The Capital Fund Forecast

Each year in October, Town Staff proposes the next year's budget for review by the Town Council, prior to final adoption in November. While Town Staff is still working on compiling the information required for the budget process, a July study session outlined the 5-year Capital Improvement Plan (CIP) for the Town, which uses the Town’s newly created Capital Fund to provide funding.

Projects which use this Capital Fund include the Town’s major maintenance and capital expenditures that aren’t paid through an enterprise fund (ie. water, wastewater, storm drainage) or a special fund (ie. "Transportation Impact Fund", "Trails, Natural Areas, and Community Character (TNACC) fund", etc.). Funded for the first time after the 2024 calendar year by the Town's General Fund, this account is comprised of the remaining balance after all revenues, expenses, and minimum emergency reserves have been accounted for. This account is intended to fund the various CIP projects in the coming years, including street maintenance, the proposed Makerspace, Affordable Housing initiatives, park fixture replacements, streetlights, police equipment, and many other items.

Based on the volume of capital requests from each department, the total funding required would have depleted the Town's Capital Fund in 2025. With this knowledge, Staff not only had to prioritize funding requests, but in many cases had to reduce funds allotted or defer projects entirely to future years. 

As part of Staff's 2025 capital project recommendations:

• Annual Street Maintenance was reduced from $4.5 million initially requested to $4.0 million
• Traffic Calming projects were reduced from $200,000 initially requested to $75,000
• Traffic Signal Improvements were reduced from $105,000 initially requested to $52,500
• Affordable Housing Fund allocation was reduced from $1.0 million initially requested to $800,000

After the capital requests were outlined, a projection as to the amount remaining in the Capital Fund could be generated. The financial forecast based on Staff's recommendations — which assumes 10% annual growth in sales and use taxes, 4% annual growth in operation expenses, and 10% annual growth in personnel costs — estimates that the capital fund will be fully depleted by year 2028.

This same forecast, using the Staff's recommendation, indicates that the town will only have $6.5 million available for all capital projects receiving funding from the General Fund in years 2027, 2028, and 2029. With street maintenance immediately consuming $4 million of these funds, this ultimately means that the Town is projected to only have $2.5 million available to fund the various required needs in the coming years.

How did this happen

Spanning 3 different Finance Directors since 2022 when the first 5-year financial forecast was provided, each of these presentations provided by Staff told us that this point was coming. During these meetings, although I had been very vocal about this bleak outlook and our potential inability to fund projects in the future, the council majority failed to heed these warnings. In fact, they have gone as far as to denounce my comments publicly during meetings, rationalizing that these are only future projections and that they aren't real numbers because a lot can change between now and then. However, every single time one of these new forecasts came before us, each one painted an even more grim picture than the last one.

To make matters worse, for the 2024 Adopted Budget, the Council majority went as far as to repeal a $7.5 million stabilization "rainy day" reserve beforehand — saying that these reserves were not required anymore. This was done by the majority in order to release $7.5 million in funds towards the $10 million needed to balance that year's budget, as well as to draw down the required minimum fund balance so that this additional spending could occur. Essentially, if these funds had not been released, the Town would have been below the minimum ending balance as required by our reserve policies, and the requests by Staff would not have been able to be included.

Although this adopted budget passed 5-2, Council Member Bell and myself made it known to the Council majority that the Town was deficit spending in order to balance the budget, (i.e. the town had more expenses than revenues coming in) — which was not the "fiscal responsibility" that 97% of residents demanded from their elected officials, as per the 2023 Community Survey.

Since 2022 under this current Council majority, spending has run rampant at Town Hall. The Town's personnel expenses have increased by 41% and operations expenses have increased by 80% — for a total increase of 55% among all operating expenses — in addition to capital expenses increasing by 108%. All while there were these rapid increases in expenses, Town revenues only increased by 15% in this same timeframe. Simply put - it was just a matter of time before the forecasts became a reality because Town Hall has been overextending themselves.

With this limited amount of Capital Funding available, if there are any decreases in our revenues, or any major unexpected funding needs in the near future — it will have the potential to create a domino effect towards our ability to fund projects, including things as simple as maintaining our roads.

How can we resolve this before it's too late

As a currently elected Council Member, I am going to continue to voice these concerns and work with both Town Staff and the Council majority when it comes time to review (and vote) on the 2025 Adopted Budget. This is the reason I decided to run for re-election - to do everything in my power to make sure this doesn't become a reality. In terms of the short-term future and potential ultimate "fixes" for this issue, there are only two things that can be done to affect a change — either increase revenues (e.g. jump-start our economic development projects) or decrease expenses (e.g. reduce operational costs). In terms of the immediate future with the impending 2025 Budget which needs to be adopted by the end of this calendar year, Town Hall needs to be immensely fiscally minded to ensure we are living within our means. The Town can not rely on unexpected revenue gains, as has occurred in the past, to resolve this issue. We need to plan accordingly and take specific steps to address the issue.

As residents, we must voice our concerns so the Council hears that the actions taken to-date are not ok. The actions taken by the Council majority have dug us into a hole that is going to take years to get out of. With the impending November municipal election, we can as well all vote for individuals who will maintain the fiscal responsibility demanded by Erie's citizens. We all deserve to have individuals represent us who first and foremost know what they are voting on and the repercussions of their votes. We also deserve to have individuals represent us who aren't afraid to ask questions that come with making decisions on-behalf of 37,000 Erie residents.

Our Town's future success depends on leaders who are willing to stand up for the Erie residents and ask the tough questions others won't, leaders who remain Forward Thinking for Erie’s Future!

*Just a side note to all of the items that I discuss: I am a solutions driven problem solver by nature. I wonder how things work, why they work the way they do, and how to make them better. This means seeking different, outside-the-box methods to figure out solutions to various issues. Accordingly, I am always open to learning new ideas, different ways of doing things, as well as constantly learning from others' experiences to make better decisions. When I see an issue, I view it in a holistic fashion, and then dive into specific areas to remove deficiencies and create efficiencies. If you, who are reading this, have some thoughts or ideas about any of the subjects I discuss, I would be more than happy to speak with you to hear your opinions. Please reach out to me here through my website. Listening, hearing, and understanding different perspectives is the only way that we can all grow and create positive change - by learning from others, and delivering ideas that push the needle to become Forward Thinking.