Category Archives: budget planning

>Letter: Scharfenberger Is A Master Of Deception

>Mayor Scharfenberger is a master! He is a master of deception. He would have Middletown taxpayers believe that he has managed Middletown so well that he has only increased our taxes by 2.8 percent. If that were the case he would not have had to go to Trenton to answer to higher authorities when he surpassed the state cap on municipal budgets. Trenton placed a four percent cap on increases and Mayor Scharfenberger’s proposed budget was almost 14 percent. Does he really think we are so blind that we don’t know this? The final increase in the tax rate has gone from $0.35 to $0.3975 per $100 of assessed value. This is an increase of over 13 percent for the homeowner.

Mayor Scharfenberger’s deceptive tactics must end along with his tenure in office this year. Current Committeeman Sean Byrnes and his running mate Mary Mahoney stand for managing costs with tight controls on spending. They stand for improved planning that can reduce tax increases. They stand for cutting waste and inefficiency from township operations. They stand with homeowners, not supporting special interests. They stand with you and you should join me in supporting them.

Dora Crisafulli
Middletown

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Filed under budget planning, Gerry Scharfenberger, Sean F. Byrnes, tax increase

>Video: Sean Byrnes on Planning for Budgets and Projects

>Middletown Township Committeeman Sean Byrnes discusses the Planning (or lack thereof) of Township budgets and projects that drive up the tax rate and cost local tax payers, at a Town Hall Meeting which took place at Panera Bread on September 27,2010

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Filed under bonding. Panera Bread, budget planning, Finance Committee, project planning, Sean F. Byrnes, tax increase, town hall meeting

>Letter: Foresight could keep tax increases under control

>The following letter appears in this weeks edition of the Independent:

As township officials try to explain the reason for the latest round of tax increases, they refer to a few factors, one of which is the cost of snow removal during the winter of 2010. This explanation is disappointing and frustrating on several levels. The main responsibility of our budget planning committee is to have the foresight to plan for expenses that we know are going to vary from season to season. This means calculating an average budget target for yearly snow removal, which shields us from major shortfalls during the high swings. So, if snowfall in 2009 was light, and we hadn’t fully used the budgeted money for that line item, we could roll it over to 2010 and have some fiscal cushion when snowfall is heavier. Are we to assume if the winter of 2011 is mild, we’ll have a budget surplus and tax rates will decrease? I doubt it. Are we to assume that our budget planners simply approach snow removal in singleyear increments, rather than looking at well-known trends, and then hope for mild winters? It sounds like they do. While I can understand the reduction in state aid as a factor in the budget shortfall, I simply can’t buy into the rationale that property taxes are increasing 13 percent partly because we had a bad winter in 2010.

Township officials need to understand that the residents of Middletown are fearful about these soaring tax rates on two fronts. In the short term we’re wondering how much longer we can afford to live in a town where our monthly spending in property taxes is larger than our mortgage payments. That fact alone is stunning.

In the long term we’re wondering how we’ll ever find buyers for our homes that come with such staggering property tax rates. One of many things needed to get this mess under control is proper planning. I question how well that planning process is being executed when heavier than usual snowfall is cited in the list of factors for a double-digit tax increase.

Tim Geiselman

Middletown

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Filed under budget planning, letter to the editor, Middletown, tax increase, the Independent

Pay No Attention To That Man Behind The Curtain: Scharfenberger "The Tax Man" Issues Middletown Tax Update

Pay no attention to that man behind the curtain I say, it is simply a man who is desperate to save himself from the bitter truth and who has earned the title of the “Tax Man” by overseeing the rise in the municipal tax rate of 41.9% over the past 5 years(once the currently proposed Township budget is approved).

Over the past couple of days an email has been making its way through cyber-space, written by non other than Middletown’s appointed mayor, Gerry Scharfenberger. He is so desperate to inform the voting public that the pending municipal budget (which includes a 13.87% municipal tax increase) is the result of circumstances beyond his control, that some residents have received it 3 or 4 times.

