Residents to pay less in taxes despite deficit

West Orange’s financial straits managed with strategic cuts, prioritizing and an eye on the future

WEST ORANGE, NJ — The West Orange Township Council approved the $78,593,900.14 municipal budget for 2016 during its May 24 meeting by a vote of 4-1, with Councilman Joe Krakoviak being the sole vote against it.

The budget increases the municipal tax levy to $51,933,857.13, which is $989,797.01 more than last year’s municipal levy of $50,944,060.12. In addition to that, the budget is collecting $1,988,181 for the minimum library levy and $145,460.49 for the Open Space, Recreation, Farmland and Historic Preservation Trust Fund levy.

The budget also increases the tax rate by 2 percent, the state-mandated maximum cap.

Considering that the average assessed value for a single family home is $338,049 — which is up from last year’s $337,916 — the average West Orange homeowner will pay $3,135 in taxes for 2016, a $54 decrease from $3,189 in 2015. While typically an increase in a home’s assessed value would lead to an increase in property taxes, West Orange residents are seeing a decrease because the assessed valuation of all taxable property within the township decreased by $1,024,800 between 2015 and 2016.

The 2016 budget was approved in the face of what Mayor Robert Parisi has called a more than $4 million deficit, largely incurred by increases in employee health care costs. Township CFO John Gross told the Chronicle in a May 26 phone interview that those costs increased by $2,215,226, rising to $12,281,765.12 in 2016 from $10,066,539.12 in 2015.

But health care was not the only cost increase to affect the budget. The amount spent on salaries and wages increased by $107,421.26 to $29,378,965.89 this year. According to Gross, the “vast majority” of salary increases were a result of collective bargaining agreements. Other cost increases listed in the budget include $102,207.63 for operations; $225,000 for capital improvements; $369,003.14 for the debt service; and $1,666,500 for deferred charges.

Overall, the total amount designated for general appropriations increased by $4,840,484.03 in 2016, rising to $76,057,791.51 from $71,217,307.48 in 2015.

The deficit did indeed did make a financial impact on the township this year: not only did the tax levy increase, Gross said, but West Orange is also spending roughly $2.9 million of its approximately $3 million surplus to address the situation, leaving the town with only about $540,000 left in its fund balance. Parisi has previously stated that the township will also eliminate 15 vacant positions.

Yet the township’s financial situation could have actually been much worse. Gross said the initial proposed budget was roughly $81.5 million, approximately $3 million more than the final budget.

At the council meeting, Krakoviak lauded Gross for reducing the appropriations in the budget, but the councilman still maintained that more funds should be allotted to the West Orange Public Library, an argument that he and hundreds of other library supporters have been voicing for months. The WOPL has seen a decrease of roughly $600,000 in funding since the township stopped contributing monies in addition to the minimum required by the state after 2010. As a result, the WOPL has had to reduce its workforce by 31 percent in the past six years in addition to cutting hours and materials budgets.

This year, the library board passed a budget cutting $83,000 for its materials budget and two part-time employees. Heading into the municipal budget vote, library board Chairwoman Sheri Prupis requested that the township give a minimum $60,000 to save those jobs. And Krakoviak said he had found more than enough money within the budget that could be redirected to meet that need — to the tune of $117,717.88.

That amount was calculated after adding up nine budget items that Krakoviak said were largely included every year but never used. These included $20,128 for training that he said has not been spent in multiple years; $50,000 from the $125,000 designated for litigation-labor matters when he said only $52,764.71 has been spent to date; and $16,000 from the $40,000 designated for marketing when he said $24,000 has been spent to date.

“These are all allocations that are expected to be rolled over into the surplus,” Krakoviak said, pointing out that no money would be taken away from anyone, no one would be laid off and no programs would be eliminated. “So the question for me is whether we should use a small part of the surplus this year in order to stave off further cuts to the library.”

Jack Sayers, the township business administrator, pointed out that using those monies would be a bad idea because they serve as a financial “cushion” for the township in case a situation arises requiring the funds. Just because the money is not used every year does not mean that it will never be needed, Sayers stressed.

