Politics & Government

Council to Ponder More Layoffs, Ending Garbage Pickup

The layoff of nine more employees next year - including four police officers - or the elimination of municipal government involvement in trash collection were options discussed as township council got its first look at 2013's projected budget deficit.

Lawrence Township Council members, during their meeting last night (Tuesday, July 17), got a look at the township’s financial future, and what they saw wasn’t pretty.

Township Manager Richard Krawczun and Comptroller Peter Kiriakatis gave a PowerPoint presentation which, using estimated numbers and educated guesses, showed a projected municipal budget shortfall of $932,008 for 2013.

Two ways to address such a budget gap were then discussed: the layoff of nine additional municipal employees during 2013, including four police officers; or the complete elimination of municipal government involvement in garbage collection in favor of a system whereby residents would be responsible for securing their own individual trash haulers.

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Neither option was presented as a concrete proposal; they were merely offered by Krawczun to council and the members of the public in attendance to make clear the enormity of the township’s financial situation and the tough choices that lie ahead.    

“I want everyone to understand we’re not bluffing,” Krawczun said. “This is the math.”

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At the heart of the problem is the state’s 2 percent tax levy cap and the way that cap is calculated.

As per the cap calculation formula, Krawczun explained, Lawrence Township can increase the amount it raises through taxation in 2013 by $448,995.

But, under the same formula, nearly three quarters of that amount – $334,345.90 – must be allocated toward paying percentages of the township’s pension contributions and health care costs for employees and also the full amount of the reserve for uncollected taxes (a figure based on the amount owed by delinquent taxpayers).

Factoring the remaining $114,649.10 of the allowable tax levy increase against estimated increases in township expenses – such as contractual wages, benefits, pensions, and debt service – results in the revenue deficit of $932,008 for 2013.

“We’ve made some assumptions in this calculation, some of which we have a lot of confidence in because we have the data, others are projections based on historical performance,” Krawczun said.

That projected $932,008 shortfall already takes into account the use of $2.7 million from the township’s surplus fund as a source of revenue to offset taxes in 2013, Krawczun noted.

“That leads us at this juncture to have a conversation on two options,” Krawczun said.

The first option would involve the township laying off nine additional employees in 2013. Four would come from the police department, while the other five would be “non-police.” Krawczun did not identify from what departments the five other job cuts would come, saying, “This is not about creating panic among the employees. It’s to illustrate the problem.”

As part of the township’s efforts to balance this year’s budget, a total of 13 municipal positions – including five in the police department – are being eliminated, and a 14th position is being reduced from full-time to part-time. Most of those layoffs are set to take effect at the end of August.

Should the additional layoffs happen in 2013, they would need to occur in the first week or so of January in order for the township “to get the full effect of the savings. Every pay [period] you go beyond that, the savings are reduced,” Krawczun said.

Going by the projected numbers, those additional nine layoffs would put the 2013 budget about $73,000 under cap, he said.

Krawczun noted that, once this year’s layoffs take effect, the township will have a total of 31 fewer employees than it had in 2008.

“I know this is going to anger some people, but we need to have a frank discussion,” Krawczun said in prefacing his talk about the second option: the elimination of municipal government involvement in trash collection.

Earlier this year, in rejecting a referendum that would have authorized a tax increase in excess of the 2 percent cap, many township voters were also vocal in opposing the other proposed alternative to balancing the 2012 budget: the imposition of a municipal “user fee” to support trash collection.

State government subsequently passed legislation making such “user fees” subject to the tax levy cap, forcing township council to balance this year’s budget by way of the layoffs.  

The trash proposal discussed last night would differ from the one put forth earlier this year because the township would have no involvement at all in garbage collection; it would be up to individual residents to negotiate and sign contracts with the trash hauler of their own choosing.    

“Under current law, if we were to eliminate the service, there would be no cap base adjustment for elimination. I can’t make projections about what the legislature will do, but as of yesterday at 4:30 when we had this conversation, that is where we are,” Krawczun said.

In response to a question from Councilwoman Cathleen Lewis, Krawczun noted that the township’s current contract with its trash hauler, Central Jersey Waste, expires on Dec. 1, but the township is required to give the company 60 days notice if it intends not to renew.

The elimination of municipal government involvement in trash collection would, again using the projected numbers, put the township $1,569,541 below the cap. That, Krawczun said, could allow the township to rebuild its surplus fund so that money from surplus can be used in future years as a source of budget revenue to prevent tax hikes, counter increases in health benefits and other expenses, or prevent additional layoffs.

“So I wanted to bring this to your attention, not to request an answer this evening. But I think it’s important that we have time to contemplate and think about this because, I think, it puts into focus the challenges of the 2013 budget,” Krawczun told council members. “I hope it puts into focus some of the timing [about] when we need to move forward on some of the decision-making.

“It’s not good news,” he added. “Again, I know there are going to be some people who will say why didn’t you see this coming. We’ve been seeing it coming. That’s why we’re able to have these conversations in the context that we are and not having to make panicked decisions.”

After Krawczun had concluded his presentation, Councilman Greg Puliti asked, “So the reserve for uncollected taxes is included in the cap?”

“Yes, it its entirety,” came Krawczun’s answer.

“So the money we have to put aside for the county and the board of education – which are larger portions than our portion of the tax bill – is included. That just doesn’t make sense,” Puliti responded. “It really just shows that there wasn’t much thought put in this cap. I understand the cap. I understand they want government shrunk. They’re shrinking it. We’re seeing that here in Lawrence Township.”

Councilwoman Lewis, meanwhile, asked about the possibility of layoffs beyond 2013: “If we have the same sort of numbers for 2014 and 2015, what’s to prevent there to be a need for more layoffs moving forward if we were to do layoffs next year? It seems like this will continue to be a problem till we’re shrunk to zero."

“That’s right. You’re right,” Krawczun said. “I think it’s important for everyone to recognize we’re not flush with employees… This problem continues going forward.”

 

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