In the email Scharfy states that “Some of the information I have heard from folks around town is based on very false and misleading data”, and that he has “…put together a fact sheet to give people the reality of all things associated with the 2010 budget…”

After reading his email, I found it somewhat lacking in true facts and misleading in it’s own right. So, what I have done is to post Gerry Scharfenberger’s email below, broken down with comments in blue, to counter some of what he attempts to “clear up” and to show that the reason for Middletown’s massive tax increases over the past 5 years is due to his poor leadership and overall mismanagement:

By Mayor Gerry Scharfenberger

The Middletown budget has been the subject of quite a bit of discussion lately. Some of the information I have heard from folks around town is based on very false and misleading data. To try and clear things up, I thought I would put together a fact sheet to give people the reality of all things associated with the 2010 budget, as well as the situation at the state level. As always, if you have any further questions or need additional information, don’t hesitate to contact me. Also, please look over the attached FAQs – they are quite sobering.
Here are the facts:

– the proposed municipal tax increase is 2.8% which means the municipal increase on a $5000 tax bill will be $140 per year, a $10,000 tax bill will be $280 per year and so on. This will go down prior to adoption, thanks to legislation the governor has signed that will allow us to make additional cuts.

The OVERALL tax increase is 2.8%. This includes the BOE and County taxes. The Township tax rate has increased 13.87% over last year. The amount raised from property taxes is depicted in the following chart. These numbers came from Township budgets or were reported in Middletown Matters.

If the Governor has allowed the Township to make additional cuts, why are they not made NOW so the budget could be reduced further?

– 98% of all of the municipalities in the state had to do estimated tax bills this year. This is due to the state budget and the uncertainty of state aid to the municipalities.

There is no uncertainty of State aid to the municipalities. The Mayor specifically lists the amount of State aid that was cut this year below at $1,564,911. The Township knows the amount of State aid it will receive. How can a budget be proposed is there is uncertainty in the amount of aid to be received?

– it is a mistake to multiply the third quarter estimated tax bill by four – THAT IS NOT THE PROPERTY TAXES FOR THE YEAR! When people get their fourth quarter bill, that will be accurate and will also be much lower than the third quarter bill.

The 4th quarter tax bill (just before the election) will be more accurate because the Township is meeting with the Local Finance Board, in Trenton today (8-10-2010) to find out just how much the Township can exceed the State cap of 4%.

– Middletown has one of the lowest tax rates in the region. While we are currently at 35 cents, Fair Haven, for example, is almost 49 cents and Little Silver is over 50 cents.

The tax rate is one of lowest in the area, but other towns’ tax rate has no bearing on what the tax rate in Middletown should be. A big reason why the tax rate has increased almost 14% this year is because the Township came up short $5.5M last year and it had to borrow money from the 2010 budget to make up the difference. This is shown in the chart above as the difference in the amount of money raised by taxes between 2010 and 2009.

– Middletown has one of the lowest worker per capita in the state (305 for 70,000 residents and 41.4 square miles) and one of the lowest spending per capita (around $880 per person).

Middletown might have the lowest worker per capita, but how other towns manage there resources are different from town to town. Plus, what other towns do with these resources should have no bearing on how Middletown uses the resources that are employed.

Below are some of the drivers of the budget and how we’ve addressed them. Get rid of binding arbitration, civil service and unions and we could really do some cutting. For now, we are legally prohibited from doing what is really needed to make deep, significant cuts.

If Middletown can’t legally make the cuts it wants to, they should plan to manage the resources on hand better. You just don’t throw up your hands and say we can’t legally do something.

While there were many factors that contributed to this year’s budget problems, the main ones were:

$1,564,911 loss in 2010 state aid. This loss comes after a $640,000 reduction in 2008, $184,000 in 2009.

Why rely on State aid to begin with? The Township should budget for no State aid and if the State should provide some type of aid, then it should be used in the following years’ budget. Notice the amount of State aid for this year compared to last 2 years. Last year the loss of State aid was touted, by Mr. Scharfenberger, as the worst thing that could happen. This year the Mr. Scharfenberger says that the Governor is doing the right thing.

