Sunday, November 22, 2009

What Other Towns Are Doing About The "Budget Dilemma"

More information gathered at the League of Municipalities Convention:


- layoff plan - city administrator urged starting early so savings are not limited to a few months

- reduction in workforce - 102 positions including 20 vacant positions, 19 demotions, 49 permanent employee terminations and 14 seasonal terminations. This included 10 vacant police positions and 3 demotions.

- The savings from the reduction in force is reduced by increased unemployment benefit costs

- Non union employees absorbing increased co payments for drug benefits (from $10 to $20)

- 79 user fees increased

- Voluntary furloughs offered to save some employee positions but no-one came forward

- Superior police officers accepted 0% wage increase for 2010


- Council knew of $2.5 million shortfall early and worked closely with administration to introduce a budget

- layoff of 20 positions including 3 police positions

- Renegotiated FMBA contract (firefighters) to save $1.1 million and staff positions

- 12 furlough days per year (fire and police not included in this plan)

- raised user fees

- layoffs and furloughs resulted in staff morale problems


- county took over police dispatching, saving $600,000

- sharing IT Manager with Board of Education saving $50,000

- reduction in workforce from 166 to 137 over a two (or three?) year period

These towns are ahead of Plainfield in developing solutions to the fiscal crunch being felt all over New Jersey. At last nights Council meeting, the responsiblity for the budget shifted from the administration and Mayor over to the Council. There will still be a need for the Mayor and Council to cooperate in order to work with our unions to make the tax increase less devastating. We shall see.

Plainfield's budget - part three

Or what I learned at the NJ League of Municipalities Convention

The last post, part two, explained how the state has capped the annual increase in municipal expenditures (the annual cost of living cap on expenditures is usually 2.5 % with significant exceptions allowed for pension, health benefit, capital and other costs). I also covered how this affects Plainfield.

Now to the all important revenue side of the budget. Municipal revenues are heavily dependent on property taxes to pay for local services. Important miscellaneous revenues in Plainfield are state aid and local user fees, both of which are not increasing along with our personnel expenditures. In fact the economy is taking its toll on these revenues and they are going down.

So property taxes have to increase more than expenditures on a percentage basis to compensate for the poor revenue picture. In other words, a 2.5% increase in Plainfield's annual budget (and allowing for all the cap exceptions mentioned above) may require a 10% property tax increase! That is, in fact, the situation facing Plainfield right now.

That's what motivated me to take a trip to Atlantic City to the League of Municipalities Convention (at no cost to the city), to learn about strategies used around the state to cope with our fiscal dilemma.

In one workshop Robert Casey outlined five ways cities can cope:
1. increase miscellaneous revenues - Mr Casey said that there are limited opportunities here and in fact, Plainfield has already done some of the things suggested in this category.

2. reduce expense - he said cities have to operate as businesses and seriously reduce ongoing expenses and not just use one time fixes

3. transfer costs to another entity - Plainfield has used this approach - can anyone guess what it is - the answer is at the bottom of this post.

4. shared services agreements - to get economies of scale. An example shared was a town that split the cost of an IT Manager so each paid $50,000 towards the salary.

5. advocacy - lobbying the state legislature to take action on binding arbitration and unfunded mandates.

The take home lesson for me is that in the near term, while Plainfield needs to pursue each of the five general categories above, the most important way to control property taxes is to reduce local expenses.

In the next blog post, I will share details from three towns that are working hard to get a handle on the difficulties we all face. Here is a sneak preview - layoffs, furloughs and increased user fees.

- Answer from question about transfer of services - Plainfield Municipal Utilities Authority
- Bonus question - who is Robert Casey? Winner gets mentioned on my blog. Awesome prize, right!

Saturday, November 14, 2009

Plainfield's budget - part two

The state legislature recognizes that New Jersey property taxes are too high and will continue to escalate. There is a state law to address this, ineffective though it may be. This law states that local governments cannot exceed the previous years budget by more than 2.5 %. Sounds good, right? Unfortunately there are so many exceptions allowed that taxes can go up 10 or 15% anyway. In addition to the exceptions, a municipality may pass an ordinance each year to increase its expenditures an additional 1% (from 2.5% to 3.5%) and establish a "cap bank" permitting a town to increase its budget the following year if it doesn't need the full 3.5% expenditure increase in the current year.

Plainfield has passed such an ordinance every year I have been on Council. I started voting against this two years ago but have always been on the losing side of this vote. Passing this "cap waiver" ordinance this year would allow us to add $588,000 to our expense budget. This year I spoke out against this at each of the four meetings required for its passage - two agenda fixing two business meetings. This year my one "nay" vote sent the ordinance down in defeat. 5 votes are needed for passage and it went down with 4 yes votes to my one vote of opposition. Two Councilors were absent. It is critically important to understand the implications of the defeat of this ordinance :

  • It forced the Plainfield administration to go back and make more cuts to the budget that will be introduced at the Council meeting this coming Monday, November 16.
  • There will be no cap bank next year (fiscal year 2011) which will mean more drastic action will be required to address the inevitable increases in wages and benefits. Employee lay-offs will become more a more important budget balancing strategy.
  • Proposing lay-offs will bring all parties to the negotiating table for serious talks about employee contributions to health benefit premiums, furloughs and wage givebacks.
  • Without a credible threat of layoffs, the unions will not engage in substantive negotiations or renegotiations.

I do not like to see reduced compensation for city employees. But I do not like to see families lose their homes because property taxes are unaffordable. And the fact is that for many years government workers compensation increases have outpaced all other workers and are exceeding working families ability to pay. Unless we rebalance government worker compensation, we will see more and more city job positions eliminated. That would be most unfortunate.

I believe serious and painful action must be taken to bring property taxes under control. If we don't act at the municipal level, we are postponing the inevitable and it will be even more painful that what we face today.

Saturday, November 7, 2009

Life Just Got Safer on Kensington Ave

Speed humps have been installed on Kensingtion Ave! This street has long been a speeders paradise in spite of the 25 mile speed limit. The only traffic calming device this street had up till now was potholes. With the much needed paving of Kensington winding down, speeding would have become an even bigger concern.

Speed humps are different than rumble strips or speed bumps. They are more effective because failure to slow down will damage the underside of your vehicle. They make walking and biking more safe and so must be a part of any successful traffic circulation plan.

Speed humps are not preferred by fire and police officials. They don't like to slow down when they are driving to a crime or fire scene. They have successfully prevented installation of speed humps in Plainfield until now. Elected officials must balance their concerns with the need for pedestrian safety in residential neighborhoods. And it is true that speed humps must be used judiciously - good examples are streets like Kensington or Belividere Other towns including Westfield and South Plainfield have made good use of speed humps.

I have been an advocate for speed humps for my five and a half years on the City Council. So this is especially gratifying to me. I want to thank those responsible for the decision to use speed humps on Kensington. Rashid Burney was a strong advocate and Mayor Robinson Briggs dealt with the barriers posed by public safety officials. My advocacy was stalled until they jumped on the band wagon.

It's important to celebrate progress in Plainfield. Going forward we will have to make major changes to our roads program to keep it moving and make it more affordable. I am happy to say that traffic calming is now part of the plan.