The committee held a public hearing on the 2018 municipal budget at its April 23, meeting. But it tabled the matter and didn’t vote. It was tabled because two committee members – Kim Brown and Joseph Yates – were absent.
The proposed budget calls for $4.3 million of spending and a one-cent tax increase. The township’s Budget Message emphasized that the proposed budget is an increase of 1.78% over last year’s budget, and the small tax increase would incrementally grow the township’s surplus.
At the hearing, Stuart Brooks again asked how much surplus a township like Tabernacle should carry. It’s understandable that the budget should include surplus to cover unanticipated shortfalls in revenue or unexpected expenses, such as unusual storm cleanup. The question is, how much extra money does the township actually have on hand and, based on that existing surplus, how much more should it build into its tax levy to cover 2018’s unanticipated costs.
Chief Financial Officer Terry Henry answered that he recommended a surplus of one million dollars. That’s almost 25% of Tabernacle’s $4.3M budget. CFO Henry didn’t explain why one million dollars was his target number. As explained below, one million dollars seems high.
As of January 1, 2018, Tabernacle had a cash surplus of $945,879. That’s almost $150,000 more than it has averaged over the past five years. Its average cash balance has been about $800,000, though this balance has fluctuated between roughly $600,000 and $1,000,000. $945,879 is an actual surplus of about 22% of our proposed 2018, $4.3M budget.
Over the past five years, including 2018, Tabernacle has designed its budgets to produce an ‘anticipated surplus’ of about 15% each year. Though in 2013 and 2014, the anticipated surplus was only about 10%. The anticipated surplus is the amount that the township builds into its tax rate to insure that it’s not caught short if revenues fall or expenses go up. Other towns, such as Medford, Southampton and Haddonfield (another town where Mr. Henry serves as CFO) anticipate surpluses of about 10%. Shamong township just adopted a $2.8M budget, which anticipates a $1,200,000 surplus. That’s about 40%.
Given that the township started the year with a healthy $945,879 balance, it seems that it has enough existing surplus that it can trim its anticipated surplus from 15% to 10%. That’s to say, that the township doesn’t need to grow it’s surplus very much because it’s almost at the target that CFO Henry recommended. Historically, the $945,879 surplus is second only to the 2014 surplus of $1,018,242. That surplus resulted from the township’s dissolution of the fire district and its takeover of all of the district’s money.
At various meetings when the 2018 budget was discussed, there were comments about many proposed line items which, based on the actual expenditures of previous years, seemed over-funded. The township’s general response has always been that any unspent money would roll into surplus, implying that overfunding wasn’t a problem. That’s one option. The township could over-tax – even by a penny – and put the unspent balance into surplus.
The township could also produce surplus by keeping the current tax rate – not raising taxes – tightening it’s belt and reducing expenditures. Because there was a $945,879 fund balance on January 1, and there are so few, if any, programs or initiatives that require increased spending, this is the best route to follow.
At the April 23, meeting, I commented that the proposed penny tax increase could easily be eliminated if the overfunding was reduced. Suggestions for reductions in funding include reductions in line items for public buildings and grounds.
The committee should also reduce its $5,000 salary because it has significantly decreased the number of township meetings. In 2014, the committee held 24 meetings. Since then, there’s been a steady decline. The township is scheduled to hold a total of 15 meetings in 2018. That number might change a little due to canceled or special meetings. This reduction in the number of meetings indicates that the committee believes it has significantly less business to conduct. Therefore, there’s no justification for maintaining the $5,000 salary.
The committee should also eliminate its $35,000 cash contribution to the Tabernacle Rescue Squad for unpaid insurance balances. The TRS’s insurance revenues have substantially exceeded expectations every year. These revenues have allowed TRS to build its own surplus and compensate its members while the township has been raising taxes. The TRS can easily fund any unpaid insurance billing balances without relying on taxpayer subsidies. That’s how it’s done in other townships.
I also suggested that the township charge the TRS rent for its use of the Emergency Services Building. Taxpayers pay around $200,000 annually on the bond for the building. The TRS pays no rent.
It may seem to readers that I’m unfairly picking on the TRS. I’m not. It’s just that the township gives the TRS large public subsidies every year while TRS also earns substantial revenues from insurance billing, as the township’s official EMS provider. The public doesn’t need to subsidize TRS because it can self-fund.
The list of public subsidies to the TRS has often been reported here. There’s the free rent in a building that costs residents $200,000 per year in bond principal and interest; there’s free insurance worth at least $10,000; there’s the annual cash contribution of $35,000. Just a few years ago, Tabernacle gave TRS $70,000 in annual cash contributions and free fuel too. Current subsidies total around $200,000 annually.
