Opposing budget approaches between Council and the administration have animated the first two weeks of budget workshops. The administration is concerned with a declining fund balance and has recommended a conservative use of revenue and controlled municipal tax increases as part of a sustainable budget.
Council, led by president Bryan Maher, is seeking to limit the need for tax increases to balance the budget by reducing expenses and by projecting revenues that are closer to the amounts actually realized in prior years.
The budget proposal calls for raising the municipal tax rate to 39.2 cents, an increase of roughly 1.2 cents, to balance a 2015 budget that increased 0.96 percent to $38,118,000.
The proposed increase would amount to an additional $60 in the municipal portion of the property taxes on a house assessed at $500,000, roughly the average home value in the township. The municipal tax levy accounts for 15 percent of the total property tax collected.
“The mayor has had his 15 minutes of fame, and now it is our turn for the next month and a half,” Maher announced at the first budget workshop. “We’re going to move around lots of stuff.”
Maher describes the administration’s budget proposal as “an over-anticipation of expenses and an under-anticipation of revenue,” and he is pressing for smaller appropriations, viewing many expenses as excessive, and larger anticipated revenues.
“Personally I think too many employees in this town are spoiled,” Maher said, noting the township staff’s phone bills, tuition obligations, and use of vehicles.
Ambulance revenue provides an example of Council’s favored approach to using more revenue. The township has budgeted $250,000 in anticipated ambulance billing revenue for 2015, the same figure budgeted in 2014. Realized revenue in 2014 was $300,000, a $40,000 increase from 2013. Noting this, Maher asked Fire and Emergency Services manager Jim Yates why the anticipated 2015 revenue shouldn’t be $300,000 to match 2014’s realized revenue.
Throughout the three budget workshops that have met so far, longtime township CFO Joanne Louth repeatedly explained a conservative anticipation of revenue during the budget planning process leads to a greater replenishment of the fund balance.
“You plan a number that is sustainable and will be lower than expected, and you put back the remaining in the fund balance,” Louth said. “The more you anticipate the less you put into fund balance for next year.”
In other words the township anticipates less revenue than expected with the goal of depositing the surplus into the fund balance for use next year. Louth told Council their approach of matching anticipated revenue with actual revenue would work if the township did not use fund balance as a financial planning tool.
For the 2014 budget the township recommended $775,000 in anticipated revenues from UCC fees, which Council increased to one million. The actual revenue from UCC fees was $1.5 million, with half a million going to fund balance. An additional $225,000 would have been deposited if the adopted budget remained at administration’s recommended revenue of $775,000.
The fund balance is replenished at the end of every year from the surplus revenue generated through the year, including uncharged balances in prior year appropriations, and most of the fund is then appropriated for the next year’s annual budget. The remaining fund balance is a reserve that serves as a rainy day fund.
The reserve fund balance went down $200,000 to $1.98 million, which is down $426,000 from 2013, and the appropriate size of the fund balance is at the heart of the budget battle.
Maher has made it clear that he will not be concerned if using more revenue results in the decline of the fund balance.
“Some people don’t find that it is a bad thing,” Maher says. “Some of the people sitting on Council, we’re not happy the Mayor is sitting on cash hoards.”
The administration has maintained the replenishment of the fund balance is important to the township’s long term financial health, as well as its AAA bond status, which Maher also contests. Maher has also downplayed the interest rate impact if the township was downgraded from AAA to AA bond status.
“We are not only making decisions in 2015, we are making decisions to maintain service levels that residents are used to,” Louth says. “I can only hope Council is mindful of that. Decisions made can affect future services.”
Another budget session will be held after the Council meeting Monday, March 23, after which Council is expected to introduce a revised budget on Monday, March 30. The budget will be put to a vote by Council roughly a month after it is introduced, pending state approval. This year the state government will inspect the budget put forth by West Windsor, which it does every three years.
Council Seeking New Auditor. The discord between the Council and the administration has now left the township looking for a new auditor. After pulling the reappointment contract of William E. Antonides Jr. from the agenda at the February 9 meeting, Council voted unanimously against the contract proposal. The $26,850 professional services appointment was for the annual audit mandated by the state.
“We need a fresh set of eyes, this guy has been the auditor for as long as we can remember,” Maher says.
The administration had sent out a request for proposals and there were two responses. One was Antonides’ firm and the other proposal was for $43,000 according to Mayor Shing-fu Hsueh.
Hsueh says Antonides is a well regarded accountant who audits municipalities statewide, and that he has done West Windsor’s annual audit for more than 20 years.
“Some Council members didn’t like that we had the same auditors. That’s why they rejected it,” Hsueh says. “If Council wanted to change direction, they need to let the staff know the bidding procedures need to be different.”
Township CFO Joanne Louth says last year the township also contracted with Antonides for fee accountant services. The $17,000 agreement was for preparation of year-end financial and debt statements, as well as preparation for the 2015 budget. The annual audit agreement Council rejected would involve testing and verification.
“They broke up the contract. For annual audit and specialized services it was always one contract,” Council vice president Linda Geevers says. “It doesn’t feel right. It looks like the one contract may have influenced the price of the second contract.”
However Geevers acknowledged the combined cost of the two contracts, around $43,000, would have been similar to how much the township has been paying Antonides in recent years.
According to Louth it is common for municipal auditing firms to provide both year-end accounting and annual audit services, a process permitted by the state Department of Community Affairs. Of the two bids the township receive, Louth explained the administration’s recommendation for annual audit services was based on Antonides’ lower price, experience, and credentials.
Municipal energy aggregation update. The township could see savings in its municipal electricity bills as soon as this summer. One year after the idea of third-party energy purchase was first introduced, Council approved the administration’s proposal to join the New Jersey Sustainable Energy Joint Meeting (NJSEM).
According to township landscape architect Dan Dobromilsky, participating in the co-op’s scaled-up aggregated bid for third-party electric supply could reduce or stabilize the municipality’s utility expenses.
The next step is for NJSEM to determine a benchmark price based on the cost of basic generation service and compliance with renewable energy standards. The township must then decide by Friday, March 27, whether to partake in the co-op’s bidding process. The bid will be awarded in mid-April, and the township can opt out if the bid does not meet the price threshold.
In December Maher asked Dobromilsky to compile an additional two years of municipal expenditure data on top of the one-year data already prepared. Dobromilsky reported the supply portion of the township’s electric accounts increased 6.7 percent, delivery decreased 3.7 percent, and street light usage fees increased 2.5 percent. According to township budget documents, utility expenses for street lighting in 2013 and 2014 was $375,000. Utility expenses for electric and natural gas in 2013 and 2014 was $452,000.
Township staff is pursuing third party electrical supply for its municipal utility accounts while also considering bulk energy aggregation purchases for township residents and businesses. In September, officials from West Windsor, Ewing, Hopewell, and Lawrence townships held a public meeting to discuss forming a co-op for government energy aggregation (The News, September 20, 2014).
Rosen purchase finalized. Council approved two ordinances finalizing the open space purchase of the 25.12-acre Rosen property. The acquisition cost is $996,900, half of which is expected to be offset by Mercer County open space funds. The deal also concludes litigation that cost the township $30,000 last year, with Maher calling it a “good investment.”
