There has been much communication and letter writing about this year's municipal budget, both in the newspaper and on the various blogs. I would like the opportunity to address the budget process and the budget itself in hopes of clearing up any misconceptions or concerns.
Creating our budget is the single largest project assigned to the council as a whole. The process started the middle of Nov. 2009 - over 8 ½ months ago. This year all of our sessions were held as open public meetings and were attended by most, if not all, Council members. There was no budget committee as in the past. Every member of the Council and the public had ample time to make recommendations by the time we introduced the budget on 6/29/2010. Here is a brief recap of this year's budget process.
As per my November directive that all department heads come to the table during the February budget hearings with a reduction of 3% over that spent in 2009, the department heads complied with an appropriation request of $7,039,100.00, with most of the cuts consisting of operational expenses. We thought this would put us ahead of the curve as we continued with our budget calculations. Unfortunately we never anticipated almost $500,000 that was lost in state aid, coupled with a loss of $250,000 in appealed commercial property taxes, and a shortfall of revenue from construction fees of about $300,000. Additionally, in the last couple of years the property tax rate was lowered by using $1.8 million in surplus, drawing down capital reserves from $50,000 to $5,000 and using $800,000 in retired debt service. This year we had a shortfall in surplus and there were no retired debt service funds to help offset taxes. In total we were down over $1 million in revenue with marginal surplus to fall back on.
Between March and April a second directive was given to cut another 5% of operational costs. Then in April we laid off all part time personnel. We also took the following steps to further reduce spending:
• Laid off 1 management employee, replaced with a consultant holding necessary license
• 7 day furlough (without pay) for all employees EXCEPT police and statutory positions
• Council gave up its salary for 3/4 of the year
• Recreation Trust Fund is paying for all special events, concerts in the park, movies in the park, and Recreation Program Director's salary rather than taxpayers
• Did not replace Deputy Court Administrator; Consolidated Court with New Providence
• Decreased Police OT by 20%
• Substituted Police OT payout for the rest of the year with comp time next year (which must not incur OT)
• Eliminated Environmental Commission Secretary
• Cut out Newsletter and employee stipend for such activity
• Eliminated pay for town personnel for elections
• Employees to contribute of 1.5% of salary toward health benefits
• Eliminated Clerk's stipend for website maintenance and included it in Administration's duties
• Replaced 1 DPW supervisor with laborer and will not replace another in October
• Did not replace 3 police officers due to retirement/deceased
• Delayed purchase of needed DPW equipment
• $100,000+ in savings from negotiated change in medical benefits
• $160,000 contribution from the public library
The reductions were significant and for the first time in many years we budgeted for less than we spent the previous year - over $379,000 less. The amount reduced from the original request in February to the final budgeted amount in June was $1,254,400. Even after taking these steps plus budgeting for a 0% salary increase in 2009 and 2010, we still could not cut enough (without affecting vital services) to offset the shortfall on the revenue side. There was only one employee who received a raise without a promotion in the last 2 years and that was voted against by Councilwoman Perna and myself.
The difference in the cost to run our township effectively and what we can raise in revenue is the amount that has to be raised by taxation. This year the municipal portion of the property tax will increase approximately $152 for the average home assessed at $305,000. This is a 9.01% increase from the prior year. Without surplus or retiring debt service that lowered our taxes to an average of 1.86% for the last 3 years, we have nowhere to turn but the taxpayer to make up the difference.
We gave ourselves one last ditch effort to find further cuts to the budget between the time of budget introduction and the time of adoption. A suggestion was made by my colleague Councilman Bonacci during the budget adoption hearing on Tuesday. The new cuts proposed by Mr. Bonacci are not fair, as they target certain employees in only a few departments who have already been subject to zero increases in 2009 and 2010, have given back 1.5% of their pay toward benefits and have been furloughed 7 days. Additionally, Mr. Bonacci proposed using another $950,000 of surplus leaving us with $4,000 in surplus. So for the 3rd year in a row we would use more surplus that we generated back, just to make the tax implication look artificially better. Our auditor advised us at the public meeting that it is not financially sound to dip so far into the surplus. This leaves us vulnerable in an emergency situation and only reduces the municipal portion of the tax by $15 annually. We also run the risk of again not recouping all the surplus we have spent. I agreed with our auditors that it was not in the best financial interest of our Township.
I hope this gave all a better understanding of our town's budget and budget process this year.
Joseph G. Bruno is President of the Berkeley Heights Town Council