WAYNE, NJ – Township Chief Financial Officer, Heather McNamara presented the proposed 2021 Wayne Township Municipal Budget at Wednesday night’s Wayne Town Council meeting. She provided some worrisome news and some good news. The worrisome news was that the economic fallout from pandemic mitigation efforts is likely not to be felt by the township this year, but the CFO predicted issues in future years.
The good news was that the Township received a AAA rating from Moody’s investments, and the proposed budget would not increase municipal taxes.
Mayor Chris Vergano began the 2021 budget presentation with the announcement from Moody’s.
“The credit position for Wayne Township is extremely strong,” read the Mayor from the Moody’s report. He then mentioned that for municipalities like Wayne nationwide, the AAA rating was “well above” the median.
“Factors included: a robust financial position, a very strong wealth and income profile and a large tax base,” read Vergano. “It also reflects the negligible debt burden, and a somewhat inflated pension liability.”
This is the highest rating from Moody’s and the importance of this is that it means Wayne Township can borrow money at a very low interest rate in comparison to cities and towns with worse ratings.
Councilman-at-Large David Varano works in finance and commented on the rating. “If you look in the proposed budget for this year, our interest expected on investments is projected to decline about $55,000. Whereas the interest that we're paying on our bonds and notes is projected to decline about $280,000.”
“Given the amount of debt Wayne carries, and our ability to go out to the bond market and refinance, redeem and reissue at lower interest rates is a very powerful tool that we have at our disposal,” Varano continued. “This is due almost entirely to the fiscally conservative nature by which this township is run.”
Varano called it fiscally conservative. Heather McNamara, the Chief Financial Officer of Wayne Township called it “prudent.”
McNamara gave a short presentation to introduce the 2021 proposed budget and she began with the bad news.
“As we all know, in 2020 we faced a pandemic,” she said to begin. “Because of this, we have had some obvious affect.”
The CFO gave a few examples of decreased revenues for Wayne including court fees, interest revenue and building permit fees. She also mentioned future tax appeals.
“This is not something that affected 2021,” said McNamara about tax appeals. “But we are planning on this affecting us in 2022 and 2023. There is likely to be a couple of large hits.”
The Willowbrook mall was mentioned by both Mayor Vergano and Second Ward Councilman, Al Sadowski as likely to be one of the large hits to the budget. The mall is Wayne’s largest taxpayer, and it had been losing a lot of business to online shopping before the pandemic hit. It was closed for months in 2020, and there are still restrictions on the businesses inside and around the property. This makes them ripe for a tax appeal.
The CFO explained that the Township has a fund to handle loss of revenue from tax appeals and if it ever got so bad, they could always borrow specifically to handle major losses. But McNamara doesn’t think it will come to that.
“I think we are in good shape,” said McNamara about future tax appeals. “I think we will be able to handle that in our budget and in our reserves in the next coming years.”
McNamara then explained that “Cash Flow, although it was good in 2020, it looks uncertain in the future. If this continues and businesses start to close and more and people are out of work, our cash flow will get hit.”
“Lastly but not leastly,” she said next. “We lost some rateables due to closing of businesses. Again, that might not affect us in 2021, but in the future, we are expecting to feel a little pain on that one.”
During Council Comments after the presentation, Fifth Ward Councilwoman Fran Ritter asked McNamara about the concern with the loss of ratables.
“What are your thoughts on how we're going to fund our budget in future years given the projected decrease in business ratables?” asked Ritter.
“Thankfully Wayne Township is one of those townships that businesses want to come into,” the CFO answered, saying that ratables was an “ebb and flow.”
“So as much as we have ratables leaving, we tend to have ratables coming in,” said McNamara. “In 2021, our ratables actually went up and I’m hoping that the new ratables that hit the books will cover the ratables that we are losing.”
How is the Township handling a loss of revenue and still not increasing taxes in this year’s budget?
“We’re a very prudent town,” said McNamara. “Since 2008, we have been eliminating positions through attrition. We are up to 48 and a half positions that we have not refilled after retirement or resignation. This equates to an additional $28 million dollars in our budget that we have cut over the last 13 years.”
While the revenues did decrease over the last year, Wayne’s CFO saw it coming and planned ahead.
“I was very prudent in estimating revenue last year,” she said. “Once we realized that this pandemic was hitting, I went back to last year’s budget before it was actually adopted and I dropped some of our revenues knowing that we were going to be in a position to not collect the revenues that we had in the previous year, such as interest and building permits.”
According to McNamara, the Township saved on expenses in the budget with decrease in the capital improvement fund, debt service and township salaries, which were reduced because of not filling positions when people retire or resign.
“Our other expenses did increase, but the 3% increase was largely due to items out of our control: pensions, solid waste disposal,” she explained.
The CFO then told the Council that by sharing services with other townships, Passaic County and with the Wayne Board of Education, they were able to reduce expenses or increase revenue by providing services for other towns through shared services agreements. During the presentation, she mentioned Animal Control, the Health Department and shared services with the BOE.
In conclusion, McNamara showed a graph that separated the taxes that were collected by the Township and where the money goes.
Out of every dollar in taxes collected, Wayne Township keeps 21% to spend on services for residents. The Wayne Public Library gets 1%, Passaic County gets 25% and the remaining 53% goes to the Wayne BOE.
“What do you get for that 21 cents?” asked Mayor Vergano, and then answered the question. “You get a police department that’s state of the art. You get your garbage and recycling picked up. You get your roads paved and plowed. And when it's snowing, we probably have the best snow plowing operation, in northern New Jersey if not the state of New Jersey.”
“We run a tremendous amount of recreation programs, and if Tim has his way we’ll be running more and more,” Vergano added, talking about Tim Roetman, the Director of Parks and Rec.
Vergano went on. “We buy fire trucks, we buy ambulances, we provide assistance to the PAL, The Boys & Girls Club, the Wayne soccer Club, the Wayne Little League, the Wayne Hockey Club, and groups like that.
“We are doing an amazing number of things for our community,” said Vergano. “And we try to make Wayne a great place to live, work and raise your family. I know by looking at the screen, all of us are very pleased to be living in this community and enjoy many things that we do.
Lastly, he added: “The newest thing that we did was opening our COVID vaccine clinic, and yes there's a cost associated with that, but it was a necessary cost to help the residents of Wayne.”
Proudly, Vergano said, “The biggest part of this is that there will be no municipal tax increase for 2021. I want to thank our Business Administrator Talib Aquil, our CFO Heather McNamara and all our Department heads for getting the message and doing what's best for our community.”
The proposed budget was passed unanimously 9-0.
“Congratulations Mayor, we haven’t had a 9-0 budget vote in a long time,” said Township Clerk Paul Margiotta.
The budget will now be examined by the Town Council Finance Committee which is made up of Council President, Rich Jasterzbski and Council Members Franco Mazzei, Fran Ritter and Jill Sasso.
The Township will mail out a budget brochure to the residents, and a public hearing will be held at the next Council meeting on May 5 before it is voted on for adoption.