$1.4 million for prior year’s salary increases from resolved labor contracts;

When a municipality goes into labor negotiations, it should anticipate an increase an budget accordingly. This was not done, obviously. What was management thinking, that the unions were not going to demand some type of increase?

$1 million increase in health care costs,

CFO, Nick Trasente, increased theses costs because the Township came up short the past 2 years. He is just doing some PLANNING to avoid future shortfalls.

$900,000 for snow and rain storms clean up,

This is a legitimate and unexpected expense.

$900,000 for unexpected retirements. Cost includes payments for unused sick and vacation time.

When the new Governor was elected, he said that there would be changes in the retirement rules. It might have been a little late in the year, but some planning could have been done to ease the shortfall. There will be many more retirements to come this year.

$1.8 million increase in pension payments mandated by the state.

Middletown knew that pension payments would have to be made this year. Middletown was told to defer last years’ payment in order to exceed the 4% State cap.

$400,000 loss in recycling revenues

The Green Initiative, started years ago by Mr. Scharfenberger, should have planned for additional recycling efforts. This has only come to pass because the State and County have implemented plans to include all paper and cardboard as part of the recycling plans. Middletown should have been a leader in this since there was a “Green Initiative” in place.

To address these, the Township Committee instituted:

40 staff/position reductions since January 1, 2010.

A total of 16 employees were layed off this year. The other 24 are people retiring because of the change in the Governors’ policy.

A 15% reduction in 2010 department funding requests.

Each department submits a “wish list” budget every year. This is reviewed the day after the election, in November. The Township Committee told the departments to cut it 15%. At that point they should have reviewed the requests and made real cuts.

Purchasing natural gas and electricity as part of a collective of 119 government entities known as the New Jersey Sustainable Energy Joint Meeting (NJSEM) instead of from the utility company. The move is slated to save approximately $160,000 this year.

This is a good measure and should be encouraged every year. Buying in bulk is almost always less expensive.

Funding the 2010 Summer Concert Series with community and business sponsors.

Sponsors for all events should be sought after. Even our Library Conservancy sponsored a concert. Do these sponsors fund the police, stage rentals, shuttle buses, etc…?

Canceling Middletown Day unless sufficient private sponsorship is found.

The concerts were going to be cancelled if sponsors were not found, too. Sponsors have funded much of Middletown Day in the past.

Closing the township’s skateboard park and mini-golf course.

The skateboard park is closed and the supervision that was on site removed. The children are still skateboarding, though.

Closing the Police Department’s Community Relations Bureau and suspending the DARE program.

This is just what the community needs; less police relations. This will only lead to an increase in crime, thus increasing the relations that the police will have with the community only in a negative manner.

Limiting lifeguards on municipal beaches to weekends only.

A lifeguard should be present if the beach is open. We wouldn’t want someone to get swept out to sea from one of those rip currents.

Continued limitation of overtime for non-essential personnel without approval of the Township Administrator.

All non-essential overtime should be eliminated. If it is not essential why is it needed? This should be a part of good management.

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Filed under budget planning, Gerry Scharfenberger, Middletown, municipal tax rates, Nick Trasente, tax increase

Byrnes: MIDDLETOWN TOWNSHIP COMMITTEE SLOW TO RESPOND TO FINANCIAL DOWNTURN

Before the beginning of last night’s Middletown Township Committee meeting the following statement from Committeeman Sean Byrnes’ was passed out to members of the press and other attendees of the meeting which addressed his feelings and thoughts about this years budget and the process that produced it:

The Middletown Township Committee will hold a hearing tonight on the proposed municipal budget for 2010. The proposed budget calls for almost a 14% increase in the municipal portion of the tax levy in Middletown. Despite the fact that the current financial downturn started in 2008, the Township Committee has taken no dramatic steps to offset a tide of revenue reductions and expense escalations that will now produce a spike in the tax levy imposed upon Middletown residents. Tonight’s meeting will be the first public meeting dedicated to the 2010 budget, even though Middletown is now 7 months into its 2010 budget year. This budget will not be approved until mid-August, since there is a waiver application to the Local Finance Board on the Township’s tax levy cap that must be approved before the budget can be approved.

