Township Committee has been holding informal budget presentations. At the January 25 and February 8 meetings, Township Administrator Doug Cramer discussed the expenditure side of the draft budget. At the February 22, 2016 meeting, Township Auditor Kevin Frenia and Township CFO Terry Henry, informally presented the revenue side of the draft budget. The proposed unofficial 2016 budget is $4,303,249. The 2015 official budget was $3,811,992, an increase of $491,257.
Mr. Frenia and Mr. Henry explained that Township revenues have been flat. Most Township revenue comes from real estate taxes. But few ratables were added last year. They also explained that there aren’t any substantial new moneys expected from the State, County or other sources. As a result, if the Committee adopted the unofficial budget of $4,303,249, there will be a gap of about $450,000 to $500,000 between the proposed expenses and anticipated revenues.
Mr. Frenia and Mr. Henry discussed options to close the gap. Each option, if used alone, is pretty drastic. They recommended blending these options.
1. Reduce the Draft Budget. Administrator Doug Cramer pointed out that it’s possible to reduce the draft budget here and there without too much impact. But reducing the budget by $450,000 would require a drastic change in how the Township does business. And a significant budget reduction would handcuff the Township in future years because it would reset the budget cap at a significantly lower amount.
2. Increase Taxes. Every penny increase in taxes raises about $66,000 in revenue. If the gap were closed entirely through a tax increase, it would take a tax hike of $.08 to raise $480,000 in revenues. Committee and staff readily acknowledged that an increase of that scale wouldn’t even be considered.
3. Deferral of School Taxes. This is a complex technique. Tabernacle Township is the tax collector for the Lenape Regional High School District and the Tabernacle School District. But it collects the taxes six months before they are paid to the schools. Tabernacle can defer paying a portion of those taxes for six months and use these monies to cover the gap in its own budget.
Tabernacle has done this before as a short term solution. The problem with deferring school taxes is that it doesn’t correct the shortfall between revenues and expenses. It’s more like a band aid. When costs increase annually, and taxes aren’t raised even a little bit, eventually there’s a large gap between revenues and expenses, like we have now.
Mr. Franzen said that the goal is to have zero tax increase. That’s a political decision. But it isn’t a responsible budget decision. Mayor Lee expressed his concern about the Committee relying exclusively on deferred school taxes. He said that he preferred to closed the cap through budget reductions.
Last year, the Committee bridged the gap by absorbing $426,000 from the Tabernacle Fire District. The Committee used $108,000 as a down payment for the new fire truck and deposited $318,542 in its general fund. Now, we no longer have the Fire District money or any other large pot of money that the Township can use to bridge its budget gap. And, as Mr. Cramer pointed out, significant budget cuts would drastically change township services.
Mr. Cramer and Mr. Henry will be suggesting budget cuts to the Committee at the March 14 meeting. This is only part of a solution.
Committee members need to examine the budget themselves, so that they don’t merely rubber stamp the staff’s priorities.
The Committee should also do away with its suggestion that residents hold their comments on the unofficial budget until the second public comment period. There already is widespread discussion in the township about the 2016 budget; and there’s no purpose for the Committee to hold its discussion in a vacuum. For similar reasons, the Committee should eliminate its prohibition on public comment on ordinances at first reading. As its contract with the Tabernacle Fire Company#1 shows, the Committee doesn’t have the time to consider worthwhile changes when it only takes comment at second reading.
Here are some suggestions to increase revenue and reduce expenses. Just so I’m clear, I’m not disrespecting any of the people or organizations mentioned below. I’m just saying that better policy choices can be made. There also has to be shared sacrifice. The burden shouldn’t be solely on the residents. It should be distributed across the Township and the organizations that the Township funds.
1. Fix The Farmland Assessment Program. Tabernacle’s farmland assessment program is a mess. If the program was managed properly, Tabernacle would receive all of the tax revenue that it legitimately should get and “fake farmers” wouldn’t get tax breaks they don’t deserve. Currently our farmland assessment program assesses some properties as qualified farms, when they are not farms at all. These property owners pay 98% less property tax than they should.
Now don’t get me wrong. I already hear certain voices saying “Fran Brooks is against farmers.” I believe in farmland assessment because legitimate commercial growers couldn’t stay in business without it, and that the vast majority of farmers receive farmland assessment legitimately. But farmland assessment has to be restricted to active, commercial production. That’s what the law requires.