“What you need to understand is this money is put in there because we need it when we need it,” Sayers said, turning to the $3,000 Krakoviak said could be taken out of the $6,000 designation for new employee physicals. “If we’ve got to send 10 people for physicals, that’s $400 a person. We need to have that money in the budget. And if we don’t have that money in the budget, then we’re coming back to you guys saying ‘We need an increase in the budget.’”

In the end, Krakoviak failed to get a second for his proposal to amend the budget with the transfers. As for the WOPL, Council President Victor Cirilo pointed out that the township has agreed to fund the first year of the institution’s five-year, $1.5 million capital improvement plan, which he said is a major “victory” for library supporters. Aside from that, Cirilo said that the township found a healthy surplus for the library after auditing its finances, so its financial future may not be as bleak as previously thought.

Speaking with the Chronicle in a May 26 phone interview, Gross said he found a $606,000 surplus after going through WOPL financial records. But in a May 26 email to the Chronicle, Prupis said the money Gross referred to reflects the total funds related to the library, including donations restricted for certain purposes and necessary cash-flow expenses. The library currently has only $349,000 in capital reserves, she said.

The other council members who voted in favor of the budget said that they would have loved to give more money to the WOPL, but the township’s current financial situation simply did not allow it. Councilman Jerry Guarino said everyone did their due diligence, but the deficit made things too difficult. And the WOPL is not the only township service in need — Guarino said he would like to see the West Orange Fire Department get new equipment, but that is not happening this year.

And though Councilwoman Michelle Casalino said hopefully the township’s new grant writer can help the library, Guarino said there was nothing more that the council could do.

“We’ve done our work, we looked at the numbers,” Guarino said. “You can’t take from Peter to pay Paul because you’ll go back to Paul to pay Peter.”

COMMENTS

3 Responses to "Residents to pay less in taxes despite deficit"

  1. Sue   June 4, 2016 at 1:36 pm

    There must be something wrong here–please check this paragraph: “Considering that the average assessed value for a single family home is $338,049 — which is up from last year’s $337,916 — the average West Orange homeowner will pay $3,135 in taxes for 2016, a $54 decrease from $3,189 in 2015. While typically an increase in a home’s assessed value would lead to an increase in property taxes, West Orange residents are seeing a decrease because the assessed valuation of all taxable property within the township decreased by $1,024,800 between 2015 and 2016.”

    First, the average ANNUAL tax bill cannot possibly be $3,135. Second, there is no way that the levy and the rate both increase but tax bills will go down. If the levy goes up, then the Town needs to raise MORE money through taxes, not less, so please clarify how the average resident will pay less in taxes?

  2. John Prignano Sr.   June 29, 2016 at 12:57 am

    The $3,135 figure must be referring to only the municipal portion of each homeowner’s tax bill.You’re right about the rest of it. Nonsensical.The tax levy is up 2%, the amount of the tax levy is up $989,797.01, ” and the assessed valuation of all taxable property within the Township decreased by $1,024,800 between 2015 to 2016.That does not equal anything except an increase in taxes. 2% of $3,189 ( current average municipal tax bill) is $63.78. 2% of $3,135 is $62.70. According to the figures provided here, taxes will not go DOWN $54, they will go up about $64.( Was $54 a typo? Maybe the 5 was supposed to be a 6, who knows) You’re right Sue,the figures in the article MAKE NO SENSE. However, let’s see if some part of the “$100 sewerage fee increase” finds it way into the municipal budget….. it’s happened before………..

  3. John Prignano Sr.   June 29, 2016 at 2:52 pm

    “Yet the township’s financial situation could have actually been much worse.Gross said the initial proposed budget was roughly $81,500,000, approximately $3,000,000 more than the final budget.” MORE NONSENSE. Proposed budgets are always WAY beyond the final budget;Wish lists,an individual member’s pet projects and causes,pandering to special interests, etc.The final budget was right at the state mandated cap.Why did the council KNOWINGLY submit a budget that was $3,000,000 over the cap?