To appreciate the degree to which Middletown has ignored this crisis, it is worth studying what happened in 2009 and what Middletown’s elected officials knew in 2009:

  1. In 2009, Middletown deferred pension contributions to avoid a $1.5M expense. This temporary gimmick, that the acting CFO (and former CFO of Middletown for many years) called a “fiscally foolish decision”, meant that Middletown started 2010 with a budget base that did not include that expense. In other words, we temporarily avoided an inevitable expense. Moreover, the contribution in 2010 is approximately $1.9M. Bottom line, $1.9M shortfall in pension contributions to start 2010.
  2. Middletown had to borrow $800,000 in December 2009 from its 2010 budget to pay 2009 expenses. Thus, to start 2010, we knew we were $800,000 in the hole.
  3. On the agenda for tonight’s budget hearing is a resolution to bond to pay tax appeal settlements in excess of $2.0M. The Township Committee knew as of mid-2009 that this obligation would be coming due.
  4. The 2009 Deferral of pension contributions must be paid back (with interest) over 5 years starting in 2012.
  5. The appropriation for health care expenses in 2008 resulted in a $500,000 emergency appropriation. In 2009, this account was almost $1,000,000 short (that’s why you had to borrow the $800,000 from 2010). So unless there was a decrease in health care expenses (which we know there never is), Middletown needed to come up with $1,000,000 in 2010 to offset this shortfall.
  6. Middletown had 3 emergency appropriations in 2010; it’s neighboring towns had none.
  7. In 2009, Middletown used $400,000 in revenue from an old tax appeal appropriation that was never used, but this was a one-time event, not to be repeated, meaning that we needed to come up with new revenues of $400,000 in 2010 to offset this loss.
  8. Middletown knew that there were outstanding collective bargaining agreements that would result in increases for prior years that would generate several hundred thousand dollars in additional cost.
  9. Middletown also knew that police officers had slowed their ticket writing costing the Township several hundred thousand dollars in revenues.
  10. By February 2010, Middletown knew that snow plowing costs might well exceed what was appropriated.

Despite these unprecedented events, the Township failed to act. In mid-December 2009, Committeeman Byrnes warned in a press release that we were facing a $5.0M shortfall and that we needed revised spending plan. The tax levy increase in the proposed 2010 budget is $5.0M. We still have not had a public meeting to discuss the budget.

Although the 13% increase is bad enough, the situation is actually worse. The proposed 2010 budget includes over $1,000,000 in one-time revenue that will disappear in 2011. We also have no mechanism in place to estimate the increasing burden that retirees place on our health care costs. Indeed, Committeeman Byrnes suspects that the big jumps in the last few years are due in part to retiree health care expenses. We have also reduced our surplus to almost nothing over the last few years. We are living on borrowed time. Governor Christie’s tool kit will help, but it is not a magic bullet. More important, we must have a plan for how to use the tools.
The majority of the Township Committee has yet to come to grips with the financial reality facing New Jersey municipalities. The cuts that must be made will be severe and will change the nature of the services delivered by all municipalities. They will eliminate many discretionary programs and focus our efforts on the core governmental services that must be provided to citizens. Until we accept that fact, taxes will continue to rise beyond what our citizens can afford.

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Filed under budget introduction, budget planning, Middletown Township Committee, Sean F. Byrnes, tax increase

Byrnes: 2% Cap Place Ball Squarely in Muncipalities’ Court


” The 2% cap is a good thing. It places real restrictions on municipal tax increases by capping additional tax levies year to year at 2%. But make no mistake, this law places the onus for tax relief on municipalities…The time to start planning for this cap is now…”Middletown Committeeman Sean Byrnes – Middletown Township Committee


This latest blog entry by Middletown’s Sean Byrnes takes on the proposed 2% cap on property taxes that is now making it’s way through the Legislature and how it will effect municipal budgets, particularly Middletown’s. He states that the time to start planning for the 2% cap is now, not next year, while waiting to see how much aid will be coming from the state.
Below is from his Mobilize Middletown blog that was posted late last night:
The 2% cap is a good thing. It places real restrictions on municipal tax increases by capping additional tax levies year to year at 2%. But make no mistake, this law places the onus for tax relief on municipalities. The Governor’s “tool chest” promises to make that job easier, but the job of cutting spending rests with the towns. The Governor and Assembly have sent a clear message that most of the hard work of saving tax dollars will take place at the local level. Given that reality, we need to prepare for the difficult work ahead.