In addition, the TRS receives insurance billing revenues of about $250,000 per year. It’s been running the insurance billing program since 2013. Since then, TRS’s financial give-backs have been small. It started paying its fuel costs in 2017 – about $7,500 annually. It bought a set of defibrillators for the township. For the 2018 budget, the TRS finally offered to pay $10,000 for its worker compensation insurance.
The reason I look to the TRS as a primary source to reduce township expenses is because of the amount of public money it gets, either from direct subsidies or from the billing franchise that the township gave it. The combination of township subsidies of TRS and TRS’s insurance billing revenues ($450,000) is the equivalent of almost seven cents on the tax rate ($450,000/$66,000 = $06.81).
These monies, both revenues received and expenses avoided, have made the TRS flush. It’s been able to grow its own surplus, buy new equipment and compensate its “volunteer” members. In a perfect world, these can be good things. But in the real world, they all come at the expense of Tabernacle taxpayers. The township could easily balance its budget by requiring TRS to pay its fair share.
During the committee’s discussion of the 2018 budget, Deputy Mayor Steven Lee said that he would not vote for a budget with a tax increase. This led to a discussion of possible reductions that would total approximately $66,000, which is the value of a penny tax increase.
It didn’t take Administrator Doug Cramer very long to come up with $66,000 worth of deductions. In fact, he recommended $71,000 of reductions. Here’s the committee’s final list, I’m sure there are other possibilities.
- $35,000 from the capital improvement fund;
- $10,000 building and grounds (earmarked for electrical improvements);
- $10,000 workers comp insurance for TRS (this will be paid by TRS);
- $5,000 trash disposal fees (sufficient reserve exists);
- $6,000 (Fire Chief David Smith offered to reduce his budget by $10,000);
- $5,000 from the township’s contribution to TRS.
At the end of the committee’s budget discussion, Mayor Barton commented that the proposed budget had little surplus left to cover a significant reduction in anticipated revenues or unanticipated expenditures, like those that are weather driven.
Based on the ease with which Mr. Cramer produced $71,000 of budget reductions, I’m skeptical that the budget is as tight as Mayor Barton says.
In my April 21, 2018 Post, I commented on Tabernacle’s silence about the financial details of its agreement with Woodland Township to share a municipal court facility in Woodland.
The terms of the agreement are simple and straightforward.
- Tabernacle and Woodland will combine municipal court services in Woodland.
- Tabernacle will pay all wages and supplies for the shared court.
- Tabernacle will pay Woodland $1,200 per month rent.
- Tabernacle will keep all fees and fines, including those from code enforcement.
Although Mayor Barton assured residents that the committee knew the financial details, no committee member nor any of the township staff or professionals would publicly disclose them. Nor did they explain how they concluded that this agreement was a “win-win” arrangement for both townships, as Mayor Barton described it.
Following the April 21, 2018 meeting, I submitted an OPRA request to Tabernacle for any analysis and financial data that Tabernacle used to evaluate the shared services agreement. The only records I received were two lists. The lists showed the number and type of violations in Tabernacle and Woodland for 2017. There’s nothing in these records that shows revenues.
Tabernacle didn’t give me any records of its analysis of the shared services agreement, financial or otherwise. I asked Clerk Barber if there were any other records responsive to my OPRA request. She said she would double check. I haven’t heard back from her. So it seems they don’t have a financial analysis.
One of the ‘bonuses’ in the Agreement that Tabernacle pointed out was that it would receive the revenue from Woodland’s code enforcement. But at the meeting, the committee wouldn’t say how much this was. It turns out that this revenue is almost nothing.
I submitted a request to Woodland Township for records of the fees that it received for local code violations in each year since 2012. Woodland’s clerk sent me records from 2016, which was the only year, she said, that Woodland had code violations. There were only TWO! The amount of revenue received was $107!
I was so surprised that Woodland issued so few code enforcement violations and generated so little money that I wrote the clerk and asked her to confirm that this was true. She confirmed that it was true.
Committee members should have records of all costs and revenues associated with this agreement. Shame on them if they don’t. Shame on them also for not releasing the records to the public.
The committee generally doesn’t hide the financial details of its shared services agreements. There’s no good reason to. Just last month, when committee members discussed the purchase of a used road grader, they had an involved discussion about entering into a shared services agreement with Southampton Township for the use of the grader. The discussion included all of the pertinent details including the financials.
Tabernacle’s lack of candor about the Woodland agreement is unusual and troubling. It implies that the agreement isn’t well-reasoned and is a back-room deal.
The next township meeting will be held May 21, 2018, at 7:30 PM at town hall.