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Recommended 2013 Budget Presented to Council

Accompanying the text of Lawrence Township's proposed $43 million municipal budget for 2013, we present here full audio from the Jan. 22 Lawrence Township Council meeting.

As previously reported, Lawrence Township Manager Richard Krawczun presented his recommended 2013 municipal budget at the township council meeting held last week.  

As part of that nearly $43 million budget, a 5-cent increase to the municipal tax rate – increasing to $0.94 per $100 of assessed property value from $0.89 – is recommended.

That, combined with the proposed $25 fee for bulk waste disposal, will result in the owner of a home assessed at the township average of $160,262 paying an additional $80.13 in municipal taxes during the year, according to Krawczun.

A PDF copy of the recommended budget, as distributed at the council meeting, can be found in the media box at the right. Also available is full audio from the council meeting, with the budget discussion beginning at the start of Audio Part 4.

Reproduced below, for the convenience of readers, is the full narrative that appears at the beginning of the recommended budget document. This narrative was read into the official record by the township manager during the Jan. 22 council meeting.

The Lawrence Township municipal government is responsible for 33,472 full-time residents, tens of thousands of daily visitors, twenty-four hours a day seven days a week police, fire and emergency medical services, two hundred lane miles of roads and associated infrastructure, a thousand acres of parks, land use, health services, recreation programs, fiscal management of  $130,000,000 of new annual revenue along with a plethora of state and federal mandates. As the budget has changed over the last few years, and 2013 will continue to reflect the same fiscal contractions, there has been no diminishing of the required or expected services that are provided. Identical to private businesses Lawrence Township is doing more with less. There are fewer resources and less employees, for example there were 195 full-time and 17 part-time employees in 2008 and 163 full-time and 18 part-time at the end of 2012.

The 2013 Lawrence Township municipal budget has been dissected, publicly discussed, analyzed, prodded and probed. The examination of the 2013 municipal budget began in May 2012 immediately following the adoption of the budget for that year. The reason for this early start was the full knowledge of the pending impacts from the negative influences of the economy, appeals of tax assessments and the statutory mandates placed upon the municipality and its' budget. Those influencing factors required deliberative planning. The requirements and mandated levels of municipal services provided to residents, businesses and visitors to Lawrence Township continue as a responsibility. Contrary to some opinions the budget process for 2013 and prior has not been reactionary, it has been proactive. Absent that proactive response the results would have been significantly different. Much of what is included in this recommendation has been thoroughly vetted during those discussions and presentations of fiscal information.

The significant fiscal factors that impact the 2013 municipal budget and financial condition of Lawrence Township are as follows:

  • The amount to be raised in taxation for municipal purposes is $105,404 below the statutory 2% levy cap.
  • The amount of tax ratables has decreased $27,093,823. This decrease results in a 2013 municipal revenue loss of $254,953.
  • There are currently cash tax refunds due in the amount of $970,000; cash reserves in the amount of $1,000,000 are available to make said refund payments.
  • Surplus anticipated as revenue in the 2012 budget was $4,440,000. Surplus anticipated as revenue in the 2013 budget is $3,195,000, a decrease of $1,245,000. The level of surplus anticipated for 2013 is in line with projections on what is possible to be "regenerated" through the fiscal year and then available for the subsequent budget.
  • The amount of available Surplus after applying a portion to anticipated revenue in the 2012 municipal budget was $580,000; in 2013 the balance will be $1,000,000. This is an increase in Fund Balance of $420,000.
  • The new bulk collection fee is recommended at $25.00.
  • Position changes include; Purchasing Assistant from full-time to part-time, Planning Department Executive Assistant position eliminated, Deputy Chief of Police position eliminated, Per Diem Firefighters eliminated, Park Maintenance Worker position eliminated.
  • No proposed layoffs.
  • The recommend municipal tax rate for 2013 is .94, an increase of .05.

The following explanation details recommended anticipated revenues and appropriations in the 2013 municipal budget of Lawrence Township.

Revenues

Revenues anticipated in a New Jersey municipal budget are classified into one of four categories although there are multiple sources. The four categories of budget revenue are surplus, miscellaneous revenues, receipts from delinquent taxes and current taxes. The amount of revenue that may be anticipated is regulated by state statue. New Jersey municipal budgets are legally mandated to have revenues equal appropriations. Generally the statutory restrictions are as follows; surplus is restricted to the amount available in cash, miscellaneous revenues are restricted to no more than the amount realized in cash in the immediately preceding fiscal year, receipts from delinquent taxes and current taxes are limited to the collection percentages realized in cash against receivable balances of the prior year.

When deciding on the amount of revenue to apply to a budget one must consider what if any impact there may be on future budgets as well as the balance of revenues from each "category". The lack of revenue being available from one category may demand an increase in the amount of revenue needed from an alternate category. The default source is property taxes.

