Here is a nightcap, if you will, to the cap bank discussions at the April 28 council meeting. During the cap bank ordinance hearing I incorrectly quoted a state COLA cap of 2.5 percent on the “in-cap” appropriations, when it was actually 0.5 percent as per the November 18 Local Finance Notice 2013-23, no mention of which had been made in the mayor’s proposed budget. (This cap was 2.5 percent as recently as 2012 and declined to 2.0 percent for 2013.) The administration’s proposed cap bank ordinance requested an additional 3 percent boost to bring it to the absolute allowed maximum of 3.5 percent.
Council correctly turned down this ordinance. They already had an allowance of $2,446,996 from the combined 2012 and 2013 cap banks and clearly did not need any more. In the last several years, council has not had to access cap banks for either appropriations or levies. This year it accessed about 10 percent of the bank, due to the unusually low state COLA cap plus an additional $455,000 of “in-cap” appropriations.
The remainder of the 2012 cap bank has expired, but there is still an allowance of $1,197,381 from the 2013 bank. This should be more than enough to handle any 2015 contingencies. If not, council can adjust the budget and/or pass a new cap bank ordinance.
High cap banks are not just harmless “planning tools,” as some have stated. Their downside is that they give the administration leeway to propose larger future budgets than may be justified. Each year council should carefully examine the need for a new cap bank ordinance and vote down any proposed ones if so indicated.
After the budget hearing following the cap bank vote, council adopted the 2014 budget by a 5-0 vote with no increase in the levy. Mayor Hsueh had originally proposed a 2 percent levy increase that would have put it exactly at the allowed maximum before accessing any of the existing cap bank.
John A. Church
West Windsor
