It is budget season, and the proposed numbers for next year are sitting on the manager’s desk in townships across Montgomery and Chester counties. The revenue lines look familiar. The question this year is different: what happens to those lines if Harrisburg misses its deadline again?
That is not a hypothetical. Pennsylvania has blown past its June 30 budget deadline five years running. The 2025-26 budget was signed on November 12, 2025, roughly 135 days late and the longest impasse in recent memory. The 2026-27 budget came easier, signed July 12, 2026, about 12 days past the deadline. The pattern is clear enough to plan around. Assume a late state budget, and build one of your own that does not depend on the state being on time.
What an impasse actually does to a township
A state impasse does not freeze every dollar a township receives. It freezes some of them, and the difference between the two is the whole game.
Money the state collects and dedicates to a specific purpose by law tends to keep moving. Your liquid fuels allocation is the clearest case. It is paid each March out of the Motor License Fund, which the Pennsylvania Constitution dedicates to highway purposes and holds apart from the General Fund fight. Through the long 2025 impasse, that road money kept its schedule.
The money that stalls is the discretionary kind that flows through the General Fund: state grant reimbursements, pass-through programs, and payments that need an enacted budget before the state will release them. During the 2025 standoff, counties and school districts warned of program cuts because so much of what they run is General Fund money. Townships carry less of that exposure, but they are not clear of it. A township waiting on a grant reimbursement for a road or stormwater project can wait months. A township that already spent the money and is waiting to be paid back is financing the state’s delay out of its own cash. That is the exposure to plan for.
Map your revenue before you touch the spending side
Start the 2027 budget by sorting revenue into two columns. Not by dollar amount, but by reliability.
The first column is money you control and collect locally: real estate taxes, the earned income tax, the local services tax, permit and fee revenue, and your fund balance. This money does not care what Harrisburg does. It is the floor under your operations.
The second column is money that depends on a state payment arriving on time: grant reimbursements, state program pass-throughs, and any line where the check comes from Harrisburg rather than from your own residents. Liquid fuels sits in a middle spot, reliable by its dedicated source but still worth watching.
Once revenue is sorted, a rule writes itself. Core operations, payroll, debt service, insurance, fuel, and winter road work get funded from the first column. If a service your residents depend on can only be paid for with second-column money, that is a risk to flag now, not in March.
What to fund from reserves, and what to defer
This is where a reserve earns its keep. The Government Finance Officers Association recommends that a general-purpose government hold unrestricted general fund balance of at least two months of operating expenditures, roughly 16.67 percent of the annual general fund budget. For a township with a $1.2 million general fund, that is about $200,000 held in reserve. Not idle cash, but the bridge that carries payroll and core services through a payment gap.
Treat the reserve as a bridge, not a checkbook. Its job during an impasse is to keep the lights on and the plows running until the state’s money catches up, then to be repaid when it does. It is not there to fund new spending, and a reserve spent down in a quiet year is not available in a hard one.
On the spending side, sort discretionary items by how much they lean on a state payment. A paving project funded by a Commonwealth Financing Authority grant, a park improvement waiting on a state reimbursement, a new piece of equipment tied to a grant award: these are the line items to stage so they can slip without breaking the year. Write them into the budget with a condition attached. The project proceeds when the grant money is in hand, not when it is merely awarded. That one sentence in a motion keeps the general fund from carrying a state delay it never agreed to.
Build the bridge before you need it
A reserve covers a normal gap. A long impasse, the kind that ran past Halloween in 2025, can outlast a thin reserve. The time to arrange a backstop is now, while the budget is calm, not in month four of a standoff.
Talk to your bank before year end about a tax anticipation note or a short line of credit, priced and approved so it is ready if cash runs short. Most townships will never draw on it. The ones that need it will be glad it exists and was not negotiated under pressure. Confirm the terms with your solicitor so the authorization is clean and the board knows what it approved.
Hold the calendar discipline
The budget process has its own deadlines, and they do not move for Harrisburg. Under the Pennsylvania Second Class Township Code, the proposed budget must be available for public inspection for at least 20 days before the board adopts it, and adoption happens at the December meeting. Build the inspection window and the vote into the schedule now, so a late state budget never becomes the excuse for a rushed local one. Tell the board in plain terms where the risk sits before the vote, not after.
Where to go next
PSATS tracks the state budget as it moves and publishes the figures townships need for planning. Its coverage of the 2025-26 budget’s passage is a useful record of what landed in the final package, and its salary and benefits survey gives real numbers for the single largest line in most township budgets. For a related item your office will field questions about, our earlier look at the new Working Pennsylvanians Tax Credit came out of the same 2025-26 budget. Your solicitor and your auditor are the two people to bring into the reserve and bridge-financing conversation before the December vote.
The bottom line
A township cannot make Harrisburg pass a budget on time. It can build one that does not need Harrisburg to. Fund your core from the money your own residents provide, hold a reserve that can carry a payment gap, and tie grant-dependent spending to the moment the money actually arrives. Do that, and the next impasse becomes a headline your office reads, not a crisis your office manages.