Another Inconvenient Truth

To the Editor:

With this letter, I end a lifetime tradition of lack of involvement in local government. I never felt strongly enough about any particular issue to make the effort.  However, the debate regarding Consolidation has not only captured my attention, but has forced me to take a position.  I have a few friends who are very vocally against Consolidation, and while I respect their passion I cannot agree with them on any point other than my concern for Princeton.

For the last 8 years I have been running a private company with $1.2 billion in sales and 5000 employees.  For the better part of this year, my company has been preparing for how to handle what we believe will be a long period of slow growth.   While we continue to make investments for the future, we are looking hard at our expense base asking questions like “do we really need to do everything we have been doing?”

In my world, any opportunity to save 3.5% would be met with near giddy enthusiasm.  To a lay person, 3.5% may seem paltry.  But in mature organizations such as my company or any local government, a 3.5% decrease in expenses is ridiculously difficult to achieve.  The Consolidation Commission has concluded that the INITIAL savings on consolidating the two governments could be as high as high as $3.2m or 6%.  Opponents of consolidation have questioned this number and have suggested that such savings would only be $1.9m or 3.5%.  In my world, 3.5% would be a no-brainer.  But in my experience, there is usually more savings AFTER a consolidation when there is even greater flexibility to review expenses from the bottom up.  I believe the $3.2m or $1.9m in savings (whichever you choose) will be just the beginning.

As hard as times currently feel, they are likely to stay this bad (or get worse) over the next few years.  This means property values are likely to stay relatively flat (and in many cases, decline).  Additionally, support from Federal and State sources will also decline.  Sadly, as in business, even though revenues may be under pressure, expenses will certainly grow.   Most of our local expenses are labor related and will grow by set formulas.  Unfortunately, the rest is just math— slowing revenue coupled with rising expenses equals the need for more money— this is the real “inconvenient truth” of the next few years.

For the last couple of years we have been protected from these increases because our towns wanted to keep our taxes down and used surplus cash to fund the shortfalls.  But that surplus cash is running out.  When it does run out (if not sooner), our taxes will go up.  And because we have been insulated the last couple of years, the tax increases are likely to be meaningful.  As taxes continue to rise with property prices staying flat, Princeton will become less affordable to many people.

There are other options.  We could increase the number of new taxable properties.  Opponents of Consolidation within the Borough quickly mention the new units in Palmer Square and the other units which will come in the old hospital building.  But ironically, many who want to preserve our historic Borough might then find themselves needing more development which will come with greater and greater compromises since the Borough really doesn’t have the space. Additionally, new “taxable” properties don’t come without increasing expenses either.  There will likely be more kids to educate and new owners will require all the services the rest of us enjoy, all which come at a cost.

Even with Consolidation, we likely face financial pressures in this town greater than those seen in more than a generation.  I don’t believe Consolidation makes our problems just disappear.  But I do believe that Consolidation represents our absolute best option to slow down expense increases.  To me the alternatives represent a much greater threat to “our historic Borough”— increasing property taxes which make Princeton less affordable to many or increased development which will make it less of the town we all love.  Neither option is acceptable to me and that is why I am now “involved”.

Dinni Jain

Olden Lane