PRINCETON: Borough takes first look at 2011 budget

Initial figures predicting 1-cent local tax increase

By Victoria Hurley-Schubert, Staff Writer
   At its first meeting of the year, Princeton Borough Council got right to work with a 2011 budget presentation. At first pass with the very rough figures, the budget is calling for a one-cent tax increase to cover a proposed deficit of $206,000.
   ”It’s our first look at what 2011 looks like from the staff and administration’s viewpoint,” said Robert Bruschi, borough administrator, who made the presentation Tuesday night.
   First looks at the $25,828,638 budget include a spending increase of $1,016,503 and a potential tax increase of $206,000. In 2010 the borough raised $10,398,806 from taxes. The tax increase works out to roughly one penny per $100 of assessed value.
   The budget does include the full 2 percent increase the borough is allowed to have by law. This 2 percent limit is a major part of Gov. Chris Christie’s reform agenda to control government spending. This cap, which has bipartisan support, applies to all salary items, such as across-the-board and cost-of-living increases, salary step increment payments and longevity pay and is a major portion of Mr. Christie’s attempt to get property taxes under control.
   Modest salary increases of 1.5 percent for some non-contractual employees were passed last month. In the past, raises have been 2 to 3 percent.
   ”The presentation last night was the beginning of a process. Additional data will be forthcoming that will help us determine our recommended tax rate,” said Councilman and Finance Committee Chair David Goldfarb. “As Bob mentioned last night, the borough is in better financial shape than it has been for many years, but we share with all New Jersey municipalities the difficult challenges of funding health care and pensions.”
   The biggest increases in spending were from health benefits, which are expected to rise by double digits, and pension costs. Both these items are exempt from the 2 percent cap. Borough employees do contribute to healthcare costs, paying 1.5 percent of their salaries toward their chosen plan.
   Borough debt service has increased 5 percent this year, due to projects financed last year, but the figure remains about $3.8 million, which is right on target for the established goal for overall debt service payments and is dependent on the interest rates the borough receives when it funds its bonds.
   ”It’s primarily because we financed three years worth of projects last year,” said Mr. Bruschi. “We’ll do a smaller capital budget this year to compensate for the increases.”
   One of the largest capital projects of the year could be funding the borough’s $2.1 million share of the proposed Community Park Pool project.
   The pool would be easier for the borough to accommodate over a two-year period, and the it could be afforded over multiple years. “We could work that in easily,” said Mr. Bruschi. One year would be a stretch. “We’d have to fund our obligation before the project is completed.”
   Auditors will be doing a reconciliation soon. “We could be off here and there with transfers that haven’t taken place and the like,” said Mr. Bruschi. Outstanding bills, such as telephone and electric, for the end of 2010 also need to be paid from the 2010 budget before a true picture of last year’s expenses and revenues can be drawn to provide a clearer picture of 2011.
   ”We’ll need to see where (Princeton) Township’s budgets are,” he said. “I’m making some assumptions in here on behalf of the township’s budgets. Generally we’re looking at holding the line on all those.”
   The borough and township budgets are intertwined on some items that are shared, such as the tax assessor and fire inspection.
   ”The past couple of years have really set us up well for where we are today,” said Mr. Bruschi. “We’re pretty close to our 2008 expenditures; that’s pretty good when your looking at four budget years later and that’s a testament that I don’t want to say we were ahead of the curve, but we knew that the curve was coming.
   ”We took a lot of actions in 2009 to reduce expenditures, reduce some staff expenses and take steps that were putting us in a much better position, even though we didn’t know what that position would be,” he added. “We set ourselves up pretty well.”
   Borough Council members vowed to try to have no tax increase this year.
   ”I felt the presentation was encouraging. It is common that an early budget shows a potential tax increase. This is the way staff normally approaches such shortfalls,” said Council President Kevin Wilkes, who is beginning his second year on the finance committee. “It will be our responsibility on the committee, I hope, to steer the budget back to a position of zero increase in the municipal tax rate.”
   Event thought there is a projected $1 million increase in spending, “there are ways we can curb those numbers somewhat,” said Mr. Bruschi.
   The $200,000 potential tax increase has been kept in check with aggressive borough fees and parking revenue from parking fees and making sure as many programs as possible cover their expenses, said Mr. Bruschi.
   Revenues will remain consistent with what the borough anticipated or collected in 2010.
   Budget does not reflect any reduction in state aid. “I don’t know that were going to get a reduction, I don’t know we’re not going to get a reduction,” said Mr. Bruschi. “I try to believe the state and what they tell us that they are not going to reduce state aid this year. That’s always our big unknown.”
   Funding from Princeton University is also a key factor in the budgeting process. Currently the university contributes $1,180,495.74 to the borough.
   The borough has a meeting scheduled next week with Princeton University representatives to discuss the university’s annual payments to the borough to help offset services they use.
   ”The presentation last night supports the conclusion that mayor and council will be able to maintain a zero percent tax increase for 2011, which would be the third year in a row,” said Councilman Roger Martindell, who also serves on the finance committee. “Over the long term tax relief will be accomplished only if we have more shared services with other governmental entities and a greater contribution by non-profits to the borough’s annual operating budget.”
   For greater shared services, the borough is exploring the possibility of sharing police dispatch services with neighboring municipalities. The borough and township already share many services and later this winter the tax assessor and fire inspector will each be moved to one location to increase efficiency and customer service.
   The budget will be back before the full governing body mid-February.