Budget includes tax rate hike of 8.6 cents

Sayreville officials are expected to vote next week on a 2009 municipal budget that would increase taxes on the average home by $124.

The Borough Council held a hearing on the budget amendment Monday. Business Administrator Jeffry Bertrand said the amendment reduces the budget enough to bring it below the state-imposed 4 percent cap on tax levy increases. The preliminary budget had failed to meet the cap due to decreasing revenues.

"I would say from my experience, the budget process is getting more difficult each year, because the budget is getting tighter and tighter," Bertrand said. "There's not much fat in the budget here. It was already lean. You're trying to trim, and there's virtually nothing to trim. The goal is to not affect services."

The Borough Council is expected to vote on the $50,517,397 spending package at its July 13 regular meeting. Chief Financial Officer Wayne Kronowski said this number includes $250,333 in grant money awarded to the borough for such purposes as police highway safety programs and body armor.

The municipal tax rate would increase by 8.6 cents per $100 of assessed valuation, meaning that a homeowner whose property is assessed at the average of $143,800 would pay $124 more this year if the council adopts the budget next week. The tax rate increase stood at 10.3 cents in the preliminary budget before the administration and borough officials got the budget below the tax levy cap.

Bertrand said the borough is using more of its surplus funds as revenue in this budget in order to limit the tax levy increase. The borough will have $400,000 left in surplus instead of the $500,000 that was originally proposed.

The spending package is up $599,329 from last year, a roughly 1 percent increase, but Bertrand said the tax increase is the result of an almost $2 million loss in municipal revenues.

Borough Councilman Stanley Drwal, who heads the council's administrative and finance committee, commented on the tax increase.

"The expenses were drastically reduced to under a 1 percent increase, but we got hit with a bad economy [that resulted in] a loss of revenue. So if we had the same revenue as we did in the past couple of years, we would actually have a budget with less than a 1-percent increase. [The tax increase would] be almost nothing this year."

Drwal described the loss of revenue as significant and said it is in part due to tax appeals.

"This is one of the leanest budgets in the last 10 years," Drwal said. "… We cut overtime drastically and we also found savings in smaller areas in different departments."

Kronowski said the administration cut overtime, except for departments that provide 24-hour coverage, such as police.

"Overtime was reduced in virtually all departments," Kronowski said.

Bertrand said the administration put mechanisms in place in order to monitor and justify overtime, which is under additional scrutiny.

"In the past, it was not embellished," Bertrand said. "Now we just have a greater handle on what it is. Now it's a series of smaller numbers."

Among the losses that the borough faced with this budget was a $296,000 reduction in state aid. Kronowski said it is difficult for municipalities to receive state aid unless they are severely destitute. The borough did not qualify for extraordinary aid, because it would have had to take advantage of the deferred pension program, he said.

"We decided not to do that," Kronowski said. "In the long run it would hurt us."

Drwal said the borough is climbing out of a financial hole with its past pension deferral, which is why borough officials refused to defer its contribution to the state pension system this year.

"Part of the whole strategy is to look long term," Drwal said. "[Deferring the pension payment] would have looked good in the short term, but it would have caused a deeper deficit in the coming years."

Drwal said this is the last year that the boroughwill have to make up for the shortfall related to the past pension deferral, which the state mandated eight years ago. This year the pension deferral was optional for municipalities, but it would have come with an interest rate of 8 percent.

"The goal here is to think multi-year, not one year at a time," Bertrand said. "Let's forecast where we're going so we don't have these spikes, peaks and valleys, so people don't feel it one year to the next."

Bertand cited one piece of good news with the budget. He said that two years ago the administration successfully anticipated an area of savings and switched to Horizon Health Corp. coverage. He said it resulted in significant savings, while having no negative impact on employee benefits.

"We opted out of the state health benefit plan," Bertrand said. "We saved $450,000 when we went directly to Horizon. We were overpaying in [the pervious, state-run] plan, because we had a low-claim history. Now, the state benefits plan has been modified and we're being told … that the health benefits plans should be budgeting next year at a 20- percent increase. … That's another $750,000."

Despite the efforts of the administration and other officials, they still ended up scrambling to find cuts due to dwindling revenues, increasing utility costs, tipping fees and a loss of interest on investments, Bertrand said.

"We make these moves and we never really get to rejoice in them, because we still have issues," Bertrand said.