The election campaign period is known as the “silly season” because candidates will say almost anything to get elected. One of the silliest things heard this year, from the Democratic candidates for the Westfield Town Council, is that Westfield’s budget surplus has been “hidden” from the public and should be spent down immediately.
It is critically important to maintain surplus funds as a municipal savings account. In our personal lives, we understand the importance of savings, and professionals recommend that we have available six months of expenses. In municipal budgeting, the benchmark is a fund balance of 15 percent to 20 percent of a town’s annual expenditures.
As a result of the decision-making and planning of Westfield’s mayor and council, our fund balance entering 2015 was 17 percent of budgeted expenses. That has not been kept secret, nor should it be. All of Westfield’s budget documents are publicly available on the town’s website. Our nearly $6.6 million surplus is disclosed in the 2015 State Municipal Budget Filing available under the “Budget” tab at www.westfieldnj.gov.
Having worked so hard to build its rainy-day fund, it is silly to think that the town would not disclose it, and even sillier to suggest that the money should be spent to pander to voters. The importance of a fund balance was never more evident than after the collapse of the financial markets in 2008 and the ensuing Great Recession.
Westfield weathered the financial storm of cuts in state aid, lower property tax collections and a two percent tax levy cap because it had an appropriate savings account. Nature’s storms soon followed, including Hurricane Irene and Superstorm Sandy, for which the town unexpectedly had to pay substantial amounts for public safety, infrastructure repairs and recovery efforts. Wisely, we had saved for those very circumstances. Others apparently would not have.
In the past three years we have rebuilt our surplus to meet recommended standards. Our hard work did not go unnoticed, except by certain council candidates. When Standard and Poor’s awarded its AAA credit rating to Westfield in August, it specifically noted the town’s surplus as a reason, stating that “[b]eginning in 2012, … the town made a number of changes to restore fiscal health and rebuild fund balanc …. Fiscal 2014 marks the third year in a row with a general fund surplus since the aforementioned fiscal measures bega …. Westfield’s budgetary flexibility is very strong, … with an available fund balance in fiscal 2014 of 17 percent of operating expenditures, or $6.6 million.” It does not get much more public than that.
As a result of our AAA rating, the interest rate on our recent 12-year bonds was only 2.027 percent. Our surplus caused that very low rate and netted substantial savings for Westfield taxpayers. While spending down our fund balance might provide some fleeting tax relief, reducing or eliminating our fund balance would result in residents paying higher property taxes over a much longer term and the town having no savings available for a rainy day. I urge the Democratic town council candidates to stop being so silly.