Should West Windsor use more surplus to offset taxes? Should a new reimbursement policy be drafted to govern the expenses of township employees? Is this 2008? 2009?
Actually, it is 2010, and for the third consecutive year, those issues are expected to come up during another budget season. The West Windsor Township Council begins deliberations on the 2010 municipal budget during a workshop meeting on Friday, April 16, at 9:30 a.m. at the municipal building.
Council members have weighed in on areas where they think the township can find more savings, but none has been more adamant than Charles Morgan, who will argue his case for dipping further into the surplus.
Morgan has criticized the administration yet again for failing to do so — a major issue in last year’s mayoral election that prompted legal action from Morgan against Hsueh. Since then, the litigation has branched out into criminal charges, which were dismissed.
But other council members seem to have a different opinion. Council President George Borek said he was glad the township held more of the surplus last year and is very concerned about doing it again this year, given the unstable economic climate. “Next year’s budget is going to be even harder to deal with because we have nothing in the pipeline to replenish the surplus,” he said.
Most council members seem to be on the same page — they want the administration to provide a spreadsheet showing what can be cut if they decide to sacrifice some services to bring the tax increase to zero. Councilwoman Linda Geevers said she personally requested the information to be submitted to council before the budget workshop.
The $37.1 million proposed 2010 package represents an increase of $626,000 from last year’s $36.5 million budget, but the tax levy will increase from $20.6 million to $21.8 million, a 5.8 percent increase.
Due to tax appeals and declining property values, the value of a tax penny has been reduced from $621,732 to $610,086. As a result, the proposed municipal tax rate is therefore estimated to be .357 in 2010, reflecting a 2.6 cent increase from .331 in 2009.
Under the 33.1-cent rate, the owner of a home assessed at the township average of $534,782 would see an increase of $139, from $1,770 last year to $1,909 this year.
This year’s $37.1 million proposed budget uses $200,000 more in surplus for a total $4.4 million being used to offset taxes. In his memo to council, Mayor Shing-Fu Hsueh said using more than the $4.2 million the township used from its reserves last year to offset taxes was “a serious concern, given our goal of sound and efficient long-term management.”
Last year Hsueh and his administration argued that using up the township’s surpluses is fiscally irresponsible and could damage West Windsor’s AAA bond rating.
Morgan insists, however, that it is possible, using calculations from Standard & Poor’s, to reduce the amount of surplus without affecting the township’s rating. “The administration continues to refuse to even discuss the mathematical proof that I have given them showing that it is possible,” he said. “That’s going to be an area where I am insistent that they explain to me. The administration has neither pointed to the errors in my assumptions or the errors in my math nor explained why they’re not willing to consider the proof.”
Last year, Morgan adamantly proposed to reduce the township’s surplus by $2.45 million, which he claimed would lower the tax rate by 4 cents. Under Morgan’s proposal, he advocated cutting back the $7.6 million in reserves by $6.65 million all together, leaving about $982,832 in the fund balance.
Morgan publicly accused then-business administrator Chris Marion and Chief Financial Officer Joanne Louth of using “inaccurate numbers” in their response to his proposal — a response he says was commissioned by the mayor specifically to discredit his proposal in light of the campaign. He even wrote to the state Attorney General and Mercer County Prosecutor’s Office requesting a criminal investigation. His request was denied.
Morgan pointed to Standard & Poor’s “analytical characterization of ratios,” which he says suggests that carrying 7 to 11 percent of surplus in the budget is more than sufficient for a municipality. Right now, the surplus lies between 22 and 26 percent, he said.
But that isn’t the only issue expected to resurface. Morgan is calling for a new reimbursement policy to be put in place to eliminate the $250 flat rate paid to township employees each month for travel expenses — a controversial stance that also dominated the 2008 budget season.
“A lot of people get this,” he said. “We don’t know whether or not that is way over what should be paid or way under what should be paid. I suspect if they were to be reimbursed at the IRS approved rate for travel, it would be substantially less than the $250 per month on average over the course of the year. We can save considerable amounts in the budget.”
At the same time, this would convert the reimbursement to a taxable income, he said. “If you can prove it’s a business expense, it’s tax free.”
On top of that, Morgan says that all of the elected officials, council and mayor, should forego their salaries. “The school board does,” he said. Instead, the new reimbursement policy would cover expenses associated with the job. “All of us incur expenses as part of the job,” he said. “Let’s reimburse the actual amounts. We should implement an expense reimbursement policy that is across the board.”
Morgan also questioned Business Administrator Robert Hary’s salary. “We should ask Mr. Hary to take a cut in pay, back to the salary he was making before,” he said. “I think it was just an outrage that there was no effort made to see who might be available with skills at a compensation level that might have been different.”
