With a quorum for four (4) council members, the governing body held its first 2011 budget meeting to get an overview of the challenges anticipated for the upcoming year. Ken Blum, the municipal Chief Financial Officer (CFO) started by discussing the 2% tax levy cap is which is to take effect on January 1, 2011 – half of the previous cap allowed by the State. Using the new limit on raising taxes, based on the amount raised in 2010 of $10,613,416.04, the municipality is looking at a maximum tax increase of only $212,268.32. The 2% cap, according the the CFO, is not a hard cap since there are some exceptions in the law – including debt service – but municipalities are still awaiting further guidance from the State as to what will be excluded from the cap.
State aid was the next topic of discussion with the CFO personally anticipating the borough losing $225,000 or 20% of 2010’s state aid amount. In 2010, the borough lost $229,161 in state aid. The CFO explained that state aid is basically broken out into consolidated municipal property tax relief ($223,741 in 2010) and energy receipts tax ($860,345 in 2010).
The Public Employees Retirement System Pension Bill, known as PERS, can expect an estimated increase of 19.33% from 2010’s $225,100 amount to $268,609 in 2011. The PFRS, or the Police and Fire Retirement System, is projected to go up to $778,748 – a 20.48% increase from $646,372 in 2010. These two (2) mandatory payments alone would increase the upcoming tax levy by $176,000 – leaving the municipality with only around $36,000 to cover other appropriations. If the loss in state aid is factored in, the borough will exceed the state cap for appropriations. The CFO stated that the governing body needs to take these issues into consideration and that next year services will have to be cut or employees will have to be terminated or the workforce will need to be reduced.
Estimated for health insurance rates for all three (3) carriers can see an increase of $266,000 next year: Aetna (19.7% increase), Horizon (16.18% increase), and Bollinger (9%). With the borough seeing a 46.39% increase in debt service of $521,266.78, the municipality’s estimated increase of $1,188,151.78. Based on net valuation taxable 2010, it comes out to roughly a $268 increase per household assessed at $65,000.
A discussion involving a proposal by the Union County Utilities Authority to extend the municipality’s contract to 2045 was part of the agenda. The proposal’s estimated savings was between $12 to $14 ton or $58,800 to $68,600 a year.
The possible replacements of retiring employees from the DPW and police department were on the agenda due to the costs associated with their salaries. The two (2) retiring DPW employees’ salaries total $123,565.65 and the two (2) retiring police officers had combined salaries of $187,819.86. The CFO offered an option of using seasonal help to reduce the cost for DPW. With respect to the police force, the added factor of losing a $60,000 grant needed to be considered since the current complement of officers is the minimum required to receive those funds. If the officers are not replaced, the total savings to residents will be around $127,000. If officers are hired in order to receive the grant money, the savings to the residents would be around $67,000. This figure was arrived at by the CFO estimating the salary and benefits for each newly hired officer to be around $60,000.
The Municipal Alliance Coordinator, Nick Badillo, offered his resignation effective the end of the year. The CFO gave figures that are associated with the Municipal Alliance Grant from the municipality’s end is $7,860. The loss of the grant would affect programs such as D.A.R.E., Project Graduation, and Red Ribbon Week. Even though the borough would still have the CAASA trust account, Councilman-At-Large Carl Hokanson offered to fulfill the duties of the Municipal Grant Coordinator pro bono in order to keep the Municipal Alliance Grant.
The CFO discussed the Youth Center, which the municipality is currently under contract with Board Of Education (BOE) for $100,000. There was conversation on contacting the BOE to get a report on the programs being done and the amount of children taking part and to start asking for monthly or quarterly reports from them.
A decision was made to have the finance committee to meet with department heads at the beginning of the year and they have been notified to prepare two types of budgets – one of them being what mayor-elect Joseph Accardi called a ‘doomsday budget’. He clarified the statement, “Something that shows substantial cuts – 20% to 25% cut in each department.”
Among other suggestions to cut the budget included addressing bulky waste and the selling of properties the municipality currently owns. The CFO reminded everyone that such revenues from sales should be used for one-time appropriations. Mr. Blum stated, “If you use it as a quick budget fix, that’s the amount you’re in the hole before any number gets announced next year.”
In a change of protocol, the CFO stated that the State will require a referendum if a municipality wants to appeal to go over the 2% cap – a cost estimated by the Borough Clerk & 1st Ward Councilman Larry Dinardo to be around $30,000 to $35,000.
A suggestion at the end of the meeting from Doreen Cali, the Borough Clerk, was to require businesses to obtain a business license. Mayor elect Joseph Accardi suggested that the recommendation be discussed with the new downtown development coordinator.
During the public portions residents spoke to offer their views and suggestions, including Jake Magiera, who gave a proxy to his councilman, Joseph Accardi, to recommend freezing wages to 2008 rate, the freezing of hiring and tenure to employees, cutting all other expenses 10%, and having employees pay more to their insurance co-pay.