The most egregious farmland assessment case in Tabernacle is the Crown Castle site off of Tabernacle-Chatsworth Road. On October 6, 2014, state Tax Court ruled that the Township couldn’t claw back property taxes from this property owner even though the Township had wrongly assessed the land as a QFarm for a decade and omitted assessing the cell tower, which has been in plain view since the 1990s. I estimate that more than $150,000 in tax revenue was lost from this site over that decade.
The key to responsible management is knowing which properties are actively farmed. State regulations require tax assessors to inspect all QFarm properties, at least once every 3 years. Tabernacle doesn’t do this. Inspections weren’t done at the Crown castle site for at least 15 years. There aren’t any records showing current systematic inspections of other Tabernacle QFarm properties.
Township residents paid for an inspection of all properties, including QFarm properties, when the comprehensive revaluation was done in 2013. But there aren’t records showing that farmland assessed properties were inspected then either.
The Committee hasn’t yet shown any interest in properly managing its farmland assessment program. When TTJ reported on the Crown Castle case (see March 22, 2015 Post) the Committee was asked what steps it was taking to make sure that similar problems weren’t occurring elsewhere. No committee member has answered this question yet. State regulations allow the Township to charge farmers a $25 fee to cover the cost of farm inspections. That’s a nominal cost for the tax benefit they gain. But Tabernacle doesn’t do that either.
The mismanagement of this program deprives Tabernacle of legitimate tax revenue and corrodes the integrity of its property tax system. Most people, including me, support the differential assessment of farmland because it protects agriculture and the livelihood of legitimate farmers. But few support a tax system that so readily allows people to pay less than their fair share. This should be changed.
2. Reform Emergency Services. In June 2014, former Mayor Kim Brown testified to the State’s Local Finance Board that fire and rescue services would be centralized to provide “the efficient, cooperative and effective delivery of all emergency services in the Township.” This has never happened. Instead, Committeeman Franzen and Mayor Brown introduced and seconded an amended resolution to prevent this from happening.
In the interim, emergency services continue to be in a muddle, and resident’s have lost out on the promised financial and organizational benefits. There are many times that I have stood up and supported our emergency volunteers and the important work that they do. But events over the past few years have shown that the existing system isn’t providing efficient, cooperative and effective delivery for Tabernacle residents. Here’s a quick recap.
• As the Township’s surplus has been declining, the Committee has continued to give the maximum annual contribution of $70,000 to the Tabernacle Rescue Squad. The TRS has been using this money to build up its own private surplus (see January 17, 2016 Post). This extra payment is, in addition, to the hundreds of thousands of dollars that the TRS gets in annual insurance billing revenues, free rent, fuel, insurance, etc.. Despite this generosity, TRS won’t give its insurance billing records, its roster or information on payments to its members to the Township. It says that it’s a private organization and doesn’t have to.
• The TRS is Tabernacle’s official EMS provider and is funded by substantial Township contributions. Yet TRS made a secret agreement with Shamong Township to provide free services to its residents without any financial contribution from Shamong Township. The Agreement is beyond the occasional mutual aid that’s provided through a separate agreement. TRS never discussed the Shamong Agreement with the Tabernacle Committee.
• As the Township’s surplus was declining, it increased the annual contribution to the Tabernacle Fire Company #1 from $24,900 (which is what the Fire District used to contribute) to $90,000, even though the fire company said it could do the job for $15,000. The Township also gives the TFC#1 free fuel, rent, and insurance, though TFC#1 pays for undefined customary expenses.
• In the Committee’s haste to sign a contract with TFC#1, it guaranteed that the contribution of $90,000 couldn’t be reduced unless the township budget is reduced. Now the Township committee is looking for budget cuts and this guarantee handcuffs it.
• The idea of a guarantee was poorly conceived. And because the Township prohibits public comment on ordinances at first reading, the public had limited opportunity to ask questions about it. The contract was very long and had numerous questionable provisions. It wasn’t possible to address them at second reading because of the three-minute rule. Besides, by the time an ordinance reaches second reading, the Committee is reluctant to revise it because substantial changes require that they republish and rehear the ordinance. That’s why Township Committee should hold public comment before an ordinance is adopted at first reading.
• Tabernacle Fire Company #1 continues to struggle with membership and interior firefighting capability. Yet the TRS, which has enough money to pay its volunteers, apparently, is drawing new members from other townships.
• Fire Chief Dave Smith publicly said that the delivery of emergency services isn’t working and that people’s lives are in jeopardy (see TTJ Post, October 26, 2015).
