More than 100 residents were in attendance on April 13 to hear the State of the Township address by Mayor Shing-Fu Hsueh. In addition to the usual discussion of goals and accomplishments, the mayor began his speech — reprinted in this issue — by emphasizing West Windsor’s immigrant history and today’s diverse, shared community. Hsueh may have been alluding to the divisions within the township, and he concluded his speech by discussing two critical issues which the administration and Council have clashed over.
The first issue related to property taxes and the administration’s budget approach consisting of modest annual increases to address rising costs and to maintain a reserve surplus fund.
The township recently concluded the budget process, introducing a budget with no tax increase for the second straight year.
Administration officials argue Council’s budget approach is not sound municipal finance, while Council President Bryan Maher dismisses the mayor’s concern as political games.
“Council tries to look at every single line item, so no increase for this year is the goal,” Hsueh explained in a follow-up interview. “You want to think about the impact for next year and beyond.”
The administration’s goal, the mayor says, is to sustain the current level of municipal services and maintain a financial safety net. He cited the recent closing of the Twin W Rescue Squad and the affordable housing judicial ruling. These events had budget expense implications and both happened after the administration introduced the budget in February. Unexpected expense overruns could lead to dipping into reserve funds, so the administration prefers to overanticipate expenses. Expenses not realized would go to the fund balance for future financial planning.
“They are acting like we took a hatchet to the budget. The mayor is just playing games, because he wants to keep a large fund balance,” Maher said in a phone interview. “Nobody is sitting here saying we want to cut the fund balance dramatically. The fund balance has gone done a very little amount. We are willfully trimming the fund balance, which was $7 million, to $6 million. Why is it the mayor needs $7 million for a $38 million budget, when Mercer County needs a $9 million fund balance for a $300 million budget?”
(Mercer County’s fund balance was close to $21 million, and the $302 million County budget for 2015 used $11 million in surplus, leaving a reserve balance of $9.5 million. West Windsor began the year with a $6.4 million surplus, and $4.8 million will be appropriated for the 2015 budget, resulting in a $1.6 million reserve balance.)
Council’s amended budget reduced expenses to $38.1 million, a net decrease of $18,700 from the administration’s proposed budget. Last month’s closing of Twin required an expense increase to hire three additional full time EMTs, offsetting Council’s main reductions to litigation, gasoline, and brush disposal expenses.
The 2015 budget increased roughly $350,000 from last year. To avoid the administration’s recommended 3.06 percent municipal levy increase, Council increased revenue anticipation in UCC fees and fund balance to balance the budget. UCC revenue is $1 million, the same as 2014, but $250,000 more than the administration’s recommendation. Fund balance revenue is $4.826 million, a $390,558 increase from the administration’s recommendation.
“We cut $140,000 out of a $38 million budget. We’re trying to trim it back a little bit. The budget was passed 5-0 by Council,” Maher says. “The bulk of those changes consisted of three things. We don’t believe they were doing the math correctly on what brush disposal will ultimately cost us, so we cut $40,000 there. We cut $40,000 from $340,000 gas expenses, when in fact gas prices have been cut in half. The vast bulk of what we cut, is totally explainable.”
Expenses for litigation in this year’s budget was reduced by $30,000 to $140,000. Maher says with the recent conclusion of $80,000 worth of lawsuits, the $30,000 reduction provides a buffer of $50,000. The administration and township attorney Michael Herbert advised against any reduction in light of future affordable housing matters.
The township controls the municipal budget, which accounts for only 15 percent of property taxes collected. Hsueh says West Windsor has the second lowest total municipal tax rate in Mercer County, behind Trenton, after factoring in open space and fire district levies. The average municipal tax was $972.54 in 2001, the year Hsueh became mayor. In 2014 that average was at $1,986.88. In the same time period the average assessed value of residential homes went up from $243,136 to $522,456.
Hsueh says residents should also keep in mind the corresponding appreciation in home value that has also occurred since 2001. Factoring in appreciation, the net municipal tax rate increase since 2001 is four to five percent.
Hsueh acknowledged that many homeowners do not consider their primary residence as assets and are more concerned with appreciating tax payments, to which he responds: “Which way do you want it? If you save on property tax, what do you want to cut?”
According to Business Administrator Marlena Schmid, several line items out of the township’s control may be increasing. All five union contracts for township employees are up for negotiation at the end of the year, as are contracts for garbage, brush disposal, and roadside refuse.
Maher says the mayor is crying wolf and the township is well positioned to address future needs.
“The goal is to match revenues with expenses as closely as we can,” Maher says. “This is a business where people have to buy your product, where they have to buy your property taxes. And residents pay it at a rate of nearly 100 percent. We know there have been expense creep, and it particularly comes from salary and wages. Nobody is saying no tax increases will go on indefinitely. Next year there might be a 1 percent increase.”
Longtime CFO Joanne Louth says the township has state mandated caps on both the amount of taxes it can raise and the amount the budget can be increased, which she says adds import to long term planning and preserving the township fund balance.
“If the revenue disappears, services are at risk if we cannot raise taxes,” Louth says. “Even if we have infinite revenue, expense caps could prevent us from raising the budget to pay for needs.”
“If we don’t have a mutual understanding, I think we are going to have trouble,” Hsueh said in a follow-up phone call. “There’s nothing I can do, because Maher has a three-vote majority.”
Affordable Housing. Affordable housing obligations were the second issue the mayor addressed in his speech. A recent state Supreme Court ruling requires municipalities to submit affordable housing plans to the judiciary, as it is unlikely the governor and state legislators will resolve the issue before June (The News, April 3). One of Hsueh’s first challenges as an elected township official was the “Builder’s Remedy” lawsuit won by Toll Brothers that resulted in the high density Estates at Princeton Junction development.
At the Council meeting after Hsueh’s speech, township attorney Michael Herbert called the recent affordable housing court ruling “one of the biggest issues to hit West Windsor in many, many years.”
Maher said Council is on top of the issue, and he suggested West Windsor’s attorneys make a public presentation on the issue.
Other news. Council approved three contracts relating to road improvements. (See story, page 12.) The Earle Asphalt Company will resurface Alexander Road for $426,213; Roberts Engineering Group will survey and engineer the Conover Road shared bike pathways for $24,800; and BANC3 will provide survey and engineering services for $42,800.
