Village Council Special Public Budget Meeting Minutes 20140421
A SPECIAL PUBLIC BUDGET MEETING OF THE VILLAGE COUNCIL OF THE VILLAGE OF RIDGEWOOD HELD IN THE SYDNEY V. STOLDT, JR. COURT ROOM OF THE RIDGEWOOD VILLAGE HALL, 131 NORTH MAPLE AVENUE, RIDGEWOOD, NEW JERSEY, ON MONDAY, APRIL 21, 2014, AT 6:30 PM.
1. CALL TO ORDER – OPEN PUBLIC MEETINGS LAW – ROLL CALL
Mayor Aronsohn called the meeting to order at 6:37 P.M., and read the Statement of Compliance with the Open Public Meetings Act. At roll call, the following were present: Councilmembers Hauck, Pucciarelli, Riche, Walsh, and Mayor Aronsohn. Also present were Roberta Sonenfeld, Village Manager; Heather Mailander, Village Clerk; and Stephen Sanzari, Chief Financial Officer (CFO).
Mayor Aronsohn led those in attendance in the Pledge of Allegiance to the flag and asked for a moment of silence in honor of the American men and women serving in our Armed Forces, as well as those serving as first responders. Mayor Aronsohn asked for an extra moment of silence in remembrance of a friend, colleague, and the “sixth Councilmember,” Roger Wiegand.
2. COMMENTS FROM THE PUBLIC
Mayor Aronsohn stated that they would now have comments from the public and advised anyone wishing to address the Village Council to come forward. There were no comments from the public at this time, and Mayor Aronsohn closed the time for public comment.
3. DISCUSSION ITEMS
Ms. Sonenfeld said she wanted to point out a couple of things before the actual discussion got underway. A public budget review was held last Wednesday, and she was using the same document, which has been updated. Councilwoman Hauck and Councilwoman Walsh were not present at the previous meeting, but Ms. Sonenfeld met with Councilwoman Hauck, and Councilwoman Walsh watched the video of the meeting, and both of them studied the presentation document. Ms. Sonenfeld will make the presentation again on Wednesday, April 23rd, at the Village Council Work Session meeting, to give the public another opportunity to see all of the details.
- REVIEW AND WRAP UP OF 2014 BUDGET, 2014 CAPITAL BUDGETS, AND SETTING OF 2014 TAX RATE
Ms. Sonenfeld commented that she would go over the changes made since the previous meeting last Wednesday. First, she thanked the team of professionals who worked with her on this presentation for giving up so many hours to work with her on these changes. In addition, further departmental reviews were held from last Friday through Monday morning. She noted that in re-examining the budget, another $161,000 in expenses was found.
As noted before, there are expenses in the budget that need to be covered as soon as the process is started. Ms. Sonenfeld went over all of the most important ones last week, but several more have been added, including some Planning Board fees, which are incremental legal fees; the forensic review of Village processes; investment in Six Sigma training; and the fine assessed by the New Jersey Department of Environmental Protection (NJDEP). In addition, Ms. Sonenfeld added to the list of expenses that she believes should be covered the Community Center, and replacement of trees and mulch in the Village.
Ms. Sonenfeld explained that she found some expense savings in the budget. These include some full-time salary savings in the Fire Department, due to new hires, in the amount of approximately $161,000; a savings of approximately $56,000 in the Village Manager’s office on salaries and benefits; a savings of $10,000 in tax assessments; and an extra $161,000 in additional budget cuts.
On the revenue side, Ms. Sonenfeld commented that over the past couple of days, they took a closer look at the revenue numbers, and as mentioned last week, in nearly every case, revenue was maximized up to the actual revenue received in 2013. The revenue figures were re-evaluated to see whether there was any risk or opportunity in those numbers, and Ms. Sonenfeld believes the revenue situation is fine. Revenue may be increased in some areas, and decreased in others. It was thought that the side jobs by the Police Department might show a potential increase of approximately $200,000 year over year, and it was rumored that PSE&G has done a lot of major work, but it seems that any future work may be gas work, rather than electrical work. Therefore, Ms. Sonenfeld stated that, given the usual Graydon Pool weather risk, she is comfortable with the revenue numbers at this time.
Next, Ms. Sonenfeld discussed the fund balance. She pointed out a significant change from what was reported at the last meeting. At that time, Ms. Sonenfeld stated that $3.1 million of the fund balance would be used, but based on the savings in expenses, that amount has decreased to $2.983 million of the surplus to be used. When compared with the remaining surplus one year ago, it is actually higher in 2014, or $1.45 million. Moreover, the percent of the budget is lower.
