Budget Wrkshp March 12, 2018
Lking Back at 2017
2017 Revenue Results 2017 Anticipated Revenue cllectins exceeded budgeted amunts by apprximately $170,000: Psitive Results: Building Dept. Fees $437,000 (300,00 Budgeted) Interest n Depsit $145,000 (50,000 Budgeted) 1 st year f Verna Place PILOT Agreement ($39,000) Nn-Anticipated Revenue f $246,000 FEMA Receipts, Surplus Vehicle Sales, Trust Accunt Cancellatins Negative Results: Change in Status f Verna Senir Husing PILOT
2017 Budget Results Fr the mst part, 2017 actual expenses fell inline with ur prjected budget: Savings: The Department f Public Wrks and the Health Department saw significant decreases in persnnel cst due t Retirements Emplyee Benefit Csts PSEG Reimbursements Energy efficiency, cmbined with steady rates, led t lw utility csts. Increases: Prperty Revaluatin added $400,000 t be paid ver the next five years PBA and OPEIU cntracts expiring 12/31/16 have nt been settled. Outcme f negtiatins did nt yet impact the 2017 Budget.
2017 Operating Results The net result f the Twnship s peratins is an increase r decrease t the Twnship s Fund Balance Fund Balance Increased by: Revenue cllectins in excess f budgeted amunts Actual expenditures less than budgeted amunts Miscellaneus revenue nt anticipated Fund Balance Decreased by: Revenue Shrtfall Expenses ver budgeted amunts Emergency Expenses 2017 Operatins resulted in an $564,000 increase t Fund Balance
Mving n t 2018
2018 Prpsed Municipal Budget Summary Revenue Surce 2018 Budget Miscellaneus Anticipated Revenue $ 4,060,988 Delinquent Taxes 420,000 Fund Balance 2,920,000 Amunt t be Raised by Taxatin $16,475,923 TOTAL $23,876,911 Expense Apprpriatin 2018 Budget Salary and Wages $ 8,030,070 Statutry Expenses 1,803,533 Debt Service 3,820,405 Public Library 820,243 Reserve fr Uncllected Tax 1,628,850 Other Expenses 7,773,810 TOTAL $23,876,911
2017 and 2018 Municipal Budget Cmparisn 2017 Budget 2018 Budget (Prpsed) Change Municipal Tax Levy $15,885,429 $16,475,923 3.72% Municipal Tax Rate.7852.8149 3.78% Avg. Prperty Valuatin $361,700 $362,600 $900 Municipal Tax n Avg. Prperty $2,842 $2,955 $115 Assessed Valuatin $2,023,084,900 $2,021,822,600 -.06%
Municipal Tax Histry 2012 2013 2014 2015 2016 2017 2018 Municipal Tax Levy (in 000 s) 14,856 14,865 15,710 15,762 15,842 15,885 16,475 % Change frm Prir Year 0.00% 0.00% 5.69% 0.33% 0.51%.27% 3.72% Municipal Tax Rate.720.740.785.785.785.785.815 % Change frm Prir Year 3.75% 2.76% 6.08% 0.00% 0.00% 0.00% 3.81% Operating Expenses (in 000 s) 21,062 21,311 22,063 22,117 21,888 21,896 22,248 % Change frm Prir Year 4.32% 1.18% 3.53%.25% -1.04% 0.04% 1.61% Befre we lk at what is driving the 2018 increase, lets examine the budget in mre detail
Ttal Expense by Categry 11% 4% 17% 36% 12% 8% 10% Salary and Wage Health Benefits Statutry Expenses Other Expense Debt Service Utilities, Garbage, Recycling Library Fire and Rescue Grants/Interfunds
Analysis f Salary by Department 5,000,000 4,500,000 4,000,000 4,600,861 57% 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 1,224,126 15% 732,382 9% 1,073,310 13% 399,391 5% 0 Public Safety Public Wrks Administrative and Clerical Cmmunity Center Other Salary & Benefit Cst by Department 7,000,000 6,000,000 6,488,429 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 1,944,996 1,170,490 1,475,434 579,254 Estimated cst allcatin - Public Safety Public Wrks Administrative and Clerical Cmmunity Center Other
What Can the Average Resident Expect t in Municipal Taxes Pay? Municipal Services as a Mnthly Bill Municipal Service Annual Cst Public Safety $ 903 Capital Prjects and Debt $ 413 Public Wrks $ 507 Public Utilities, Garbage, Cllectin $ 320 Administratin and Legal $ 306 Cmmunity Services & Recreatin $ 256 Public Library $ 109 Other Miscellaneus Services $ 141 Ttal Average Annual Tax Bill $ 2, 955 Municipal Service Annual Cst Public Safety $ 75 Capital Prjects and Debt $ 42 Public Wrks $ 34 Public Utilities, Garbage, Cllectin $ 27 Administratin and Legal $ 25 Cmmunity Services & Recreatin $ 21 Public Library $ 9 Other Miscellaneus Services $ 12 Ttal Mnthly Service Bill $ 246
Nw, Let s Lk at the Entire Prperty Tax bill f a Verna resident Estimated Ttal Tax Bill f $11,685 $147 Tax Entity % Increase (2014-2018) Bard f Educatin 11.50% Cunty 11.75% Municipal 4.80% $2,808 $2,292 $6,438 Schl Cunty Municipal Library * 2018 Schl and Cunty estimated based n histrical increases
