SOUTH RIVER — There was much debate over a proposed accounting change during the Jan. 28 Borough Council meeting, which led to a Democratic councilman telling the audience that the borough is not in the strong financial position the party was led to believe it was when the Republicans were in power last year.
At issue is what is called a “deferred school tax.” The borough obtains a deferred portion of the school tax levy at the beginning and end of the school year — money the municipality has collected but has not yet paid out. That portion now totals $588,680, according to a borough resolution. Through the resolution, the borough is seeking to use $450,000 of that sum.
During the business meeting, resident Bill England asked for more information on the measure. Borough Chief Financial Officer Joseph Zanga said the move is simply an “accounting mechanism that the borough uses.” He stressed that the move would have no impact on the schools receiving their tax money, and that it gives the borough more flexibility as it prepares its annual budget. He said the borough is looking at each line item in the budget daily.
Jim Hutchison, the council’s lone Republican, said he was concerned about this decision. He asked what would happen if the money were spent for a use outside its intended purpose.
“Does that mean we have to bond? Does that mean a loss of services somewhere else? I’d like a little more time to review this,” he said.
However, Councilman Thomas Roselli said the governing body had to act on the measure at that meeting because Zanga has to file the financial audit statement by Feb. 10. In addition, he said, the council has generally deferred to the opinions of its professionals in the past.
“The one thing we realized is this town is not in the great rosy shape that we’ve been led to believe over a number of years,” he said.
He clarified that Hurricane Sandy did change the financial picture for the borough as well. As such, it needs the flexibility those funds would provide, he explained.
“As [Zanga] said, all payments to the school board still take place,” Roselli said. “They will not receive one cent less. Nor will they receive it any later than they receive it now. There is no downside to this.”
Hutchison, who later said he did not know how the Democrats could be unaware of the fiscal picture when members of the current council were on last year’s budget committee, ultimately voted no on the resolution. Hutchison is not on this year’s budget committee, a move he has previously said demonstrates that the Democrats are not looking for opportunities for bipartisanship.