The one-time revenues anticipated for 2014 did not change from what was reported last week. Ms. Sonenfeld reminded everyone that in 2014, $1.3 million is anticipated, and for 2013, that figure was approximately $877,000.
The debt service information also did not change from what was reported at the previous meeting. However, the information on supplemental expenses versus sources of funds did show a slight change, based on the slight increase in the supplemental expenses. The figure for supplemental expenses increased from $5.995 million to $6.428 million. The new total budget appropriation is $46.226 million. The total budget appropriation in 2013 was $45.343 million. That reflects a 1.9% increase year over year, which obviously is within the 2% cap, and is even more significant when one considers that uncapped and capped expenditures are included.
Ms. Sonenfeld explained that, in order to get to a 0% tax increase, there are two scenarios to be considered by the Councilmembers: a 0% tax increase, or a 1% tax increase. Both of the scenarios have positive aspects, because both of them are based on a new, more accurate, and realistic way of budgeting. Revenues have been raised as much as is allowed by law, and the previous year’s actual expenses were used to determine the current year’s expenses. Ms. Sonenfeld cautioned that this is not the best way to do zero-based budgeting, but it is better than using appropriation figures from the previous year for comparison. As a result, it was possible to decrease expenses. Both scenarios also include some modest but meaningful investments, including some relief for the Zoning Board and the Building Department; starting Six Sigma methods in the Village to enable looking at new and different ways of doing business; changes in human resource policies to strengthen the supervisory and middle-management layers; controls for the forensic audit; investment in the Community Center for the vibrant senior citizen population in Ridgewood; investment in police vehicles to replace old and possibly dangerous vehicles currently in use; technology investments; and investments in beautification of the community. Both of the alternatives include all of those things.
There are differences in the two scenarios, however. A 1% tax increase would mitigate the risk of not building up the fund balances. The process of budgeting used by Ms. Sonenfeld, in which the actual figures from 2013 were used to determine the appropriations for 2014, and revenue was matched, creates more of a risk in building up the surplus then there was in previous years, although Ms. Sonenfeld pointed out that in previous years, more money was put into surplus than was taken out. If that risk is encountered going forward, it could mean that there will be a larger tax increase 2015. On the other hand, the 0% tax increase does have its positive aspects. It continues to provide tax relief to many beleaguered residents who have paid a lot of taxes in the last couple of years, and demonstrates the Village’s desire to toe the line. The other positive aspect is that there are possibilities that over the next couple of months, more expenses could be identified, and there are some ideas that could be implemented.
Mayor Aronsohn thanked Ms. Sonenfeld and her team once again for all of their efforts in formulating the budget, and Mr. Sanzari and Ms. Mailander for their hard work.
Councilman Pucciarelli pointed out that another advantage to the 0% tax increase that goes with the idea of continued tax relief is that as a homeowner, a Ridgewood resident receives an equity dividend if the perception of Ridgewood is one of the highest taxed communities is changed. The 0% tax increase for 2014, coupled with the 0% tax increase in 2013, could help to change that perception. In the real estate world, it is said that the higher the perception of yearly tax increases is, the less likely it is that people would be willing to buy in the community. In addition, if the Village Council can be seen as a highly disciplined governing body that does not raise taxes routinely, particularly in excess of the Consumer Price Index (CPI) that could also benefit homeownership and equity investment in the community.
Ms. Sonenfeld pointed out that a .5% tax increase represents an increase of $22 per year per property, and a 1% tax increase represents an additional $50 per year per property. In addition, a .5% tax increase would raise an additional $225,000 for the Village, while a 1% tax increase would raise approximately $450,000 for the Village. However, Ms. Sonenfeld cautioned that while $450,000 seems like a lot of money, it may not actually add that much to the elimination of risk in the budget.
Councilman Riche noted that in the preliminary budget, the amount shown for receipts from delinquent taxes was increased from $738,000 in 2013 to $800,000 in 2014. He asked if that is based upon actual receipts in 2013, or if that is a projected amount. Mr. Sanzari explained that the amount for delinquent taxes is based on the amount that is outstanding at the end of the year, and is calculated based on tax collection rates. The actual figure was $950,000 at the end of the year, but based on the collection rate, the Village is allowed to anticipate $800,000 in the current budget. Councilman Riche clarified that there is a formula associated with that figure, and Mr. Sanzari confirmed this, adding that there are no foreclosures associated with those properties, so it is very likely that those funds will be collected.
