By Lea Kahn, Staff Writer
Lawrence Township officials routinely have counted on municipal surplus funds to help balance the operating budget and to minimize municipal property tax rate increases.
And most years, township officials have been able to generate more than the amount of surplus funds they have used. In 2007, the township used $6.1 million from its $9.4 million surplus account as a revenue source, and regenerated $6.2 million at the end of the year.
But in 2008, for the first time in several years, the township was unable to regenerate more money in surplus funds than it had used in the budget — and this concerns township officials as the beginning of a trend.
The 2008 municipal budget used $6.2 million in surplus funds as a revenue source, but the township only regenerated $6 million at the end of the year. The proposed 2009 budget anticipates using $6.1 million as a source of revenue.
Municipal Manager Richard Krawczun told Township Council it is unlikely that the township would be able to regenerate $6.1 million to put back into the surplus account. For example, the township’s interest income declined last year by about $500,000, he said.
“What we all have to pay attention to is having enough surplus that covers us through the valley of cash flow,” Mr. Krawczun said Tuesday night. The township collects property taxes for itself, Mercer County and the public school district, and it must have enough money on hand to pay the county and the school district.
Mr. Krawczun pointed out that Mercer County has delayed setting its tax rate for several years, which delays the township’s ability to send out tax bills. Nevertheless, the township must write a check to the county and the school district even though the tax bills have not been sent out and the taxes have not been collected, he said.
“What I am concerned over is new legislation that limits the municipal tax levy from going up more than 4 percent,” he said. “It will force municipalities to chip away at their reserve and we will see reduced services, or taxes or fees will have to go up (to maintain services).”
Mr. Krawczun also told the council that he may discuss the possibility of increasing fees to help generate additional revenue and perhaps to reduce municipal property taxes at a subsequent meeting. The additional revenue could also help to offset a potential loss in state aid for the budget, he said.
New Jersey reduced the amount of state aid to the municipality by $391,000 last year, the municipal manager said. The township made up for the loss by cutting the budget, he said. State aid to the township was $5.1 million last year, but there is a rumor that state aid may be cut by 5 to 10 percent this year, he added.
Councilman Michael Powers said state aid is “the 800-pound gorilla in the room.” He said that he, too, had heard that state aid to municipalities would be reduced in the state budget.
“We appreciate your conservative approach, but we are still flying with a huge variable that we don’t know about,” Mr. Powers said. “The one thing I am concerned about is the reduction in the (surplus fund). The surplus fund is for a rainy day, and this is clearly a rainy day in Lawrence Township.”
Mayor Pam Mount said that since no one knows how long the “bad times” will continue, the township may need the surplus funds for the municipal budget more next year than this year.
Councilman Rick Miller agreed with Mayor Mount that “we are going to run into bad economic times” and it may be difficult to replenish the surplus account. The federal government is discussing an economic stimulus package, but there may not be much money coming down to the municipal level, he said.
Township Council has scheduled its next budget review session to coincide with its regular meeting, set for Feb. 17 at the Municipal Building. The meeting starts at 7 p.m., but the budget review session is held later in the meeting.

