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Debate Over Township Budget First Salvo In Mayoral Race
By Eric San Juan
When Mayor Dan Kelly introduced a municipal budget that would put in place a 12-cent hike in the local property tax rate - about $180 a year on a home assessed at $150,000 - he knew it wasn't going to be welcomed with open arms.
But, he said, after relying on the advice of the township's financial experts he decided it was the right thing to do. Pushing for a lower rate for political expediency would have been irresponsible, he argued.
Not according to council President Stephen Acropolis, who will be facing Kelly in this November's mayoral election. The bold thing to do, he said, would have been to make the tough decisions needed to get the tax rate to a more manageable level.
And thus are fired the first volleys in this year's mayoral race. Front and center in that debate is the proposed $71.63 million township budget and all that comes with it.
The budget process hasn't been easy this year, impacted in no small way by the abrupt departure late last year of former Mayor Joseph Scarpelli. The once popular former mayor admitted to illegally accepting bribe money from an unnamed developer. (He will soon be sentenced in federal court.) A whirlwind ensued following his resignation, filled with its own controversies. When all was said and done, former planning board Chairman Dan Kelly was appointed mayor of Brick Township.
He was immediately plunged into a debate on a subject he admitted to being beyond his area of expertise. Kelly makes no bones about it - an expert on township budgets he is not.
"I'll be perfectly honest, I have no background in budgets, especially not a $71 million budget," Kelly told The Brick Times. The experts, he said, are others. "I trust my (township professionals) and I trust their judgment."
Those professionals include longtime Chief Financial Officer (CFO) and current Business Administrator Scott Pezarras, who has provided Kelly with the financial expertise he needed to guide the initial draft of Brick's 2007 municipal budget. Now it is in the hands of the council.
How The Budget Works
In Brick, the budgeting process works like this: The mayor and township administration draft a spending plan, putting in place the services and outlining the expenses for the coming year. Said plan - the budget - is forwarded to the Business and Finance Committee, which comments on and adjusts the numbers. The township council is the body that ultimately approves the budget.
It sounds simple, but rarely it is as simple as it sounds. With a major tax hike looming this year, debate over the budget was all but inevitable.
At first, a big tax increase was not in Kelly's plans. Knowing he would seek election in November, Brick's new mayor hoped for a budget that would fit his political needs. Kelly said he would have liked to have had a zero tax increase budget, but when he pushed his township professionals for one, the picture wasn't so rosy. Politics, he said, had to be dropped in favor of reality.
"They said there is just no way," Kelly said. "Both parties, over a period of 13 years, set a goal to be reelected, and to be reelected, they said no tax increase."
But too many years with too few taxes increases, Kelly said, has left Brick in dire need of revenue sources. Eventually, increasing expenses caught up with the town. "We're running out of one-shot deals like we were able to do in the past."
That leaves, he argued, just one thing: taxes.
And taxes, according to Acropolis, are exactly what the council does not want this year.
"People are not happy about a 12-cent tax (rate) increase, and I wouldn't expect them to be," Acropolis said. "You talk about balancing the budget on the backs of seniors and families? That's it."
Acropolis told The Brick Times, "any increase is too much," and said he and the council want the final tax increase - whatever it will eventually be - to be much lower than that proposed by the mayor.
"I can't see us approving something over 5 cents," he said. Acropolis said for the moment the key lies not in the specific proposals, but just in getting that tax rate down. Find a way. When it comes to making suggestions to the administration, he said his philosophy has been, "This is how much money you have to spend. You can spend it wherever you want, but this is how much you have."
Bring In More Revenue
According to Pezarras, the crux of the matter is revenue. With the township's growth all but flat-lined - Brick is 97 percent built out, meaning few new tax ratables to look forward to - additional revenue streams are few and far between. There are only so many more ratables to boost the township coffers. So-called "one-shot" deals such as liquor licenses sales and land sales only provide revenue once, he cautioned. Rely on them this year and you still have next year to contend with, when you have to find a way to make up for that one-time revenue.
Had municipal budgets increased the tax rate by about 2.3 cents each year over the last 13 years, this year's stiff increase would not be necessary, Pezarras said. But that was not the case, and now Brick Township needs revenue.