Councilwoman Walsh asked if the estimates for assessed property values were based on 2013 assessments. The answer was that the estimates are based on 2014 assessments, and Councilwoman Walsh asked if the existing 2014 assessments were used, or some other assessment. Ms. Sonenfeld replied that the average house value in Ridgewood was assessed at $688,358. In 2013, the average assessed value was $686,994. Councilwoman Walsh stated that when she researched the numbers online, it shows that the 2013 average home value was $817,000. In fact, when Councilwoman Walsh accessed the information on the Internet, it showed that in 2012, the average home value was $738,480; and in 2013, it was $817,380. So far, the average home value in 2014 is shown as $762,000.
Michael Barker, Tax Assessor, commented that he believed Councilwoman Walsh was looking at the average selling prices, not the average assessed value of those homes. He pointed out that there is another chart online that has the residential average assessment, and the actual average assessment, which factors in the commercial properties, as well.
Councilwoman Walsh noted that the Board of Education tax increase will be 1.9%, and Ms. Sonenfeld added that the County tax increase is approximately 1.8%. Councilwoman Walsh commented that those are obligations that taxpayers will have to meet, regardless of what is decided by the Councilmembers. She pointed out that the majority of questions and concerns over the past several months have been regarding services. If the Village is going to keep services at the current level, some residents think that the budget was cut a bit too much, which has affected services. Councilwoman Walsh added that the residents will see a tax increase, and unfortunately, it always seems to be attributed to the Village Council. She asked how the Councilmembers should respond to residents when discussing either a 0% tax increase, or some type of tax increase. Ms. Sonenfeld explained that the assumption during the budgeting process was that there would be no diminishment of services, and she believes this budget provides that. She thinks the question is one of the risk involved in building the reserve back up, and the other question is that, while the Village does some modest investments, there is always more investment that could be done. This is a modest budget for times that are still difficult for many people, and it could be a completely different story next year.
Mayor Aronsohn said he appreciated the way Ms. Sonenfeld laid out the different options available to the Councilmembers, both of which have some significant positive aspects. As he understands it, the positive aspects include the fact that the budgeting process is different, with a more accurate way to do budgeting due to the fact that the actual expenses and revenues are being used, as opposed to appropriations and what was budgeted. Mayor Aronsohn believes that is a big step forward. Next, as Ms. Sonenfeld pointed out, there is a lot of discipline in this budget, whether there is a 0% tax increase or a 1% tax increase, it underscores the fact that Village government is very serious about budget discipline. Mayor Aronsohn thinks either scenario would indicate the Councilmembers’ willingness to do right by the taxpayers. The third point Mayor Aronsohn wanted to make had to do with Ms. Sonenfeld’s discussion about strategic investments. He noted that there are some investments included in the budget, and he thinks they are all very important investments to make. Regarding surplus, Mayor Aronsohn thinks that the budget maintains the line, and in fact, shows a bit of an increase in the remaining surplus. He is very much in favor of a 0% tax increase. Mayor Aronsohn agreed with Councilwoman Walsh that, when one considers the tax increases being levied by the Board of Education and the County, the tax burden on Ridgewood residents is increasing, and Mayor Aronsohn emphasized that he does not want to compound that. He believes this budget presents an opportunity to allow a 0% tax increase, and that going forward, more efficiencies will be found, as well as the possibilities for making additional investments next year, which might mean a tax increase. However, that increase will be targeted and strategic. Mayor Aronsohn is very uncomfortable with raising taxes if the level of services is not being raised in a targeted way.
Councilman Riche commented that Ms. Sonenfeld made the point that the Department Directors were charged with not diminishing services, but Councilman Riche thought the bar had already been lowered. He believes there has been a tremendous diminishment of services in the Village. As an example, he noted that the Village has three employees and a Supervisor to take care of grounds maintenance throughout the Village. If the level of services is measured against what is currently provided, the budget does provide no diminishment in services. However, since the layoffs in 2010, there has been a clear diminishment in the level of services in Ridgewood.
Councilman Riche also pointed out that the debt service has increased 21%, by $835,000. Compelling arguments have been made by some Department Directors regarding equipment that needs to be replaced, and Councilman Riche believes that the Village is putting off until tomorrow what is needed today. Therefore, Councilman Riche said he supports a 1% tax increase to help with the capital budget as well as the operating budget. He does not like to see tax increases, but he does not believe that an increase of $50 per property places an undue burden on taxpayers, and it will help with some of the unfunded liabilities discussed previously. Councilman Riche is concerned that, in order to make up for all of the unfunded liabilities and capital projects that are put off, there will have to be a large tax increase at some point, which will place an even bigger burden on Ridgewood taxpayers.
