LIVINGSTON, NJ - As 2015 comes to a close, the Livingston Township Council discussed the beginnings of the 2015 Long-Term Financial Plan, which gave an overview of current and future issues and highlighted new financial policies, at a council meeting on Dec. 14.
According to Township Manager Michele Meade, although it isn’t required to prepare a formal document every two years, the Long-Term Financial Plan analysis is one of the most important things the council can do for the town. Identifying three interrelated activities similar to the ones in the previous financial plan, Meade said historical trends, fiscal environment and financial data analyses are priorities in order to determine what policies and strategies need to be enacted in order to ensure long-term financial stability.
Meade said providing a historical trends analysis would predict likely outcomes if action is not taken on certain issues.
“Although there are areas of the township’s financial structure that require attention, the fiscal environment is not unstable,” Meade said, repeating that the areas that need attention are not surprises, but necessary issues to formalize. “Financial indicators and primary trends that point toward potential challenges and difficulties have either been addressed in 2015 or are being addressed in this plan.”
Meade said that by engaging in a long-term financial plan, the township can address these imbalances before serious fiscal stress results.
Meade summarized the five primary trends, which included increasing reserves, reducing debt services, tax appeal refunds, enterprise revenues and budget gaps and also outlined some of the ongoing or planned gap-closing strategies to address the most pressing issues challenging the township’s financial position.
Strategies to increase reserves included eliminating surpluses of budget revenue and increasing the general fund balance reserves, which is different from what the town is currently doing and which Meade thinks is very achievable. The third component of the increasing reserves is to maintain the budget stabilization reserves.
In reducing debt and debt services, some components included planned issuance of long-term bonds, which Meade said has been and should continue to be effective, as well as a new strategy to reduce outstanding debt. The third component is to continue long-term capital planning, which the council has been doing.
With regard to funding tax-appeal refunds, an issue that has been ongoing since 2009, strategies included the so-far successful method of negotiating multiyear settlements and using excess surplus funds to the extent that sufficient excess fund balances exist.
“I want to give a shout out to Sharon [Weiner, Township Attorney], who’s done an outstanding job in negotiating these things with us,” said Meade. “She and Bill, [Nadolny, Chief Financial Officer] work together to make sure that we’re striking these credits and refunds in a way that’s not going to be overly burdensome to us. It’s really been very effective.”
The third component is a last-reserve option of issuing short-term debt. Chief Financial Officer Bill Nadolny has a strategy that if the council gets approval to do this, it will hold off doing it until it has to so that it can minimize the amount it needs to fund, although the council has not had to do this since 2011.
The fourth area, the monitoring and evaluating utility operations, had only two components: to perform multi-year rate analysis and reducing the need for purchased water, thereby reducing the budget appropriation. Reducing the need for water is something the council has been attempting to do since 2012, but Meade said the town is in a good place to start making some strong headway in this area.
Meade also said that a more formal strategy for eliminating budget gaps, which involved asking department heads look at their revenue and user fees when they do their budget, has been hugely successful so far this year. All of the department heads were asked to submit these for review by Friday, Dec. 11, so that adjustments can be established.
“With this one budget-gap eliminator alone, we have increased local non-tax revenues by $1.7 million between 2008 and 2014,” said Meade. “It’s one of the principle reasons why we’re able to sustain our service levels during the downturn of the economy when many other towns were not able to do that.”
Other strategies included expanding shared services, which Meade said did not see as much success as was hoped for. However, Meade said the board has substantial things in the wings for the first quarter of 2016 that she hopes will “bear fruit.”
However, Meade said that this environment has had the most success, seeing substantial taxpayer savings between $60-80,000 per year on services, which is nearly a 25-percent increase since 2008.