Decline in Tax Ratables and Inability to Replenish Surplus Fund Create Financial Woes for Township

Significant drops in the assessed value of ratables in the township resulting from the depressed economy and increased real estate tax appeals, combined with losses in other revenue that have prevented the township from fully replenishing its surplus fund in recent years, have conspired to put Lawrence Township in a difficult financial situation, Township Manager Richard Krawczun told council members and the public last week.

“We are actually seeing a contraction of revenue so therefore any growth in the budget cannot be absorbed and current operations in the budget are equally challenged to continue because we are losing revenue. Over the last four years we lost about a million dollars in revenue,” Krawczun said during an overview of the 2010 municipal budget given during the township council meeting last Tuesday, Feb. 1.

The presentation was made at the request of Mayor Greg Puliti, who felt it would help council members and the public prepare for the township’s 2011 budget – a draft of which Krawczun is expected to present to council in the next few weeks. Cuts to municipal services will likely be necessary to balance the budget, officials have said.

(PDF copies of Krawczun’s 2010 budget overview and other documents distributed at the council meeting can be downloaded from the box above.)

“This year particularly the hard question we’re going to have to ask is on the spending side. We’re going to have to look at everything we do and we’re going to have to set priorities. We may not be able to continue to afford to do all the things that we have been doing over the past few years and we’re going to have to decide what can we cut and where can we cut. What are our most important functions that we offer?” Councilman Bob Bostock said.

“In my own view, I think the most important thing we do is public safety – police, fire and emergency medical response. The next thing probably is the roads and keeping those going,” Bostock said. “So we’re going to have to take a very, very hard look, not just at trying to decrease the amount of spending on everything we’re doing now, but whether in these particularly difficult economic times we can continue to afford, and we can continue to ask the tax payers to support, programs that may be great to have but aren’t necessarily part of the core function of municipal government. Those are tough questions we’re going to have to ask. And we’re going to have to do that this year because of the constraints we face.”

As part of his overview of the 2010 budget, Krawczun tracked the decline in ratables in the township over the last five years. In 2007, the net assessed value of ratables stood at $2,695,162,162. By 2009, that number was at $2,688,130,426. But a year later, particularly because of changes in the assessed value of commercial properties in the township, the net assessed value of ratables in Lawrence dropped by more than $84 million. At that start of 2011, that number had dropped another $37.5 million to come in at $2,566,192,608, according to Krawczun.

Those decreases, he said, resulted in a loss of $657,912 in local tax dollars in 2010 alone, and another estimated loss of $293,203 this year. Using last year’s tax rate of 78 cents per assessed $100 of value as an estimate, that $293,203 loss for this year will, all by itself, have a major impact on the tax rate.   

“So in 2011 when the clock struck 12 [to start Jan. 1] our tax rate, in theory, went up one-and-a-half cents before I put pen to paper because of the lack of revenue from the drop in ratables,” Krawczun said, noting that with only a few exceptions the township must abide by the state’s newly imposed 2 percent cap on tax increases.

Krawczun went on to explain how other revenues – fees generated by various permits, surcharges on delinquent taxes, fines issued by municipal court, interest on bank accounts, etc. – have also decreased over a 10 year period and how a larger percentage of the township’s surplus fund is being used each year to balance the budget.

“Our surplus balance at the end of each year is in decline because our ability to regenerate the amount of surplus utilized hasn’t kept pace,” he said.

In 2001, according to Krawczun, the township had a surplus fund of $7,922,346 – of which it used $4 million for that year’s township budget. That $4 million – 50.49 percent of that year’s surplus – represented 13.51 percent of the 2001 budget. By last year, the surplus fund stood at $8,242,215. A total of $5,870,000 of that – or 71.22 percent of the surplus – was used as 14.27 percent of the 2010 municipal budget. Because of the aforementioned problems “regenerating” the surplus fund, Krawczun said the township in 2011 will have to reduce its reliance on the surplus fund by $500,000 and use no more than $5,370,000 of the surplus toward balancing the budget.

