Fifteen York County townships and boroughs entered 2009 with enough money squirreled away to eliminate taxes and still pay all of their bills for a year or longer.

Some municipalities had enough money to eliminate taxes and cover two, three or four years' worth of operational expenses, according to audit results from the state Department of Community and Economic Development obtained through a Right to Know request.

Municipal officials generally defended the size of their reserves as a way to stave off tax hikes if faced with unexpected costs or revenue fluctuations. Some also said they invest the money to earn interest or use it

to avoid borrowing money for projects or to cover costs until real estate tax money begins to flow.

In only a few cases did officials with the nine townships and six boroughs have particular plans for the money.

Critics argue municipalities with such large "rainy day funds" are overtaxing residents and should leave tax dollars in the hands of residents to invest. Large reserves, they say, can lead to a freewheeling attitude toward spending.

"They could have a tax holiday for a year and still have a reasonable surplus," said Joel Sears, president of the York County Taxpayers Council. "Can you imagine telling your taxpayers that we have enough money in reserves we are going to forego your taxes for an entire year?"

Municipalities with extra cash decide how much money to hold in reserve each year when they craft spending plans. Some have already passed their 2010
budgets, but most will approve them in the coming weeks.

Officials with most of the 15 municipalities with reserves larger than their operating budgets said they are not planning to raise taxes or fees next year. On the flip side, none of the municipalities are planning to lower their rates, either.

In some cases, that will likely mean growth in the size of the surplus.

Information from the most recent audits on municipalities' finances shows reserve size varies widely and appears to have little, if any, correlation to annual expenses. Thirty-four municipalities at the beginning of 2009 had at least six months' worth of expenses, including the 15 with more than a year's worth.

No consistency: Chanceford and Monaghan townships both spent about the same amount of money in 2008, according to audit information. Monaghan exhausted about $919,000 compared to $912,000 for Chanceford.

Chanceford ended the year with a reserve of $3 million. That's more than three times its 2008 operating expenses and equal to $1,286 per home in the township, according to 2000 U.S. Census estimates.

Monaghan closed out with a relatively small $662,000 in the bank.

"It's basically for emergencies," said Chanceford Township Secretary/Treasurer Brenda Gohn of the reserve. "If something catastrophic should happen, we have to have something on hand to deal with that."

Pennsylvania does not regulate how much of a reserve municipalities can maintain. But it does keep an eye on school districts.

Districts are allowed to keep up to 12 percent of their annual expenses in a reserve, depending on the size of their budgets. Any more and they're prohibited from raising taxes.

Unless the money was for a particular project, Michael Ridgely said he would likely try to lower taxes if Shrewsbury Borough were to have a reserve in multiples of its annual expenses.

The longtime councilman said he likes to keep about six months' worth of expenses in the bank to absorb "bumps."

"We don't want to raise a large reserve just to have it at taxpayers' expense," he said.

Large: Windsor Township at the end of 2008 had one of the largest reserves -- $4.8 million -- in the county. That compares to $4.3 million for Springettsbury, a more populous township that spends more than three times as much money on its annual operations.

"We're using that surplus as a cushion to not have a tax increase," said Windsor Township Manager Jennifer Gunnet.

She said the township would use the money to offset any future expenses, such as emergency roadwork, or to keep the tax rate stable if revenue dips.

Sears said there's no legitimate reason municipalities should keep so much money on their books.

For example, he said, municipalities can borrow money in the unlikely event of an emergency.

People would be furious if they found out school districts, which generally have far bigger budgets and higher tax rates, had reserves in multiples of their expenses, he said.

But "in terms of the principle, it's no different" for municipalities, he said.

It's more acceptable for boroughs than townships to maintain relatively large reserves, Sears said.

That's because a large township and small borough would pay the same amount for a fire engine, he said. But saving for that fire truck might make it look like a borough has a relatively large reserve compared to its regular operating expenses.

No set amount: Penn State Harrisburg Professor Beverly Cigler said there's no set amount municipalities should hold in a reserve. But the general recommendation is at least 5 to 15 percent.

"The thing about it is, just like with us personally, it just makes sense to squirrel away as much money as you can," said Cigler, a professor of public policy and administration.

Higher fund balances are good for credit ratings, she said, and protect townships and boroughs from boosting tax rates dramatically when they encounter an unexpected expense.

It can also help keep tax rates stable during recessions, when income tax and other revenues might fall.

She said sometimes people get upset that municipalities hold reserve funds but often the presence of the fund indicates good management, she said.

Approach: Hanover Manager Bruce Rebert said the borough entered 2009 with about $2 million cash in reserve, which is about 17 percent of its $11.4 million annual operations cost.

An audit indicated the borough had about $9.8 million at the end of the 2009, but he said most of it is assets the borough would have to sell to see any cash.

Most of the borough's cash reserve is spent propping up the borough over the first three months of the year until tax revenue starts flowing, Rebert said. The other $600,000 to $700,000 is kept in case of emergency.

He said any more in reserve would be too much.

"I think if you start to have too much money on hand you're taking advantage of taxpayers," he said.

And as for those who have multiples of the expenses in reserve?

"That's a decision they've made," he said. "That's not what we do."

--Reach Carl Lindquist at 505-5426 or clindquist@yorkdispatch.com.

The audit numbers
Every township and borough in Pennsylvania is required to submit annual audits evaluating the previous year's finances to the state Department of Community and Economic Development.

Information from the most recent audits, which evaluated finances as of Dec. 31, 2008, was obtained through a Pennsylvania Right to Know Act request.

The audits were performed over the course of 2009. The information obtained by The York Dispatch pertains to each municipality's general fund, which is the main property tax-funded account that finances general operations.

Municipalities also receive grants and other money that can be used only for specific purposes.