To be clear, we operate under a 4% cap now, but there are numerous exceptions that make the existing cap toothless. The new law has just a few exceptions and will leave municipalities with little wiggle room. In any given year, if you have a category of spending (e.g. fuel costs) that increases by more than 2%, you will need need to cut spending elsewhere to offset that increase. Many municipalities, including Middletown, have not had the discipline to operate within a cap. Last year, against my vote, we applied for a waiver of the cap. We voted to defer our pension contributions (which will need to be repaid with interest over a term that starts in 2012), and by year’s end, we needed to borrow $800,000 from 2010 to pay 2009 expenses. This type of reckless spending must end.

The time to start planning for this cap is now. One of the biggest problems with the budget process in Middletown has been our failure to start the process until well into the fiscal year. This year has been no different. It is July, and we have not held a single public meeting to discuss our budget or how we should cut spending. Clearly, at this point, any annual savings to be achieved from budget cutting measures will only be 50% effective, since half the funds have been spent by now. The perennial excuse is that we don’t know exactly how much money we’re getting until the State gives us our revenue numbers several months into the year. The problem with that line of thinking is that it assumes we cannot make cuts until we know how much money we have. Obviously, uncertainly over our final revenue numbers does not stop us from planning layoff, furloughs, reductions in service, etc. We have waited too long, and we cannot afford to make that mistake again.

We should start working on the 2011 budget now. We need to assume that Governor Christie’s tool kit will pass. We should assess that tools that will be available to us, and we should start planning on how to use them. There will be difficult, contentious debates when it comes to jobs and benefits. We may need to reconsider our status as a civil service town. Our negotiating stance with Unions will toughen as the specter of mandatory arbitration is removed.

But even with these additional measures made available to us, a thorough, regular process for evaluating our services and the programs we deliver needs to be followed. Currently, we have no mechanisms or structure to ensure efficient execution of budget-cutting ideas and recommendations. No finance or budget committee. Without a more robust governance structure to engage in the work of following through on some of these budget-cutting ideas, we will never see their fruition. Some ideas that have been discussed but not yet implemented include: combining the maintenance functions in the Parks Department and Public Works Department, sharing maintenance functions with the Board of Education, outsourcing leaf and brush pickup, one day per week garbage pickup, and tougher enforcement of recycling laws. There are more suggestions, but no real process for implementing them. So, as we consider how we might use the Governor’s tools, let’s also put in place the committees and people to help us use the tools to their full measure.

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Filed under budget planning, Middletown Township Committee, Mobilize Middletown, Sean F. Byrnes, tax cap

Letter: Scharfenberger’s Budget "Plan" Isn’t Working

The Middletown Township Committee introduced a budget recently that results in an almost 13 present increase in property taxes. This is outrageous given the fact that there are many towns that have controlled their spending and see minimal increases, if none at all.

One could ask how this can happen in these times. A good response would be that there is a mayor that insists that he can handle the budget process. Mr. Scharfenberger began this fiscal year, in January, stating that he does the budget by osmosis. When there was a call to develop a plan to deal with the increasing costs and the reality of including costs from the previous year, Mr. Scharfenberger simply said that he already had a plan.

The mayor’s plan is to rely on everyone else to bail him out. If that does not happen he will just blame others, as he consistently does when things do not go the way he expects. It is time to rid Middletown of this type of thinking for it is not putting the taxpayer first. People need to realize that the current system that has been in place for over 25 years is not working.

Dora Crisafulli
Middletown

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Filed under budget planning, Mayor Scharfenberger, Middletown Township, property taxes