Edison Mayor Jun Choi’s proposed threeyear spending plan is being touted as the bitter medicine the township needs. The malady? To Choi and his supporters, outof control property tax rates and a bloated municipal government. The cure? A proposed $115,425,700 for the township’s fiscal year 2008 budget.
It is the mayor’s hope that investment in things such as infrastructure improvements and economic revitalization will result in reduced costs and increased revenue over time, slowing down the rate of local property tax increases. In a statement, Choi said he understands that this might be a bitter pill to swallow and concedes that some difficult choices have to be made. Still, he said that if the township does not address what he feels are the major fiscal problems in the township government, the costs could be dire.
“I am committed to restoring the fiscal integrity of our community by avoiding financial gimmicks and facing up to our fiscal realities,” Choi said in the statement.
If everything works out exactly as the mayor hopes, the residents will bear a 9.8 percent increase in the tax levy this year, fueling the $115 million budget. The following year, however, will see a tax increase of 4.5 percent, and a tax increase of 4.3 percent the year after that. This is contrasted with a 9.5 percent tax increase in 2007 and a 15.1 percent tax increase in 2006. The average homeowner in Edison will, therefore, need to pay $158 more per year.
Cutting costs
While the plan, as described by Choi, has many different parts, they are mostly devoted to either lowering spending or increasing revenue. The difficulties, the mayor said, lies in dealing with what he sees as the legacy of previous administrations. The ultimate goal, he said, is long-term property tax stabilization.
“There’s a reason why the first-year increased proposal is 9.8 percent. … Because we have gone through years of deficit spending and the township still faces a structural deficit with very low reserves. We have to build up those reserves over time and we have to cut spending, mainly through attrition or downsizing over time, and by finding new ratables without increasing the tax rate, so the new ratables will be through economic revitalization,” Choi said in an interview.
While there are many areas where the mayor feels costs should be cut, he refers to the police and fire departments in particular, saying that the township has “given away the store” through contracts to public safety workers and said that this is why “most of our police officers are making over six figures.”
“Because of the contracts, there are more resources dedicated to public safety than the state average, and nonpublic safety [departments] are under-resourced,” said Choi.
To this end, one part of his plan is to renegotiate the labor contracts with the public safety workers, among other areas of the township government. He said the township is currently engaged in “hard-line” negotiations with the fire department and the contract is currently in arbitration, and that negotiations with the police will begin sometime this year. He noted that the township has already negotiated or is in the process of negotiating seven other contracts, out of 11 total. He said the new contracts should have a greater relationship between performance and results, and the setting up of more incentives for greater performance. He also said that the township is seeking a “more efficient benefit system” though noted that all of these things are in the interests of cutting costs.
“We’re looking, overall, to cut costs. We need to cut costs,” said Choi.
He did note, though, that he has no definite plans to cut police officers from the force, a recommendation from an independent study from the Department of Community Affairs. He did say, however, that if he were to do it, it would be through attrition of senior officers, not through terminating patrol positions.
The township is, overall, looking to reduce the number of employees under the proposed plan. The mayor said that during his tenure, there has been a net reduction of 60 total employees, with the overall number being, he stated, much higher. Several have been hired under the mayor during this time, and Choi noted that while their salaries might be higher than those let go, there is still a net savings of “millions of dollars” from the 60 net personnel reductions. Further, their quality, he said, does help control costs through better management.
“In certain cases, I support higher salaries because higher salaries means higher-qualified managers, and what the township has always needed are better managers.We need [fewer] employees, but better management,” said Choi.
The mayor does not want to end with reducing 60 positions, though – another aspect of his plan is to encourage more attrition among township employees. One way is through a program that will let people who have been working in the township for more than 25 years to retire before being 55 years old, but still receive health benefits through the severance pay they would ordinarily receive as a lump sum payment. Choi said that this has saved the township money overall.
Another aspect of the Choi plan is to restructure the township’s debt payments. He said that since Edison is on a fiscal year debt schedule rather than a calendar year schedule, the township can change the rate at which debts are paid off, allowing a softer landing, according to Choi.
“What I am proposing is we restructure it, which means the payment schedule is more gradual, and what that allows us to do is give us more room to downsize our government and develop ways to find additional ratables so we can come into fiscal balance,” said Choi.
“You need state approval, but what you do is restructure the debt load by going into the bonds market, and you’re taking the debt load we have now and developing a new payment schedule. Also, because of potentially lower interest rates, you might achieve some savings there, too,” he added later.
Generating revenue
The proposed three-year plan banks heavily on being able to generate tax revenue through economic revitalization. The overall goal behind this is to develop a surplus.
“Over the next three years, we will be replenishing our surplus and the reserves … the problem now is our reserves are very low, and that was due to the past practices of runaway spending,” said Choi.
Part of the revenue side of the plan involves sending $250,000 to the planning department, which the mayor said will be for enforcing township law as well as for helping find new sources of revenue, primarily through what he called “economic revitalization.”
“The township has had a history of poor planning, and we are now investing more into planning up to this point. I’ve largely relied on grants and state aid, but we can do more if we also invest ourselves, and that is what that is,” said Choi.
He noted projects such as the Oak Tree Road revitalization project as an example that would bring in additional tax revenue. More can be done, he said, through “better coordination of our land-use policy” and making sure that the right investment goes into the proper areas.
Other investments that can be made in the plan include capital improvement projects such as repairs and renovations to the various firehouses, which the mayor feels will reduce maintenance costs in the long term. Along the same vein, the plan also calls for increased investment in technology in order to reduce overhead and increase efficiency.
Skepticism
Opponents of the mayor have expressed skepticism over some points in the proposed three-year plan. CouncilmanAnthony Massaro, during a special council session Jan. 3, said he didn’t feel spending could be described as “runaway” until recently.
“I wanted to see if the conventional wisdom matched the arithmetic. I looked at the first budgets I was responsible for as councilman from the beginning of my term through fiscal year ’05. I saw over those 10 years were numbers that don’t support the conventional wisdom, the contention that spending was out of control,” said Massaro.
H
e said that
over the past 10 years, the average tax rate increase had been about 4 cents. He said that over the past two years, the average tax increase was 9.7 cents a year, 19.7 combined.
Choi said that the assertions made by Massaro were “untrue.”
“When you look at the facts. … For the 12 years before this new administration came in, it was a 200 percent increase,” said Choi. “Look at the comments you got from CouncilmanMassaro and look at [my figures], directly from the Middlesex County tax records.”
Joe Petrucelli, a member of the finance committee, also noted that much of the plan depends on the state giving the township waivers to exceed the recently instituted 4 percent tax levy increase cap. He said that if Trenton says no, there will be problems.
Moving forward
Choi admits that the changes he wants to make in his spending plan will be difficult and take time, but he implored residents of Edison to support him, saying that in the end, property taxes will be stabilized.
“I can’t promise that we’re going to cut taxes, because that would be disingenuous of me, but I am confident, with the council support of this budget plan, that we can achieve stabilization. And, the goal is to keep property tax increases every year to less than the statewide property tax average or the inflation rate, whichever is higher. That is stabilization,” said Choi.