Councilman Pucciarelli commented that a 0% tax increase does not mean that there will be no tax increase in Ridgewood, due to the increases from the Board of Education and the County. The 0% tax increase only dilutes the increases from the other entities. Next, Councilman Pucciarelli said that he does not understand the correlation between a 1% tax increase and the level of services, which Councilman Riche just discussed. If raising the budget by $500,000 would somehow translate into providing better services, Councilman Pucciarelli said he might be able to support that. However, no restructuring plan has been completed, and simply throwing more money into the budget without knowing where it is going and without a plan going forward is not something that Councilman Pucciarelli can support. In fact, Councilman Pucciarelli does not feel a 0% tax increase is much different than a 1% tax increase, but he completely supports the implied discipline in the 0% tax increase. He asked Ms. Sonenfeld about the $161,000 in additional cuts, and where they are coming from. Ms. Sonenfeld answered that the biggest cut is in Workers Compensation claims, in the amount of $125,000. The other cuts are coming from the Village Clerk’s office, including cuts made in the elections budget based on the elections two years ago; and other cuts from tax collection, $14,000 in cuts from the Village Manager’s office and other cuts in the Engineering, Building Maintenance, Yard Waste, Recycling, Solid Waste, Fleet, Recreation, Parks Departments, and Graydon Pool. As far as employees are concerned, there was a large increase in part-time and seasonal workers in the Department of Parks and Recreation.
Councilman Pucciarelli noticed that there is an increase in the cost for health insurance in the amount of $321,000. He pointed out that the Village pays a higher percentage of that than most other municipalities because, due to contractual negotiations with uniformed services, implementation of the State law that requires a minimum 1.5% of salary contribution, up to 35% of premium, was delayed as a result of the last round of collective bargaining negotiations. However, that portion of the contract with the Fire Department will expire in October 2014, and contributions to healthcare premiums made by Fire Department personnel will go to the amount required by State statute. The Police Department contract expires at the end of 2015, which will bring their health benefit contributions to the amount required by State statute. This is indicative of the structural changes that will be made in the budget going forward. Councilman Pucciarelli said there must be other similar areas that can be modified to change the embedded increases that are seen every year.
Councilwoman Hauck said she finds this to be a very difficult decision, because she also finds the difference between a 0% tax increase and a 1% tax increase to be negligible. However, it is more symbolic to be able to say that there is a 0% tax increase and that the Village Council is practicing responsible government. Councilwoman Hauck realizes that a 1% increase represents approximately $450,000. However, she feels strongly that in this day and age, New Jersey residents are barraged by tax increases, and Councilwoman Hauck believes that ways can be found to be more efficient. With the surplus in place, and seeing that all of the most important needs of the largest Departments are being fulfilled with the 0% tax increase, she is more inclined to vote for the 0% tax increase. She recognizes all of the cuts and sacrifices made, as well as the hard work done by the various Department Directors to get to this point. In addition, Councilwoman Hauck believes there is the potential to find more revenue and to save money in other ways that do not include more budget cuts.
Councilwoman Walsh said she had a couple of questions for Ms. Sonenfeld. In the 2013 tax bill, the percentage apportioned to the Board of Education was 1.535%. The municipal portion of the tax bill was .542%. The Open Space tax was .004%, and the Public Library portion was .036%. Therefore, Councilwoman Walsh wanted to know if there was a chance that the mil rate numbers would come down based on the County numbers, and is that something that is built into the budget. Ms. Sonenfeld tried to clarify Councilwoman Walsh’s question by saying that the Public Library has been funded above the mil rate by approximately $320,000, and they have requested a $43,000 increase on top of that or approximately 1.9% more than the 2013 appropriation, as well as a significant amount of capital funds. In the past few days, rather than focusing on their expenses, Ms. Sonenfeld stated that the focus was on their capital requests. Approximately $300,000 worth of capital requests were removed from the capital budget, one of which was a request by the Public Library for a $250,000 generator, because the Public Library is not considered to be a primary disaster recovery site in the Village. Another item that was cut from the capital budget was the request by the Public Library for automatic doors with heat curtains, in the amount of approximately $26,000. In addition, the request for automated kiosks for checking out books and credit card use was also cut. Ms. Sonenfeld pointed out that she is not sure what the Village Council’s responsibility, or Ms. Sonenfeld’s responsibility, is regarding the Public Library. She is unsure as to whether the Public Library reports to the Village Council, or whether they must report to the Public Library Board of Trustees. Therefore, there has been no open dialogue held with anyone associated with the Public Library in order to find efficiencies. That is something that could be addressed this year. Councilwoman Walsh said she is torn, because she wants to support the 0% tax increase, but she feels strongly that services in the Village have diminished.
