Ed. note: This budget explanation was emailed to Morris Township residents by Committeeman Ron Goldberg. He is the lone Democrat on the committee and seeks re-election this fall.
By Ron Goldberg, Morris Township Committee
Dear Neighbors,
I’m concerned that you have been getting little information about the very complex budget process still going on after more than a half year. The following is an attempt to begin bringing you up to date. …
Morris Township Committeeman Ron Goldberg
The Budget Challenge
The weak general economy, declining real estate values, increased commercial property vacancies, large tax appeal settlements, reduced municipal fee collections, a $1 million reduction in State aid, increase in pension and benefit costs all combined to cause $3.5 million budget gap. And $3.5 million gap assumed that no employee would get a cost of living increase, and that taxes would be raised to the limit of the levy cap.
Some $2.1 million of the gap was closed by cutting spending and accounting measures such as aggressive use of our fund balance. There was hope that voluntary employee give backs would help further, but after that the last million, the amount of the State aid reduction, could only come from jobs. That’s where much of the remaining cost was.
The State aid reduction is by itself equivalent to a 5.25 percent municipal tax increase or $26/$100,000 assessed value. The State aid reduction eats up 75 percent of the cap.
So much for slowing the growth of property taxes.
Recent Events
On June 16 after having requested an extension, the Morris Township Committee introduced a balanced budget which was below tax levy and appropriation caps. Certain cost reductions that allowed “balance” were only assumptions on June 16 and, if they were to become reality, it was understood that further action was needed. These actions had to do with job changes, layoffs and furloughs.
During May and June, “Rice” notices were prepared and issued and Rice hearings scheduled and conducted as required by law to allow discussions affecting employees and jobs.
On June 24, 17 layoffs were announced at a special public meeting of the Committee. The anticipation and implementation of layoffs has caused great anxiety and pain among Township employees. Residents must be aware that after layoffs there is a period of healing and adjustment for remaining employees, as well as service reduction because there are fewer personnel.
Please be aware that in addition to layoffs which will be completed in July, we have lost and will not replace another 10 positions lost through attrition. We have reduced hours or benefits of another five employees. Our head count will go from 190 to 163 and be reduced by 14 percent.
Layoffs: Number of personnel by department
· Admin -2
· Tax-1
· Assessor-1
· Court-1
· Engineering-1
· Fire-3
· Parks-1
· DPW-1
· Health-1
· Construction Code-4
· Sewer-1
Upcoming Events
Between July 6 and 14, actions must be taken to close the portion of the budget gap which was based on assumption of savings through furloughs. Another open issue is whether to tax up to the levy cap limit of 4 percent. The current budget uses approximately 3.9 percent of the levy cap amount which translates to a 6.2 percent municipal tax rate increase. (I’ll explain below.)
In addition, Volunteer Fire Officers, Fire Chief Goss, the Fire Fighter union (FMBA) and the Fire Commissioners Caffrey and Snyder are convening at my request to develop an operational plan which “provides the service level we need, at a cost we can afford while observing necessary standards.” Results could affect the budget or head count.
Some background on the Fire Department issue: I voted “no” on the entire “Reduction in Force” plan, because agreement was not reached to take two fire fighters off the list. I wanted to retain those firefighters, because we had not prepared to do without them. In short, I had to choose between budget timing and safety. As you heard, I charged all parties with responsibility to produce a manning plan which could be implemented quickly.
It’s the 11th hour. There may be a public, full Committee work session on the budget between July 6 and 14. Please watch for announcements.
On July 14, a special session of the Committee will consider adoption of the June 16 budget.
$$ Numbers Important to you
Municipal Tax Levy $$
2010: $22,459 million
2009: $21.241 million
Change: + $1.218 million
Muni Tax rate/per $100 of assessed property value
2010: $0.5968
2009: $0.5621
Change: + $0.0341
Open Space tax/per $100 of assessed property value
2010: $0.002
2009: $0.002
Change: none
The proposed municipal tax increase is $34.10 per $100,000 of assessed value or about $133 for a home assessed at $400,000. Should the Committee decide to use all of the 4 percent levy cap, the tax rate would rise by an additional 0.5 percent, and your taxes would increase by $2.50/$100,000 of assessed value.
Total general appropriation
2010: $33.369 million
2009: $34.650 million
Change: -$1.281 million
Insights
The budget introduced taps into all of the funds, reserves, surpluses and contingency money typically used to create “fund balance” or “surplus” we roll into the following year for tax relief. At the end of 2009, we had $2.2 million less fund balance than in the previous year. The 2010 budget squeezes the balance even more, and we are at risk of having another budget shortfall in 2011.
In addition, there will almost certainly be a levy cap lower than the current one. We must be more vigilant and agile than we have been. I want to build a pro-forma 2011 budget now and also build a tracking and forecasting system which will help us anticipate challenges better. To complicate matters, our CFO, Julia Hasbrouck, has just retired and we are searching for a replacement.
Morris Township Taxable property valuation has declined $15.6 million between 2009 and 2010. The decline combines commercial and residential property, but much of the decline is in commercial real estate and is also reflected in commercial tax appeals requiring give-backs for prior years. However, in order to illustrate a hypothetical impact on just 2010 tax collections, let’s assume it was all residential. Then it would calculate to $56.20/$100,000 multiplied by 156 or about $87,000.
The drop in real property market value coupled with the “age” of our last property valuation suggests action.
Your Attention Requested
Please check the Township web site for a PDF file of the 2010 budget and have a look.
Please watch for announcement of a budget work session 9, 12 or 13 July. The public would be able to observe, but not comment during such a work session.
Please consider attending the July 14 budget adoption session
Future Email Topics
Why budgeting took so long.
How we came up more than $3.5 million short this year.
Effect of reduction in force on service level.
Use of Open Space Trust funds.
If you have any questions about the budget or would like to discuss any other issue, please contact me via e-mail at rmgoldb AT verizon DOT net.
Sincerely,
Ron Goldberg
Committeeman, Morris Township Committee
