New Jersey residents may have an easier time understanding where their tax dollars are being spent under new state requirements for towns to provide more concise budget summaries.
Municipal governments are now required by the state Department of Community Affairs (DCA) Division of Local Government Services to produce a userfriendly budget, a 14-page document containing several data points, including town assessment information, personnel and health insurance costs, and a summary of appropriations and revenues.
“The intent of the Legislature was to create a means for laypersons, unfamiliar with the municipal budget format, to understand the financial position of their towns,” DCA Director of Communications Tammori Petty said.
“Thus far, the user-friendly budget form appears to be working very well.”
Officials stressed that the user-friendly version will be in addition to the traditional long-form budget. “Some of these pages are a regurgitation of information that’s contained in our annual financial statements [and] contained in our annual debt statements,” Louis Palazzo, Howell Township chief financial officer, said.
“[The state] wanted to use a document that could be universally used by all of the municipalities within the state. It is basically our job to get all this information that we get on a yearly basis and submit it in a transparent way.”
Municipalities are required to post the user-friendly budget online upon adoption of the annual spending plan, in accordance with a law originally signed in 2007.
Some of the other information provided in the user-friendly budget includes tax impact, a property tax breakdown, the number of full-time and part-time employees, tax appeal statistics, surplus history and debt projections.
“It is a lot of information. There was a lot more than what is actually in the budget,” Fair Haven Chief Financial Officer Helen Graves said. “It goes into population, it goes into your three-year average of property evaluation, and it’s pretty interesting.”
According to an April notice from the Division of Local Government Services, the three main objectives of the user-friendly budget are to summarize the annual municipal operating budget, display information on key cost drivers and better explain the municipal budget’s impact on local property taxes.
Along with helping the public understand the budget, the summary can help municipalities in assessing their fiscal health and identifying potential cost savings, the notice states.
Palazzo said some of the information in the user-friendly budget, such as summaries of revenues and appropriations, is presented in the regular municipal budget documents, but is more concise in the user-friendly budget.
“I think they want to highlight key information and put it in this 13-page userfriendly budget. I guess [it’s] the bullet-point areas that the general public would want the most amount of transparency on,” Palazzo said.
The bill implementing user-friendly budgets was first signed into law in 2007 by former Gov. Jon Corzine, but was not implemented until April.
“The law itself didn’t give a specific timeline, and the staffing in the division has been pretty much decimated,” Ocean Township Finance Director Stephen Gallagher said. “So it has taken them a while to come up with it.”
Graves said one of the benefits to the general public is that they will now be able to compare the financials of similar-sized municipalities.
“It makes sense for looking at town-totown comparisons,” Graves said. “You look at general government, but you don’t know how many employees there are, so it just gives you more information.”
Because the DCA did not send towns the framework for the new, easier-to-navigate budget document, its posting is only required upon adoption of the budget this year. Next year, municipalities will be required to produce the user-friendly budget at the time of the budget’s introduction and adoption.
The New Jersey League of Municipalities, a statewide organization representing the interests of municipalities, has been critical of the initiative, requesting that the state combine the two budget documents into one.
“What we said all along is, instead of creating another form, the division should look to change the current budget form to meet the intent of the user-friendly budget,” League of Municipalities Senior Legislative Analyst Lori Buckelew said.
“We think it is an ideal time to re-engineer the requirements of the budget document by simplifying it and have a single, electronically filed document.”
However, Ocean Township’s Gallagher said combining the two documents could harm the intent of the user-friendly budget.
“The budget document is like 70 pages, and this is 12, so it gives you kind of a summary of the appropriations all in one chunk without having to flip through the budget,” he said. “Maybe you can do that, but you are taking a 70-page document and making it 80 pages, so I’m not sure if that’s such a great idea or not.”
While Buckelew and the league have issues with municipalities having to produce a second budget document, she said it is possible that the process will eventually be changed. She noted that the Division of Local Government Services has said it will welcome recommendations from the regulatory community and general public.
“They appear to be open to comments and recommendations,” Buckelew said.
While the aim is to provide more transparency, Gallagher said he still expects the public to have some trouble grasping the annual budget.
“To increase the understanding of the public, you kind of have to have an understanding of how government works to appreciate the numbers,” he said. “But I think it is a good step in the right direction.”