A newly introduced municipal budget calls for a reduction in operating costs, but it also brings an unavoidable tax increase due to soaring pension and health care expenses, East Brunswick Mayor David Stahl said.
Stahl presented the 2011 operating and capital budgets at a special Township Council meeting Monday, during which he elaborated on several factors contributing to the tax hike that are beyond the control of municipal officials.
“Your municipal government is confronted with increases in many of our costs, just like we all face at home,” Stahl said “Unfortunately, some of those costs have escalated rapidly and are state-mandated costs. In other words, we have no control as to the costs involved.”
The operating budget stands at $55.9 million, down roughly $750,000 from last year. Since 2008, the budget has been reduced by $8.2 million, or 13 percent.
Despite the cost-cutting, municipal taxes would increase approximately $60 for the owner of a property with an assessed valuation of $150,000.
Prior to his budget presentation, Stahl discussed the arduous process of preparing a spending plan that is fair to taxpayers and maintains high-quality municipal services for residents. He noted several departments that require adequate funding in order for East Brunswick to run properly.
“Every area of governmental services I mentioned costs money to operate. East Brunswick has many residents who believe that only their interests should be fully funded and other departments’ funding certainly can be cut because they don’t utilize those services,” he said. “As mayor, my responsibilities in preparing this budget for council reviewis tomake sure that each of
us, no matter our special interest, is treated fairly and equitably. With diminishing revenues and reserves, this task becomes even
more difficult.”
The mayor added that while municipal government has the ability to spend and tax without consideration for economic conditions,
he does not believe in taking advantage of township residents.
Stahl also reminded the public that municipal taxes account for only 20 percent of a homeowner’s property tax bill.
“It amazes me how many residents continue to believe that the mayor or the Township Council is responsible for all the taxes
that are collected,” he said. “I do not control what the Board of Education spends. I don’t control what the county spends, nor do I control
what our fire districts spend.”
There are several other financial influences that the mayor could not control, all of which have had a marked impact on this
year’s budget.
Pension, health care, snow costs up
Stahl first discussed rising pension costs, which have proved to be the most problematic this year. The township, like all municipalities,
is responsible for both police and non-police pension costs. In 2006, East Brunswick’s non-police obligationwas about
$250,000, and costs have steadily increased to a $1.5 million contribution this year. That is up nearly $500,000 from2010 and amounts
to a total increase of $1.2 million over five years. The police obligation increased even more, costing the township $844,000 in 2006
in contrast to a $2.8 million contribution this year. The 2011 police costs are also up nearly $500,000 from last year; the total increase
over the last five years stands at almost $2 million.
“It is difficult to continue to provide services when so much of our tax dollars cannot go to provide you services,” Stahl said, noting
that the total obligation will claim $4.3 million, or 7.7 percent, of the township budget.
“Nowyou understand why Trenton must pass a pension reform bill that is fair to the taxpayers
and current employees.”
Continuing on the issue of pension costs, the mayor added that he did not take advantage of a pension deferral offered by former
Gov. Jon Corzine, which could have compounded the township’s already strained financial situation.
“It would have provided a short-term reduction in costs, only to be outweighed by a much higher and costlier long-term financial
obligation,” the mayor said.
Stahl noted that the township, unlike the state, does not have the ability to forgo pension payments, and that all obligations need
to be paid in full and on time. He said East Brunswick’s pension costs have increased 389 percent over a five-year period, despite a
work-force reduction of over 20 employees, which initially resulted in a face-value savings of $2 million.
Escalating health care costs are also negatively impacting East Brunswick finances.
While officials have not been able to significantly minimize these expenses, they have been able to hinder rapid increases.
“We have done a remarkable job of cost containment over the past years,” Stahl said.
“In 2008 our costs were $7million. This year our health care costs are $7.5million, or a rise over a three-year period of approximately 8
percent. In comparison, the state’s health care costs over the same time period rose by 39 percent.”
In addition to these factors, snow removal has proved to be a significant financial burden.
Stahl said the 2011 budget asks for $265,000 more than last year, nearly an 80 percent increase.
“Quite frankly, given the forecasts for tonight and later this week, and the fact that winter is not over, that number may have to
be adjusted upward before the budget is adopted by the council,” he said.
Revenue down
Beyond expenses, factors beyond the mayor’s control include internal revenue. “Unfortunately, over the past few years,
revenue from sources other than taxes have been declining as the national economy has impacted everyone’s budget,” Stahl said, noting
that revenue traditionally was split evenly between taxes and outside sources. “Now the amount raised through taxation is almost 60
percent — a dramatic change. Thus, even though we have reduced spending over three budgets, our taxes rise.”
Stahl enumerated several notable losses in revenue, including the $1.1 million loss in state aid last year, decreased hotel occupancy
income, and a reduction in available federal and state grants,which has even affected projects
that the township has completed.
“As an example, when the township acquired Heavenly Farms, the state pledged $6 million for acquisition costs to be paid at the
rate of $600,000 annually for 10 years,” he said. “This year,we expect to receive half that amount, or a loss of $300,000 in revenue.”
Stahl noted that a decline in the valuation of property has depleted township revenue, with East Brunswick losing almost $875,000
this year due to 2010’s tax appeals.
Capital budget totals $2.6M Despite dwindling revenue and swelling costs, the township has significant borrowing
capabilities.With an interest rate of less than 1 percent, East Brunswick can continue to invest
in equipment and improvement projects.
“There are a number of projects the administration is willing to support,” Stahl said.
“Also, the amount of money we’d be borrowing is less than the debt we’re retiring.”
Stahlmentioned several projects included in the 2011 capital budget that will take advantage
of the borrowing rate, such as the continuation of software and technology improvements, several pieces of equipment,
sewer system modifications, patrol cars, an upgraded police computer system and road improvements.
The total capital budget amounts to $2.6 million, ofwhich $1.8 millionwill be bonded.
“If the department heads were here, they’d each tell you they need more,” said township Business Administrator Jim White. “But we
needed to balance their needs and wants with the available tax dollars.”
Following themayor’s presentation, council members voiced several concerns over a number of projects listed in the capital
budget.
However, Stahl said he introduced both the operating and capital budgets much earlier than usual so that the council would have
ample time to reviewandmake suitable modifications.
He recommended that the council hold off on introducing the capital budget and revisit it at the next meeting, scheduled for
Feb. 14. The council obliged. However, the council voted unanimously to introduce the municipal budget. Budget
workshops for that package will be held at 7 p.m., before the start of regularly scheduled
council meetings, starting Feb. 14