Surplus as an anticipated revenue in the municipal budget is available from the excess of quick assets over liabilities. Its' use is limited by the amount held in cash therefore the balance available is known. Surplus may include "non-cash" assets but for purposes of the 2013 budget only cash surplus is being considered. Credits to surplus are revenues realized in excess of anticipated amounts, lapsing of unexpended budget balances from the 2011 budget and miscellaneous revenues not anticipated.

The amount of surplus anticipated as revenue in the 2013 budget is $3,195,000. The trend of declining available surplus as revenue continues, but the amount anticipated for use in 2013 is at a level estimated to be regenerated for future budgets. The 2013 amount of surplus as revenue is $1,245,000 less than 2012 and is $2,675,000 less than the amount applied as revenue as recently as 2010. This simply means that the Township budget has had to absorb a decline of $2,675,000 of this single revenue. Anticipated surplus is 7% of total revenues, a 2.5% decrease from the prior year.

Miscellaneous revenues are from known and recurring sources. Items in this category include locally generated revenues, such as licenses, court fines, interest on delinquent taxes, funds held in reserve, state aid, sewer user fees payable to the Ewing Lawrence Sewerage Authority and various grants. Statutorily each individual item of revenue is limited to being anticipated up to the amount realized in cash in the prior fiscal year. It is important to note that realized miscellaneous revenues in 2012 exceeded the amount anticipated by $1,387,000. This result was due in large part to construction permit fees paid by Educational Testing Service and Simon Properties, owners of Quaker Bridge Mall. This amount of excess revenue is not expected to repeat at the same level in 2013. A second matter to note is that sewer user fees were realized below the amount anticipated. The shortfall was $166,532. The difference is attributed to a drop in reported water consumption which sewer user rates are based upon. There is no recommended change in the sewer user rates for 2013. The new residential bulk fee is recommended to be set at $25. Miscellaneous revenues are 35% of total revenues.

State aid for 2013 is anticipated at $3,980,814 which is the same level as received in 2012. State aid has no specific offsetting appropriation but is applied to reducing the amount of taxation paid by property owners. Once the final amount of state aid is certified it may become necessary to amend the recommended budget accordingly.

Receipts from delinquent taxes are the third revenue category. The source for this revenue is from payments of outstanding prior year tax receivables and tax title liens held by the municipality. The year-end tax receivable balance is $2,148,677. The 2013 budget anticipates $940,000 in delinquent tax revenue which is 2% of total revenues.

The final revenue is current taxes. Property taxes are the amount necessary to balance the budget with revenues to equal appropriations. Property taxes also referred to as the "Amount to be Raised by Taxation" is the difference between the total of all budget appropriations less the total of anticipated revenues. The Amount to be Raised by Taxation includes the statutory appropriation known as the "Reserve for Uncollected Taxes". This "reserve" is a non-spending appropriation that accounts for the difference of what amount of taxes are anticipated to be collected versus one-hundred percent collections. The amount to be raised by taxation in the 2013 budget is $23,544,416 an increase of $1,025,826. The proposed amount to be raised by taxation is $105,404 below the statutory 2% levy cap. The amount of revenue from property taxes is 55% of total revenues.

The amount to be raised by taxation combined with a decrease in taxable ratables will result in a municipal tax rate increase of .05, from .89 to .94. The impact upon a residential property owner at the average assessed value of $160,262 will be $80.13 or $6.68 per month. Therefore, a residential property owner with a township average assessed value will pay $8.76 more monthly when combined with the bulk trash fee.

Net valuation taxable has decreased from 2012 to 2013 in the amount of $27,093,823. The aggregate six year loss now stands at $194,413,193. The taxable value of property in Lawrence Township is $2,500,748,969. A decrease in taxable value simultaneously reduces the value of one penny on the tax rate to $250,075 from the 2012 level of $252,784. At the same time this decrease in the value of a penny forces up the tax rate even if there were absolutely no other changes in the budget.

Appropriations

The recommended budget presented in this package reflects a decrease in 2013 appropriations from 2012 appropriations in an aggregate amount of $190,000. This point is raised to emphasize that the increase in taxation is not caused by increases in spending but a decrease in surplus as revenue combined with a loss in revenue due to a decline in net taxable value.

Lawrence Township, as well as all New Jersey municipalities, is restricted by law to limit designated appropriations by "2.5% or the cost of living adjustment, whichever is less". For fiscal year 2013 the cost of living adjustment was calculated to be 2%. The recommended budget is compliant with the limit and is below the threshold by $609,000.