Morgan suggests that a study be done to determine whether it is on par with the market. If there are capable candidates available at higher salaries, the township can keep Hary’s where it is. If it is found that the market rate for his position is lower than Hary’s, Hary’s salary should be decreased accordingly.
“I’m proposing we all experience a little bit of appropriate pain,” he said. “Get rid of the salaries for elected officials. Get rid of the salaries that are not market-based.”
In other areas of the budget, Morgan said there is an inconsistent practice regarding the use of part-time staff. “There is an individual in the clerk’s office whose hours have been cut back, but there are people in other departments who have not been similarly cut back,” he said. “There are other individuals who should not be invited to come back part-time. These are people with lots of skill, but we are doing a lot of things we want to do but don’t need to do. We need to cut everything down to what we need to do.”
Morgan said his overall objective is to get the increase in the budget and tax levy down to zero. “The tax levy should be at zero,” he said. “That can be achieved in large measure by circling back to the use of surplus.
Other council members are also weighing in with their opinions on the proposed budget. Borek said he wants to first hear from various department heads about the reasons they think the council should approve the budget without trimming it. “I feel there are some places we can trim, but I want to know what the impacts to the community are first.”
Borek said he is cautious about cutting because of a proposal by the governor that would put a cap on the amount of increase in 2011 to 2.5 percent — a smaller amount than the 4 percent cap currently in place. Borek said he worried that cutting areas now would hurt the township next year if it was determined there has been growth, and thus a need for more services. “Are there ways we can tweak it or save more money? I think there are. But I think you have to look at the whole context of the budget and look at the ramifications for next year. There will be more a decrease in the dollars we have coming in. Is there going to be anything else they are going to take away from us?”
Councilwoman Diane Ciccone said she would be reviewing the budget thoroughly. “I have always said I want a flat budget,” she said. “One of my biggest questions is going to be, ‘Why can’t you provide a flat budget, and what will it take to get there?’”
She said she was “serious” about not passing on cuts in state aid to the taxpayers. But she also said she did not support depleting the surplus. “My opinion is the same as it was last year. I look at it as simply as a household budget: you can’t spend more than you have, and you need to have a cushion. If you don’t expect your salary to increase, and you don’t expect to get an influx of money, you’ve got to have a cushion.”
“The bottom line is we are not generating the revenues we did in the past, and until we can turn that around, I want to have a cushion,” Ciccone added.
Councilwoman Linda Geevers said she is also looking to get to a zero cent increase. In order to do that, she said, the council will need to cut $1.5 million.
One area is in health benefits, especially in light of new legislation requiring public employees to contribute 1.5 percent of their salaries to health benefits when a new contract is formed. “The 1.5 percent of salary contribution toward benefits is something that we need to push for,” she said. “The law has been passed.”
“I think it’s a fairness issue,” Geevers added. “School employees should be applying 1.5 percent of their salary towards health benefits, and so should municipal employees.”
Councilman Kamal Khanna said he is looking for specific answers from the administration heading into the workshop session. “I want every department to come and tell me, in as much detail as possible, whether they have made any improvements compared to 2009, which areas they have reduced the costs, and by how much and how they did it,” Khanna said.
Pertaining to the areas where costs went up, “Which area did it go up, and by how much and why?” he asked.
He said that answers to these questions will help determine whether the administration has done its homework. “We’re looking for some information in case we want to come up with a zero percent increase,” he said. He said he supports his colleagues, who have urged the administration to provide a zero increase scenario.
On the table for discussion is a budget that reflects a decline in revenues and property values in West Windsor. That translated into a 5.8 percent tax increase in the budget. This is despite the administration’s efforts to limit the overall budget increase to 1.71 percent — the lowest in 16 years — including a cut of three positions from the police, court, and health and human services departments as well as a reduction in overtime costs and part-time employees. The cuts, however, will not force lay-offs.
According to the proposed budget, expenditures requested by department heads in the 2010 have been reduced from $37.8 million to $37.1 million — a reduction of $701,502.
Revenues for 2010 are down considerably in the areas of interest income, which shows a decrease of $679,500, including state aid, which decreased by $619,620 (a 22 percent decrease); and in hotel occupancy tax, which decreased by $85,000, although officials said that expected increases in sewer service charges and the proposed third-party billing program for the EMS services help to offset some of those losses.
Revenues include $2.2 million in state aid, $3.9 million in miscellaneous revenue, $4.4 million from the fund balance, and $2.96 million in sewer service charges, leaving a total of $21.8 million to be raised through taxation — a $1.2 million increase over last year.
