Wednesday, January 19, 2022

2022 Lawrence Township Recommended Municipal Budget Message

FOREWORD:  A "recommended" budget is intended to be exactly as it is named; a budget as recommended by the Municipal Manager and the Chief Financial Officer to the governing body.  It is a starting point for the public budget process (work on the budget actually begins in October of the prior year).  In our form of government (i.e., Council-Manager), the elected officials (i.e., the five elected council members) have the responsibility to review and, if they deem appropriate, revise the budget in some manner that the majority of the council members support and they believe is in the best interest of the community. Ultimately, the elected officials will be required to vote on whether to adopt the final version of the budget as it goes through the review process.   

Our process involves multiple public meetings (open to the public) that include each department head (i.e., Police, Fire/EMS, Public Works, Health, Recreation, Municipal Court, Finance and Construction) appearing before the governing body to discuss their departmental budget, its needs, and the forecasting of issues that may negatively or positively impact its operations.  During these presentations, council members ask questions to better understand the budget as presented to them for consideration.  After all department heads have presented,  we then have the "Introduction of the 2022 Municipal Budget" which may very well be different than the document introduced.  Finally, we have a public hearing on the adoption of the budget.  In every calendar year, there are important "budget" dates that guide the preparation and adoption of our municipal budget.  For 2022, they are as follows:

1.  December 31, 2021 is the close of the 2021 Fiscal Year;

2. January 18, 2022 is the date the Recommended Budget is offered to Council;

3. January 31, 2022 is the date that the Annual Debt Statement is due to the Division of Local Government Services for the State of New Jersey;

4. February 10, 2022 is the date that our Annual Financial Statement is due to the Division of Local Government Services for the State of New Jersey;

5. March 15, 2022 is the date we are targeting to Introduce the Municipal Budget to Council;

6. April 19, 2022 is the date scheduled for the Public Hearing for the Adoption of our 2022 Budget.

The following is a budget message that I have prepared that is intended to offer some reasoning behind the budget we have recommended. 

2022 Lawrence Township Budget Recommendation

            The world health pandemic known as Covid-19 continues to dominate our thought process and considerations for the preparation of the 2022 municipal budget.  To be candid, as recent as this past November, we were fairly confident that we were past the worst of the pandemic and would be able to return to a budget that plans for a certain near and distant future.  But, given the resurgence of the virus and a faster spreading variant (Omicron), the confidence that we are trending toward pre-pandemic normalcy is no longer present.  However, over the course of these past two years, we have learned how to address the challenges the pandemic has wreaked upon us and, most importantly, we understand that this situation is and always will be fluid, and demands us to be ready, willing and able to adjust to whatever confronts us.   

            In crafting the previous 2021 budget, we described our approach as “remaining calm in the eye of the storm” and delivered a budget that was less than the year before and provided for no increase in taxation in an effort to offer some relief to our residents feeling the financial impact of the pandemic.  The description we used in 2021 remains as relevant today as it did back then.  The difference, however, is that we now better understand the financial impact a pandemic can cause our municipal government, and we also know the level of financial assistance we have and will receive from our County, State, and Federal governments.  With this knowledge and experience, we can recommend a budget that is fiscally responsible with eyes wide open.  

            With inescapable increases to key appropriations that total $1,717,711 or 3.67 cents[1], we are able to craft and recommend a budget that provides for a 3.50 cent tax increase.[2]  Importantly, this budget provides for the preservation of our Surplus balance.  We have planned to use only as much as we can regenerate so that the balance does not reduce in each subsequent year.  By doing this, we are better able to maintain our high credit rating and enjoy the benefits of the best rates for financing our important community projects and infrastructure improvements.

            The recommended municipal tax rate for 2022 is .632 [“.597”] which represents a 3.5¢ increase[3].  One (1) cent = $469,312.11.

            The Amount to be Raised by Taxation in 2022 is $29,659,134.15 [$27,760,451.69] which is $1,898,682.46 over 2021.

ü The Levy Cap Bank available from 2020 and 2021 is $1,353,473, and we will use $0 to remain within the 2% tax levy cap.  NOTE:  The 2022 Recommended Budget is $767,025 under the Levy Cap and is available for "Banking." This addition to the 2020 and 2021 banks will leave a usable "cap bank" of $2,120,498 for future budgets.       
 

ü The 2021 year-end Surplus balance is $17,529,312.69 versus a 2020 year-end balance of $17,162,489.74, an increase of $366,822.95.  

ü The Surplus balance remaining available after applying an amount as anticipated revenue will be $10,679,312.69 [$10,312,489.74], an increase of $366,822.95 over the 2020 remaining balance.        

ü The cash reserve balance for tax appeals is $6,219,491.18 [$4,119,491.18].

ü The decrease in outstanding debt continues.  The 2010 closing balance was $30,797,000.  The 2021 closing balance is $15,631,000.   

            Fiscal strength is evident as $6,850,000 in surplus (also known as Fund Balance) used in the 2020 budget has been regenerated at the close of 2021.  Fund Balance is the excess in the following Balance Sheet categories:  Amount to be Raised by Taxation, Miscellaneous Revenues Anticipated (MRA), Delinquent Taxes, Prior Year Appropriations Lapsed, and Miscellaneous Revenues Not Anticipated (MRNA). 

            In 2022, our recommendation is to utilize $6,850,000 in surplus, $15,612,169.38 in MRA, $830,000 in Delinquent Taxes and $29,659,134.15 in Amount to be Raised for Taxes.  The total of these balance sheet categories equates to the municipal budget of $52,951,303.53.  






[1] 1) ELSA increase; 2) Health Benefits increase; 3) Contractual increases to Salary & Wages; 4) New Hires (i.e., firefighter and inspectors); 5) Increase in Uncollected Taxes; 6) Increase in Debt Service (principal and interest/Capital Improvement Funding); 7) Increase in solid waste collection; and 8) Increase in Public Employee Pension contributions.

[2] We have been able to offset the 3.67 cent increase by certain factors within our budget (i.e., anticipated recreation fees, increase in our ratable base (i.e., Cobblestone and Amazon warehouse, etc.), QBM police staffing reimbursement, etc.)

[3] NOTE:  Figures in [ ] are 2021 amounts included for comparison.

 

 

No comments: