>Looking At Both Sides

>by guest blogger Sean F. Byrnes, former Middletown Township Committeeman

Last week we saw the Township of Middletown enveloped in a dispute over the Township’s effort to convince the Board of Trustees for the Library to turn over a significant share of its surplus to the Township Committee for budget relief purposes. Unfortunately, the manner in which the township chose to solicit these funds lacked tact. Although the township had previously made less threatening overtures to the Library in an effort to win the Board of Trustees’ support for a funds transfer, when that effort failed, the Township pursued an aggressive campaign to convince the public that a transfer would be in their best interest. Spearheaded by new Committeeman Kevin Settembrino, this effort, whether intended or not, seemed rooted in tactics of intimidation and threats to de-municipalize the library and combine it with the County Library system. This effort also suggested that a failure of the Board of Trustees to abide by the wishes of the Township Committee would result in the loss of ten police officers, the layoff of a significant number of Township employees and, if you heard the comments at the Library Board of Trustees’ meeting, an effort by Township Committee members to replace existing Board of Trustees members.

Based on the comments from Board of Trustees’ members at their meeting on Tuesday, it would appear that the resolve of the Board of Trustees has not wilted in the face of these threats. Led by Randy Gabrielan, the Chairman of the Board, the Library challenged the assumptions, numbers and legal authority for the Township’s demand for a funds transfer. Looking ahead, as a Township resident, I would hope that both sides could retreat from the current level of heated rhetoric and restart their discussions.

I think it would be in the interest of all taxpayers for the Township Committee and Library to continue their discussions. It might make more sense to have the Township Administrator meet with the Director of the Library to discuss how the Library might be able to assist the township in this time of budget crisis. From the Library’s perspective, the Board has worked hard to build a reserve that could be used for future capital projects, and there is an understandable reluctance to use these funds to satisfy operating expenses for the Township. From the Township’s perspective, the Library has a protected stream of revenue that is not subject to the same stresses and demands that the Township must face when health care costs increase, pensions become more expensive and the cost of doing business generally continues to go up. There may be opportunities for these two parties to cooperate in other ways that would provide relief to the Township without exhausting the reserves of the library.

There is no question that the Township finds itself in a perfect storm of budgetary constraints. To be fair, some of these strains are beyond its control. But the Township moved at a glacial pace over the last several years as this financial crisis approached. A quicker response to the approaching financial storm would have made the Library ask a smaller one. Accordingly, before the Library turns over any of its reserves to the Township, it would be nice to see an acknowledgment that a swifter response from the township in 2009 and 2010 would have avoided the seriousness of the budget crisis that the Township currently faces. The Township did lay off approximately 16 employees last year, but did so only mid-year. Other municipalities took action much sooner and in more dramatic fashion. The former Mayor’s claims of 40 layoffs include retirements.

Other cost-saving measures were proposed over the last several years, but were rejected as too extreme. Unfortunately, as a result of the Township’s failure to act, the Township Committee must now contemplate cuts that go far beyond those that were previously considered “extreme.” Until the Township forms a subcommittee whose function is to focus on budget recommendations, track existing and anticipated debt, look for opportunities for consolidation and sharing of services and generally manage the Township’s finances on a more regular basis, the Township will always be reacting to rather than planning for increased demands for Township resources.

Once again, in fairness, the unfortunate timing of the Township’s reevaluation in 2009, just prior to a steep decrease in property values, set the Township up for a tax appeal nightmare in 2010 and 2011. (Of course, the township had mistakenly put off its reevaluation for approximately 14 years – had the township completed the reval when it should have, the steep drop in real estate prices would not have resulted in such a large number of tax appeals.) But regardless of the failure to conduct a timely revaluation, the Township has a legitimate reason to gripe, because when a resident or commercial property owner prevails on their tax appeal, the township must return to the taxpayer not only the municipal share of the taxes received from the taxpayer, but must also reimburse the taxpayer for the funds received by the School District during the year for which the tax appeal was filed. This reality is difficulty for some to believe, but true. And, in light of the fact that approximately two-thirds of the tax dollars go to school district activities, the Township ends up paying back the taxpayer for School District funds that the Township never received in its budget.

Consequently, the steady decrease in real estate value over the last couple of years has produced a field day for those filing tax appeals. The Township is now struggling to repay multi-year tax appeals that are probably worth nearly $4 million. Unfortunately, the Legislature has failed to assist municipalities facing this dilemma. Under the circumstances, given the unique circumstances facing municipalities, including picking up the tab for the Legislature’s bungling of pension contributions for public workers, the Legislature should provide assistance to townships by creating opportunities for public entities to finance the tax appeals or extend their repayment terms. In several years, the Township will be through this unique period where tax appeal refunds are substantial and hopefully return to a more predictable budget cycle. The Township Committee took the first step in this direction in 2010 when it decided to conduct a reassessment. Even thought the reassessment cost $400,000 the savings achieved in 2011 from reduced tax appeal filings will be far greater.

The realities of the tax appeals as set forth above increase the pressure for some agreement with the Library. At the same time, the Library will see its share of funding decrease by more than 10 percent next year, due to the fact that its revenue stream is dependent solely upon property values. With a 1.3 billion drop in the total assessed real estate in the Township of Middletown, the Library’s stream of revenue will be reduced considerably. Given this dynamic, it may make sense for the Township and Library to discuss mutual relief. In other words, the Township needs money now most desperately. The Library in the out years may need assistance as its funding stream declines. Perhaps assistance from the Library during the current year could be received in exchange for promises by the Township to return the favor several years down the road.

It might also make sense for the Library to consider some sort of partnership with the Arts Center. While the Arts Center has its own Board of Directors, this arrangement, as far as I know, is not routed in any legislative scheme. Indeed, the Township has effectively turned over the operation of the Arts Center to a non-profit corporation and the Board supervises these activities. Resident Jim Grenafege was the first person to suggest that the Library Board of Trustees might consider assimilating some of the Arts Center’s operations into its activities. A casual review of the websites for these two entities suggests that there is some degree of overlap between the artistic and cultural offerings from these two bodies. Given that they both have buildings that are relatively new and both are focused on improving the education of the citizens of this Township when it comes to arts, literature and music, there may be some opportunity for the Library to assist in the operation of the Arts Center, including some of its expenses. It is exciting to contemplate what the far larger Library work force might be able to provide to the Arts Center when it comes to running the day to day events and offerings at the Arts Center.

At the end of the day, the current legislation when it comes to Library transfer to municipalities, amended in October of 2010, will likely allow some transfer to take place. From the Township’s perspective, the amount of money to be transferred under the current legislative scheme will fall short of what the Township needs to avoid drastic reductions in personnel and services. However, somewhere within the circumstances discussed above, creative minds on both sides should be able to work out an arrangement that provides some additional relief for the Township, even if it may not be a direct transfer of funds of the magnitude the Township seeks. My hope would be that the time and energy on both sides be spent working toward that goal, rather than on blaming the other.

11 Comments

Filed under 2% cap, budget deficit, budget surplus, Middletown Cultural Arts Center, Middletown Library, Middletown Township Committee, Sean F. Byrnes, tax appeals

11 responses to “>Looking At Both Sides

  1. >A fair and balanced viewpoint (with just a couple of political kidney punches that no one can blame you for).The Library Board has not adjusted to the "brave new world" municipalities around the state are in with regard to budgets. They have gotten so full of themselves that they declined to give back money under their surplus last year when they were asked nicely. They refused to consider taking over the Arts Center.Now they fail to note that the bill passed last October was likely a first step towards the state cutting the funding going to Libraries. I think we will see the entire Library under municipal control under new legislation sure to come soon.They also may have critically failed to understand the full weight of the budget crisis on the town. With three simple votes the taxpayers of Middletown get $1.1 million from Library for this years budget – and the Board slinks off to write their memoirs.Like Mr. Byrnes I hope it doesn't come to that, but the arrogance of the Library Board may mean that it will.

  2. >It should be made clear that the new state law says that a library can keep as surplus 20% of its last audited budget in addition to any funds that have been earmarked for capital projects or endowments.Under this formula the Middletown Library is only mandated by the state to return ~ $200K of it's perceived surplus to the Township.

  3. >But the Governor wanted much more…I guess you fail to realize that as well.After the elections in the Fall, I suspect that municipal libraries will see reduced budgets.

  4. >No he didn't!the Governor conditionally vetoed the first draft of the bill stating that there wasn't enough protection given to libraries.It took at least 3 draftings before the governor would sign the legislation.You can look it up!

  5. >What have local politicians or the League of Municipalities done to correct the refunding of tax appeal monies? Why shouldn't school systems be required to pay back monies when tax appeals are granted? Two other stumbling blocks our TC has been saddled with are the white elephants of the Swim Club and Arts Center. These were created by republican controlled TC's. About $9 million was spent on the Arts Center, it has been difficult to get a definitive number on the cost. I have heard they have a monthly electric bill of about $30K due to a flawed design. They charge for every program, the Library does not. The Arts Center has been an extraordinary expense to the Twp. The Swim Club was purchased even when a private group wanted to purchase it, rehabilitate it and include a restaurant. The Twp. moved ahead, bought the property and have been repairing it ever since. When the TC tells us it does not cost to much to rehab this facility I doubt they include the salaries of Twp. workers into the the cost. Prior TC's have made less than well thought business decisions we are now stuck with. The TC lamented that many of the programs the Library offers are duplicitous of those offered by Parks & Rec. So, eliminate them from P&R and let the Library continue to offer them to the residents for free.

  6. >It would be so nice to take the politics out of the this and concentrate on doing what is right.The Township neglected it's fiscal responsibility during this economic crisis.They didn't heed the warnings of Sean Byrnes because of politics.I hope the TC and Library can move forward with mutual respect.Mayor Fiore has an opportunity to show the leadership his predecessor never exhibited.

  7. >In November, Brightbill and Fiore may be history also !The town's people are fed up to death with the arrogance of both of them and Settembrino has certainly not impressed anyone either…. Massell only takes up space. Where do we begin with Scharfenberger….it would take hours to assess the sentiment that prevails against him today ! This is the way people view things today and it has little to do with partisan politics…it has to do with common sense and there's little of that displayed in government in Middletown currently.

  8. >At the risk of sounding like a DHB, I need to say elections have consequences. When will the electorate vote for the person and not the political party?They did not choose wisely in Nov.

  9. >WHO ARE THEY GOING TO "HOLDUP" NEXT YEAR ????Next thing that happens in this town the TC will wear holsters and bear arms. Have they lost their minds ??Better get their financial house in order and a forensic audit of this town is overdue ! Long overdue !

  10. >The timing of the reevaluation was not"unfortunate" – it stemmed from the TC's own recalcitrance. Every mandate and order, federal or state,has been met with chest-thumping resistance by the "tough guys" on the TC. As they possess neither the money, intestinal fortitude nor the intelligence to wage such battles, we the taxpayers are doomed to pay for their arrogance. We are essentially the NJ version of the City of Yonkers in the 1980s-who pathetically fought school and housing integration till they became the nation's laughing stock.

  11. >All this incompetence and defiance of the law is what this lawyer sees as "job security" !We could at least expect professionalism from Bernard Riley but this guy defies description.

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