S What is Driving the 2018 Increase? Debt Service n Capital Prjects Hilltp Fields Apprx. $6 Millin Library Renvatin Apprx. $4 Millin
Gverning Bdy apprves capital spending utside f the nrmal budget prcess Capital Ordinance Requirements Intrductin (Meeting One) Public Hearing (Meeting tw) Adptin by 4/5 Gverning Bdy (Meeting tw) Capital Prjects are funded by a cmbinatin f: Operating Budget Grants Lng and Shrt Term Debt Debt Service (Principal and Interest) Capital Ordinance Apprval Prcess Paid annually ut f the perating budget Required Dwn Payment f 5% Shrt-Term Debt Bnd Anticipatin Ntes Renewed Annually Lw Rates, Lw Principal, Rate Risk Lng-Term Debt Debt Prcess & 2017 Bnd Sale Scheduled principal and interest spread ver the life f the prjects Lcks in psitive interest rates 2017 Bnd Sale 1 st Since 2013 Credit Rating AA+ $14,355,000 16yr Bnds (2018-2033) 2.7% Net Interest Cst $400,000 Increase t Debt Service
Prgress Revenue Very finite revenue streams Fees are examined n an annual basis: Recreatin Prgrams Cnstructin Fees Municipal Curt Fines 1,050,000 900,000 750,000 Capital Surplus Utilized as Operating Revenue 1,000,000 700,000 700,000 Limited Investment Optins Regular Depsits Prepaid Taxes 600,000 450,000 300,000 150,000 468,900 292,000 183,000 Reduced Capital Funds as Revenue - 2013 2014 2015 2016 2017 2018
Prgress Expenses Lcal Gvernments are service prviders with many large fixed csts: Persnnel Csts amunt t abut 50% f ur perating budget PFRS Emplyer Cntributin 27% PERS Emplyer Cntributin 13% Plice & Public Wrks Garbage Cllectin and Utilities *Substantial effrt t cntrl expenses has prduced bna fide results*
Operating Expenses 2014 Expense: $ 22,063,489 2018 Expense: 22,248,060 Five Year Increase: $ 184,571 Prgress 2014 2018 Operating Expenses (Ex Debt) 2014 Expense: $ 19,107,240 2018 Expense: 18,427,655 Five Year Decrease: $ (679,585) 19,250 19,000 19,107 Operating Expenses (000 s) Excluding Debt Service 19,118 18,750 18,500 18,593 18,474 18,427 18,250 18,000 2014 2015 2016 2017 2018
Prgress 2014 2018 Ttal Salary and Wages 2014 Expense: $ 8,104,880 2018 Expense: 8,030,070 Five Year Decrease: $ (74,810) 25% 20% 15% 10% 5% 0% -5% Average Salary Increase 2014-2018 2014 2015 2016 2017 2018 22.5% 11.5% 3.0% -0.9% Ttal Salaries Management OPEIU Plice
Challenges Ahead 1. Unsettled Cllective Bargaining Agreements Bth PBA and OPEIU cntracts expired as f January 1, 2017 The result f negtiatins will dictate a large prtin f the Twnship persnnel expenses Estimated increases built int 2017 and 2018 Budget 2. Capital Prjects and Debt Management Eliminate reliance n Capital Surplus as a revenue surce Fund Capital Prjects directly frm peratins t reduce debt 2010 and 2008 Bnds retire in 2024 Plan and Reserve funds fr upcming expenses (fields)
Utility Budgets Verna Operates Tw Municipal Utilities Utilities are Self-Liquidating, which means they are perated strictly frm user fees and nt supplemented by Taxes Utilities Capital Prjects and Debt 2017 Bnd Sale: Water and Sewer = $1,505,000 Swimming Pl = $171,000 Municipal Emplyees wh spend time n bth Municipal and Utility peratins will ften have their salaries split between the tw
Swimming Pl Utility 2017 Operatins 2018 Budget Swimming Pl Utility is funded fully by its members and users Less than $20,000 Increase frm the 2017 budgeted expenses Membership Fees f $466,00 cllected in 2017. $88,000 in ther revenues (Guests, Parties, Etc.) DPW Salaries traditinally have nt been charge t the Pl Utility N Fee Increase in 2018 (Last increase was 2016) Future Prjects: Children s Splash Park 2016 Badge and Membership system upgrade has prduced greater revenue and allwed fr imprved cntrls
Water & Sewer Utility 2017 Operatins 2018 Budget Mild summer cntributed t rent revenue cming in at $5,255,000 Cnnectin Fees frm new develpment (in/ut f Twn) have prduced substantial revenues Apprximately $160,000 increase t peratins in 2018 Salary increase based n prjected result f negtiatins (OPEIU) Water Purchase Majr expense t supplement Verna Wells 2018 Increase f 5% frm Passaic Valley Water Cmmissin ($60,000) Significant prgress has been made twards autmating the meter reading prcess: 2/3 Cmplete Estimated t be fully autmated by the Fall f 2018 Debt Payments $60,000 increase t Debt in 2018 Capital Prjects Majr infrastructure imprvements Mre planning and analysis required
Next Steps Wrkshp Discussins with Dept. Heads 3/12/2018 Intrductin f Budget 3/19/2018 Public Hearing and Adptin 4/16/18 (Tentative)