Township Will Have 'Difficult' Time Reaching 2% Tax Cap In 2013, Officials Say
An audit of Mahwah's 2011 finances and analysis of current spending revealed the township is in good financial standing now, however
Mahwah’s municipal government is in good financial standing now, but may have a tough time reaching its 2013 budget restraints, according to a presentation Thursday night by county auditor, accountant Louis C. Mai.
Mai presented a summary of his 2011 audit report on the township at a town council meeting Thursday night. Mahwah’s Chief Financial Officer Ken Sesholtz and Business Administrator Brian Campion also presented an analysis of where the township is in terms of finances for 2012, and where it is headed next year.
Mai said he was “very comfortable” with all of the metrics he looked at to evaluate Mahwah’s spending and earnings in 2011, noting that the township’s fund balance was “where it needed to be.”
In terms of generating revenue and paying expenses budgeted for in 2012, Campion said the township is “pretty much on target.” However, he cited several areas of concern that will be a “challenge” when compiling the 2013 budget, which he said he and Sesholtz began doing the day after Labor Day.
Two areas of the budget, he said, will likely cost more than the township anticipated – legal fees and costs related to municipal court.
Legal fees are “running very high this year” due to the “high number of lawsuits” the township is currently engaged in, Campion said.
A “spike in filings” in the township’s municipal court created a need for a new hire in that department, higher fees due to the prosecutor and judge, and higher court-related overtime payments for Mahwah police officers, Campion said. The increases, he said, were due to increased police enforcement and more summonses being issued in the township this year than in 2011.
The increased costs, he said, have led to an increase in revenue to the town from the municipal court system – as of August 31, the town already made more than the $350,000 it estimated it was going to make for the entire year. Continuing at this pace, Campion said the township is on track to make over $200,000 more than it anticipated from the municipal court.
However, the excess will go into the town’s surplus fund, not it’s operating budget, and can therefore not be used to pay for the associated increase in costs, Campion said. He cited this “cash flow problem” as one of the issues facing the 2013 township budget.
Another, which Campion said will be discussed in more detail at the next council meeting, is an increase in tax appeals filed by residents and businesses in the township. This year, he anticipates spending all of the township’s reserve funding, about $600K, for appeals, and an additional $200K budgeted for overages.
According to an early projection of the 2013 budget, Campion said a two-percent raise in taxes, the state mandated maximum, would be "soaked up" by salary increases, increased pension and medical coverage costs for municipal employees, and the bump in tax appeal payments.
The township is currently in negotiations with its three employee unions. If all three unions agree to a wage freeze, the town would still need to pay a full year of salary increases that were previously agreed to and began this July, he said.
“We are easily [already] $500,000 over the tax levy cap” for 2013, Campion told the council. So, “the budget will be difficult. But, it was difficult in 2012 and 2011.”
Though he noted it was too early to give specifics on how, Campion assured the council that township’s administration will deliver a balanced budget for 2013 in mid-January, as it is required to do by state statute. “We have always delivered the budget on time,” he said.