In his presentation, Krawczun outlined some of the steps the township took in 2010 in response to last year’s budget woes. Among these were freezing or reducing the operating budgets of all municipal departments; eliminating four positions – including one police officer – through retirements and a vacancy; laying off five employees in the health department, construction division, and custodial staff; instituting a hiring freeze for all non public safety positions; and reducing two positions from full- to part-time hours. There was also a wage freeze for all township employees for 2010. Police officers also agreed to pay 1.5 percent of their salary toward health insurance costs and all other unionized township employees agreed to pay 3 percent of the cost of their health insurance premiums, he said.

At the conclusion of Krawczun’s presentation, several members of the public were allowed to ask questions.

Other business conducted at the Feb. 1 council meeting was as follows:

• After hearing the brief testimony of Police Officer Bryce Dowers and Lt. Charles Edgar, council voted to allow Al’s Service Center of the 100 block of Lawrence Road (Route 206) to join the rotation of tow truck operators that the township police department will use in 2011. Towing services are required by the police to help clear the wreckage after traffic accidents and in other situations such as when officers find vehicles that are illegally parked or they arrest drivers suspected of being intoxicated. Al’s was one of three towing companies that failed the application process at the end of 2010 that made a formal appeal at the Jan. 18 council meeting. . Dowers and Edgar testified that Al’s application was turned down because several mechanical problems were found with the company’s tow trucks, but that the owner made repairs and the trucks passed a subsequent re-inspection. Without asking the officers to explain why a re-inspection was made when the flawed ordinance does not specifically provide for one, Puliti and Councilmen Bob Bostock and Jim Kownacki voted unanimously to grant the appeal of Al’s Service Center. Councilwoman Pam Mount was absent, while Councilman Michael Powers abstained from voting because he had not been present at the Jan. 18 meeting. Puliti noted that Krawczun and Township Attorney Kevin Nerwinski are working to revise the township’s faulty towing application ordinance so that it will provide for a re-inspection process and better explain the appeals procedure.
• Council members introduced an ordinance to establish the position of fire lieutenant. Krawczun explained that this title was needed because the township’s four career (paid) firefighters, as of Jan. 4, had been reassigned to a single crew and that one of the firefighters needs to act as a supervisor when the crew responds to fires and emergency situations during their work hours of 8 a.m. to 4 p.m. Monday through Friday (except for holidays). The four career firefighters had previously been split up among to the three different firehouses in town to drive fire apparatus manned by the township’s volunteer firefighters, since specialized training is required to drive the apparatus and there are a limited number of qualified volunteers available during normal weekday work hours. The ordinance, which will be up for public discussion and a final vote at the Feb. 15 council meeting, provides for a $5,000 salary differential from firefighter to the fire lieutenant rank.
• The council approved six resolutions, including one authorizing a shared services agreement between Lawrence and Hamilton Township for 2011 for the providing of clinical health services for sexually transmitted diseases. Another of the ordinances authorized the honorary renaming of Berwyn Place. The road’s official designation will not change, but a new sign – at no cost to the township – will be affixed on the post below the Berwyn Place sign to proclaim that the road will also be known as American Legion Way in honor of American Legion Post 414. The post, located at 100 Berwyn Place, has been active in the township since 1946.
• The council also unanimously adopted . These ordinances increased the fees the township will charge in 2011 for participation in various recreation programs, the delivery of emergency medical services, and the issuance of certain permits and licenses. There was opportunity for public comment prior to the council’s vote on each ordinance, but no one spoke up.
• The council approved a new three-year contract with Jack Oakley as township emergency management coordinator. Oakley, a retired New Jersey state police captain and life member of the Slackwood Volunteer Fire Co., previously served as the township emergency management coordinator under a three-year contract – earning $51,442 in 2008, $55,011 in 2009 and $56,907 in 2010, according to Krawczun’s office.