Are things really that bad? Hearing Pezarras' dire warnings for budgets to come, Acropolis wondered why they are only being heard now. "Where was (Pezarras) the last 10 years?" he asked. "He has been the CFO (Chief Financial Officer) for 8, 10 years." So why the warnings only now, he asks?
An issue, Acropolis suggests, may be Kelly's inexperience. "It's difficult when you're the mayor of a town and you don't understand the most important document you deal with," he said.
Kelly and Pezarras may say the time of "oneshot" revenue streams are over, but Acropolis does not agree. All it takes is some creative thinking, he said. According to Acropolis, there remain revenue sources that can be used to keep tax increases in check: selling the Civic Plaza and/or the Route 70 Foodtown, for instance, can reap the township immediate financial rewards. If those avenues are out there, he argues, why not pursue them?
Acropolis said the council asked for more surplus to be used to keep the rate down, and has pushed for deferring school taxes - a proposal Pezarras does not agree with.
Deferring school taxes works like this: The township collects all property taxes, including those for the school district and county, and forwards the monies to the appropriate entities. Because the school district works on a different fiscal year than the township, about half of the money collected on behalf of the school district can be deferred, or "held," for a year until it is forwarded to the district. It is a common practice in New Jersey that in some cases (but not all) can result in savings at the municipal level.
Pezarras thinks it's a bad idea that could backfire next year; if conditions are right in the school district, it could actually hurt the township's 2008 budget. Acropolis disagrees; if the option is available, the township should use it, he argues. And there the debate stands.
Cut Today, Cut Tomorrow?
In the meantime, the township council has tried to make the budgeting process more transparent by holding public presentations during which Brick's department heads spell out how and where money is being spent. In other words, to justify their budget.
"We wanted to bring the people in and we wanted them to be able to present to everyone how they are spending their money," Acropolis said. "It's a good idea to do."
The issue is not, administration officials said, out of control spending. Discretionary spending, or non-contractual spending under the township's direct control - senior programs, recreation, video taping meetings, and other programs - amounts to about $62 total on the average tax bill. A fraction of the budget. Rather, rising utility and gasoline costs, hikes in pension and health insurance, and contractual salary obligations make up the vast majority of the budget.
That means if you're going to cut, you have to be creative. But where to cut?
The township council, Pezaras said, doesn't have specific cuts members would like to see made to the budget. Rather, they have a general amount they'd like to see slashed.
"They have not given me suggestions on how to reduce the budget," he said, "but they have given me a number they'd like to see."
The township will pursue every means realistically available to reduce the budget, Kelly said, but he feels obliged to be honest about the town's fiscal situation.
"I know in the reality of today's world that 12 cents wasn't going to remain 12 cents in an election year, but I felt it was time to be honest and tell people things are not good," Kelly told The Brick Times.
Kelly said some measures are being put in place to trim staff-related expenses without actual layoffs. When personnel retire, they are not being replaced, for instance. In addition, departments are being encouraged to offer "flex time" rather than overtime. (Flex time is allowing an employee to take time off to balance out overtime hours, thereby maintaining a 40-hour work week and avoiding overtime expenses.)
Other sources of revenue might include increasing township recycling, which nets dollars from the county, and, as Acropolis also emphasized, sharing services with the county and school district.
From a councilman's perspective, his ideas can only go so far, he said. Some efficiencies that could be put in place can only be done as mayor. The council has control over Brick's purse strings, but the day-to-day operations of the township are under the purview of the mayor.
Whatever happens with this year's budget - it may be several weeks away from approval - Kelly said next year's budget will be just as big an issue. With revenue stagnant and other means with which to bring in money limited, whoever is mayor will have their work cut out for them.
"Next year we're going to have to make some hard decisions," Kelly said.
But Acropolis argues that if next year will be defined by tough budget decisions, so be it. For the moment, township officials need to deal in the here and now.
"If we have to raise taxes next year, if we can delay that big tax increase a year, why wouldn't we?" he said. Giving residents a year without that tax increase is a good thing, he argues, and in the meantime further revenue sources could be found before the 2008 budget comes about.
In the end, only time will tell.
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