A list of major increases, decreases and/or extraordinary changes in spending with explanations is as follows:

Appropriation

Increase/Decrease

Reason

Salaries

($1,161,000)

Balance of Savings Prior Year Layoffs; Privatization of Police Dispatchers; Fire Services Retirements/New Hires; Reduction of Positions; Contractual COLA's Included

Health Benefits

196,000

Premium Increase Net of Employee Contributions

Unemployment Insurance

(29,000)

Experience/Trust Balance Available

Police Dispatch Other Expenses

539,000

2013 Apportionment for Privatization

Special Events

(3,000)

Reduction

Police Cars

13,000

Cost Increases

Fire Hydrants

(217,000)

Settlement Credit

Pensions - Public Employees

24,000

Contribution Increase

Pensions - Police & Fire

100,000

Contribution Increase

Social Security

(26,000)

Payroll Reductions

Ewing-Lawrence Sewerage Authority

(50,000)

Flow Credit

Debt Service

(57,000)

Retirement of Debt

Emergency Authorization

270,000

Statutory Deferred Charges

Special Emergency

160,000

First Payment Revaluation

Reserve Uncollected Taxes

87,000

Increase Amount to be Raised by Taxation

The decrease in salaries from the prior fiscal year is a combination of savings from the balance of costs from layoffs that occurred in 2012, the reduction of salaries appropriated for police dispatchers with the transition of the service to a private company, a reduction of salaries in Fire Services that reflects two retirements and two new firefighters at lower salaries. This recommendation reflects the elimination of the following positions as identified during the course of reviewing the 2013 budget during 2012; Deputy Police Chief, Executive Assistant - PT Planning & Redevelopment, per diem firefighters and a Laborer from Park Maintenance. In addition, the position of Purchasing Assistant in the Finance Department has been reduced to part-time from full-time. The appropriation for salaries and wages does reflect contractual cost of living adjustments or other required wage mandates.

Lawrence Township municipal employees are provided health benefits through the New Jersey State Health Benefits Program (NJSHBP). The NJSHBP rates increased 8.5% over the previous year. The appropriation for health benefits that is included in the 2013 recommended budget is net of employee contributions or $215,000. Currently Police and Non-Union employees are contributing in accordance with the "matrix" that was contained in the legislation requiring contributions to be a percentage of the premium for chosen health insurance coverage and the salary of the employee determines the percentage rate. The remaining employees will transition to the "matrix" at the expiration of current collective bargaining agreements, which is December 2013.

The appropriation for Unemployment Insurance is able to be reduced because of a decline in claims experience and an appropriate balance in the Lawrence Township Unemployment Trust Fund.

It is contemplated that police dispatching services will move from being staffed directly by township employees to a private concern. The increase in the appropriation for Police Dispatching Other Expenses accounts for the cost of that contract.

The change in the appropriation for Special Events in the amount of $3,000 is simply a reduction of programming. The increase for the purchase of police vehicles reflects the rising costs of the product.

During 2012 the litigation against the City of Trenton Water Utility was concluded. As a result of the settlement a credit was issued to Lawrence Township for previously made payments. The reduction of appropriation for Fire Hydrants in the amount of $217,000 reflects that credit.

The pension programs of which Lawrence Township employees are eligible to receive benefits from at retirement are fully administered and regulated by the State of New Jersey. The required pension contributions are directly billed to the municipality by the New Jersey Division of Pensions. The 2013 pension increase of $124,000 includes $100,000 for the Police and Firemen Retirement System (PFRS) and $24,000 for the Public Employees Retirement System (PERS). The total pension contributions for 2013 are PFRS $1,747,162 and PERS $717,536 or a combined total of $2,464,698.

A residual benefit of the reduction in salaries and wages is the opportunity to reduce the appropriation for employer paid Social Security and Medicare taxes. The reduction for 2013 is $26,000. An adjustment between the flows between Ewing Township and Lawrence Township to the Ewing Lawrence Sewerage Authority treatment plant will result in an estimated savings of $50,000. The amount of required Debt Service is also being reduced as debt is being retired.

The 2012 budget included three emergency appropriation authorizations. One in the amount of $125,000 for Legal Fees Other Expenses and two emergency authorizations totaling $145,000 for costs associated with Superstorm Sandy. These items are referred to as Deferred Charges and in accordance with New Jersey budget law it is required that an appropriation be made in the immediate subsequent budget year to replace cash utilized for the emergency matters. Although the amount appears as an appropriation there is no spending of the funds permitted.

During 2012 Lawrence Township entered into a contract with a firm to conduct a complete revaluation of all Township property in compliance with an order of the Mercer County Board of Taxation. The cost of the revaluation is $800,000. As funding and funding authorization was not available to pay for the contract a "Special Emergency Appropriation" was authorized that provided the needed appropriation. The repayment is permitted to be spread over each of the next five municipal budgets; the first is included in 2013 with the one-fifth amount of $160,000.

The reserve for uncollected taxes is a non-spending appropriation mandated by state law to ensure there is adequate cash collected through taxes for the tax levy requirements of the school, county and municipality. The appropriation is needed to close the gap between the amount of current taxes anticipated to be collected and one hundred percent (100%) being collected. The appropriation may change since estimates were used to project the tax levies of the non-municipal tax entities.

I would like to thank the Township Department Directors, staff of the Division of Accounts and Control and the Municipal Manager's Office for their professional contributions in developing the 2013 recommended budget. The Township Administration is prepared to fully cooperate in the review of this recommended budget by the Township Council.

Respectfully submitted,

- Richard S. Krawczun, CMFO, Township Manager/CFO

 

 

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