Last week the Madison Borough Council introduced its 2020 budget.  The good news is that the council took some steps to address the financial impact to the community from the current COVID-19 crisis, but I think there are more things that they can and should do before the budget is finalized.

First, as noted by the borough’s auditor, cash flow is going to be a concern as long as the economy is shrinking.  Tracking the borough’s cash flow is going to be a critical measurement, and waiting until the administration has a couple of months of experience before the budget is locked down seems like the most prudent course of action.  This would mean not voting on a final budget until the first meeting in June as allowed by state law.  This would give the borough an opportunity to analyze revenue collection for the utilities in April and May, and how the collection of the Q2 Property Taxes is impacted before making any final decisions on the budget.

Second, the borough reduced the money going into the reserve for substation repairs by half, or $150,000, but still went forward with setting up a new reserve with a $200,000 “deposit” for a yet to be defined Green Program.  Both should be zeroed out for this budget year and that would free up an additional $350,000 that could be used for an increase in the electric rate cut, an increase in the crisis response toolkit, or to further cut property taxes.

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Third, the borough is still holding a Free Balance in the electric utility account of over $3,000,000.  More of this surplus should be used to reduce the cost of electricity to homeowners, renter, merchants, the board of education and non-profits.  Note that the latter four do not get any relief from a property tax cut, but they have been helping to generate electric utility surplus, which covers over $6,600,000 of municipal expenses and hold down property tax rates.

Fourth, the council reduced the property tax rate increase from 2% to 1%, but they could have lowered it to 0% by not adding almost $230,000 to the Departmental Expenses budget line.  The borough’s budget has sufficient excess expenses built into to not require adding a “reserve” for the COVID-19 response.  These excess expenses are a large part of the reason we ended 2019 with a surplus of over $10,000,000.  I would strongly recommend reducing the increase in that budget line, which would allow the Property Taxes for 2020 to remain at the same level as 2019.

Fifth, the borough has still not considered cutting or eliminating the Open Space Tax for 2020.  As I noted two weeks ago, the borough has a grant that can cover the next two years of bond payments, so the only true expense for the year is covered. Cutting the $642,000 collected every year would provide up to a 4% property tax reduction for this year.

I respect the work that the administration and council have done the past few weeks under very trying circumstances but hope they will consider the above as there’s only one budget done every year, and once it is completed changes cannot be made for another 12 months.  Right now the community’s needs are growing, and these recommendations can mitigate some of the financial strains many of us will be feeling for the rest of 2020.

Patrick Rowe