Public Safety Levy

The voters of Middletown graciously made permanent the Public Safety levy a few years back, which adds 0.25% income tax dedicated to public safety funding of the Middletown Divisions of Police and Fire.  There have been questions over the years as to how this works and whether the money is dumped into the General Fund and really used for Public Safety.

As I said in an earlier post, in municipal finance, the laws and rules associated with those laws don’t always seem to make perfect sense.

We collect income tax of 1.5% and the public safety levy tax of 0.25% each month.  They are separated and tracked separately and we can tell you year to date how much has been received in each category and how collections compare to prior years and to the annual budget.  Both income tax and public safety levy receipts are at the highest level since the recession.  As of the end of May, the public safety levy has generated $1,428,307.

At various point during the year, we make a transfer of the cash in the account from the public safety fund over to the General Fund.  We continue to calculate year to date receipts throughout the year.

Public Safety expenses are paid out of the General Fund.  The General Fund includes all revenues not dedicated to specific purposes by law, such as Enterprise Funds ( for example, Water and Sewer).  To use the public safety levy funds to pay Public Safety expenses, we transfer the public safety levy funds into the larger General Fund and then pay all public safety expenses out of the General Fund.

The concern has been that once the money is in the General Fund, it was not really used for Public Safety.  It is true that once the public safety levy funds are put in the General Fund, it’s similar to your checking account.  All the money is in one place, no matter where it came from.

Here’s the flaw in the misdirection theory.  The Public Safety levy is budgeted to bring in $2,894,932 in 2015.   The Public Safety Budget for 2015 is $20,052,170.   The Public Safety levy is only covering 14.4% of annual public safety expenses.   After the levy revenues are spent, the General Fund has to pay the other $17,157,238 of public safety expenses out of the General Fund.

If the public safety levy was generating more revenue than public safety expenses, we would have an obligation to either increase public safety spending or to hold the money to make sure that it was only being spent on public safety expenses as required by the levy.  Because the levy only represents 14.4% of the annual expenses for public safety, whether those exact particular levy dollars in the check book went directly to public safety is not relevant.  Those levy funds plus General Fund dollars all paid for the $20 million public safety budget.  The accounting of the funds is consistent with municipal finance law under local, state and federal law and rules.  We are audited each year to make sure we are handling these types of transfers properly.

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