• At the very least, the insurance billing program that is now handled by TRS, should be integrated with the township budget. No other local townships allow the diversion of insurance revenues to a private organization without a contract. The contracts typically require that the township receives emergency services at no or minimal cost. Alternatively, the insurance billings should be retained by the township and deposited into the general fund to offset taxes (see TTJ Post, December 3, 2015).
3. Employee Salaries. I’m not one to complain about public employees. I appreciate the work that our employees do and they should be fairly compensated for their time. Tabernacle has generously provided raises of about 2% to 2.5% per year to its employees, even as some other public employers froze wages.
For example, the State’s last four-year contract with its primary union, had two years of no raises, and raises of 1% and 1.75% over the next two years. Over the past five years, the national inflation rate has averaged about 1.25% annually and about 0.75% annually over the past two years. All of that said, if this is to be a budget of shared sacrifice, it seems only fair that Tabernacle employees receive a smaller raise.
4. Township Committee Salary. It’s time for the Township Committee to reduce its salary. Although Committeeman Franzen boasts every year that Committee members haven’t received a raise of their $5,000 annual salary, they have steadily reduced the number of their annual meetings. In 2014, the Committee had 24 meetings; in 2015, they had 22 meetings; for 2016, they’ve scheduled 18 meetings.
In addition, more of their work is being done by Township staff. In 2015, Mayor Brown appointed Committeemen Franzen and Barton to do a comprehensive review of the Township’s ordinances. But they didn’t do this work. Instead, the Committee rehired a previous part-time employee to do this and other projects. The rehiring of the employee for this new work, and the off-loading of the ordinance review from the Committee to her has cost taxpayers over $10,000, and was never publicly discussed. Nor was there a resolution to rehire her.
Because there are fewer meetings and they are using more staff, Committee members should reduce their salaries. They also have to sacrifice.
5. The Tabernacle Athletic Association. The Tabernacle Athletic Association, like the Tabernacle Rescue Squad and the Tabernacle Fire Company #1, is a private organization that receives funding from the Township and provides services to Township residents. Before someone screams “it’s for the children,” let me say that I believe in recreational athletics. I’m just saying that better policy choices can be made.
Tabernacle has been generous in its support of TAA. Currently, it pays for the maintenance and upkeep of the fields that TAA uses. We also pay for improvements to the fields, such as bleachers, and a snack stand that the TAA can use to generate its own revenue. Tabernacle also pays for all of TAA’s insurance: accident and sports liability and workman’s compensation. The insurance costs are approximately $7,000 annually.
We used to pay for the insurance for the kids who don’t live in Tabernacle. This was an unacceptable practice that went on for years. But it only changed when it became publicly known. TAA now reimburses the township for the insurance costs of out-of- town participants. But TAA emphasizes in its reports, “NOTE: TAA is not obliged by ordinance to make this payment but does so voluntarily.” Regardless of the ordinance, it was never okay for Tabernacle residents to pay the fees for out-of-town participants and TAA was obligated to tell the Committee that this was happening.
It’s fair to ask why TAA can’t pay for its own insurance costs. It would seem that user fees could be increased modestly to cover insurance costs. Or the scholarship money that the TAA gives, at its discretion, could be reduced or redirected to pay for the essential requirement of insurance. That’s not a slap in the face of recreational sports, it’s just basic management of taxpayer funds.
Underlying this budget problem is that the Township does not manage its volunteer programs. The Committee approves public funding and allows unelected people to spend the money with little oversight, management or transparency. As Committeeman Franzen said when he was asked if the Township was going to monitor its $90,000 contribution to the TFC#1, “it’s their show to run.” And when asked how they would determine if TFC#1 was doing a good job, he said he would know if the fire was put out (see June 8, 2015 Post).
Because TAA takes public funding, Township Committee and township residents should have a clear understanding of how the TAA functions and what its revenues and costs are. Notwithstanding the important work that TAA volunteers do, the organization should be financially accountable. TAA is the only major service organization that is not even required to provide a financial statement to the Township. What can they do to help reduce Township costs?
7. Miscellaneous. There are many other expenditures in the budget that should be examined. Residents pay for a senior dinner, gifts at parades and other things that aren’t critical and might be funded alternatively by fund raisers or private sponsors. Reducing these costs won’t save $450,000 to $500,000, but would surely ease the burden on taxpayers.
The next township meeting will be held 7:30pm, March 14, at town hall.