Mayor Aronsohn commented that he supported Ms. Sonenfeld’s idea about having a dialogue with representatives from the Public Library to find efficiencies, and such opportunities might be found in other Village Departments. He also pointed out that the Public Library budget is not the only one that is increasing, because there are increases in other Departments across-the-board. Ms. Sonenfeld noted that the year-over-year increase in the Public Library budget is comparable to the year-over-year increase in the Village operating budget. Because Ridgewood values its Public Library, and considers it to be a centerpiece of the community, the question of whether to fund it over and above the State mandated amount is a difficult one. Ms. Sonenfeld commented that when she was a member of the FAC, the possibility of evaluating the budget for the Public Library was discussed. In fact, Ms. Sonenfeld said that the FAC could do to the Public Library budget the same thing that they did to the Village budget, which is to completely take it apart, analyze it, and make their recommendations. They could also do some Six Sigma training and apply those methodologies in the Public Library.
Councilman Pucciarelli stated that one of the service areas for which he has heard a lot of complaints in the past year was due to the confluence of leaves and snow on the ground, and one of the current candidates for Village Council made a suggestion as to how that could be improved. He urged everyone to come to the candidates’ debate next week, because they offer many good ideas and solutions to current issues affecting the Village. Councilman Pucciarelli also noted that if everyone starts thinking about what services are really wanted; what services need to be improved; and how the services can best be delivered, it may be discovered that the services could be provided for less. It may also be determined that they might cost more, but if it is what people want, they might be willing to pay more for these services. However, Councilman Pucciarelli pointed out that the Village is not at that point yet. Therefore, to increase the budget at this time, while receiving the same level of services as before, indicates poor discipline to him.
Mayor Aronsohn proposed that a headcount (not a vote) be taken to move forward with the preliminary budget as outlined by Ms. Sonenfeld, for the 0% tax increase. Councilman Pucciarelli and Councilwoman Hauck joined Mayor Aronsohn in that support, while Councilman Riche and Councilwoman Walsh stated that they do not. Mayor Aronsohn said the budget would be introduced on Wednesday, April 23rd, at the Village Council Work Session meeting.
Ms. Sonenfeld commented that she and her team went through the capital budget in detail. She noted that the Village Council directive was $3 million, and the capital budget is now close to $3 million. The capital budget includes a lot of the requests made by the various Department Directors, although some equipment requests had to be cut. Ms. Sonenfeld also pointed out that there is the $850,000 increase on the principal and interest payment for the outstanding debt that cannot be ignored. She reminded the Village Council that the higher the capital budget goes, the more bonds that are issued, which will only increase the principal and interest payments. She feels strongly that going forward, there needs to be some type of long-range capital plan formulated. Ms. Sonenfeld commented that Mr. Rutishauser told her that in 2006, he prepared information suggesting that there is a lot of infrastructure work to be done in the Village, which Ms. Sonenfeld said could potentially be a big number. She believes it is essential to come up with a five-year capital plan, in order to determine how much capital will be needed. The FAC will be consulted in creating that plan.
Councilman Pucciarelli pointed out that Nancy Johansen, Chairperson of the FAC, and Janice Willet, FAC member, were present at this meeting. He noted that they and Ms. Sonenfeld had discussed the possibility of leasing Village vehicles, rather than purchasing them, which would come out of the operating budget rather than the capital budget. In addition, Ms. Sonenfeld had mentioned the possibility of having the vehicles serviced by the proposed vehicle repair facility to be built by the County. These are more examples of finding ways to deliver the same services without cutting personnel or the current level of services. Ms. Sonenfeld noted that they also require investment spending.
4. ADJOURNMENT
There being no further business to come before the Village Council, on a motion by Councilman Riche, seconded by Councilman Pucciarelli, and carried unanimously by voice vote, the meeting was adjourned at 7:28 P.M.
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Paul S. Aronsohn
Mayor
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Heather A. Mailander
Village Clerk
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