2017 Budget Proposal Public Budget Presentation April 19
2017 Budget Proposal Public Budget Presentation April 19, 2017 0
Introduction: Budget Basics: Tax Rates: Based on total assessed values l Example: If we collect $100 and assessed values are $1000, tax rate is 10%. If assessed values are $2000, tax rate = 5%. l Theoretically – The tax rate could drop but a homeowner could pay more! 1 Total Borough Valuation: $10, 000 $15, 000 Total Municipal Taxes Levied: $1, 000, 000 Tax Rate 10% 3% Drop 7% No change to spending, no change to tax collected – but the tax rate dropped 3%! When the valuation FALLS instead of rising, the tax rate INCREASES. Key Point: It’s important to look at the actual tax dollars levied as well as the tax rate, since that’s where you see actual changes in Borough spending.
Introduction: Budget Basics, continued: Assessment = Tool used to allocate the total taxes. Does not result in more or less taxes being collected in total. l If your neighbor successfully appealed taxes and you did not, you are paying a larger share of Red Bank’s total taxes 5 Red Bank Homeowners Begin With Identical Taxes: $ $ $ 1 Homeowner Appeals, and His/Her Savings Are Redistributed as Taxes to Other Homeowners: 2 $ $ $ Red Bank collects the same $, just redistributed via the appeals process
Introduction: Budget Basics, continued: Tax Assessment Base Changes Each Year for Two Reasons: l Construction (increases base) and Demolition (reduces base) l Tax Appeals (reduce base) Tax Assessment Base: l Revaluation in 2015 (for 2016 Tax Year) meant fewer successful appeals - assessments now closer to market. l Assessed values now closer to current. l ADP program = Annual Re-assessment. Will inspect 20% annually to prevent large drops in assessed values which drive up the tax rate. l Also, under ADP, we no longer have to refund the County and School portions of Countylevel tax appeals. l Key concept: The further away assessed values become from actual market rates, the more vulnerable Red Bank becomes to tax appeals. Given the number of large commercial properties, this could pose significant risk! – One commercial property appeal in December 2014 = $675 K tax refund – The more current we keep our assessment base, the less risk we have. 3
The Big Picture: 2017 Budget in a Nutshell Revenues 1 Surplus from 2016 Expenses $1, 450, 000 Water/Sewer 806, 600 Parking Fees 1, 210, 000 $1, 070, 670 Land Use Administration 283, 950 UCC & Accumulated Leave 594, 900 Construction Fees 424, 000 1 Insurance 3, 450, 000 Delinquent Tax Collections 875, 000 2 Police Dept. 5, 679, 000 625, 000 3 Public Works 2, 655, 270 Municipal Court 2 General Government Energy Receipts Tax 2, 011, 680 Health & Human Services 258, 304 Hotel Occupancy Tax 170, 000 Park & Recreation 304, 000 PILOT Agreements 475, 000 Library 708, 800 Sale of Firehouse 200, 000 Utilities 594, 000 Interest on Taxes & Investments 215, 000 Court All Other Lines 1, 327, 160 Municipal Tax 11, 909, 860 Library Tax 4 Debt Service 503, 600 2, 674, 000 Reserve for Uncollected 708, 800 1, 001, 480 All other Lines 2, 630, 126 $22, 408, 100 4 $22, 408, 100 1 Down $585 K, or 29%, from prior year - the 2016 budget 1 Down $107 K, or 3%, from prior year - we put our plan out to bid contained no "cushion" 2 Increase of $204 K from prior year, driven by contractual salaries 2 These are taxes paid by utilities to municipalities, and were originally imposed as a form of property tax relief. The State 3 Public works is up only $84 K from last year but about $350 K collects on our behalf, but in 2001 began sending us less and less since 2015 since outsourcing the garbage is costing us $225 K of the total due. In 2017, the State of NJ is short-changing 4 Debt service is down $130 K, nearly 5$, versus prior year Red Bank by over $1. 7 MILLION.
Expenses: Spending Cuts and Other Reductions Absorb Nearly All Salary Increases Municipal Tax Increase Since 2014: Municipal Taxes, 2014 $12, 578, 271 Total Budget, 2014 $20, 988, 412 Municipal Taxes, 2017 $12, 618, 665 Total Budget, 2017 $22, 408, 100 Change since 2014 $40, 394 0. 3% Cumulative Inflation Rate, 2014 - 2017 Expenses versus 2016: Change in Salary, Wages Change in Other Expense Net Change, expenses 5 3. 0% Change since 2014 $1, 419, 688 6. 8% This is the actual tax increase since 2014 – 0. 3% over three years – this takes all the “noise” from municipal revaluations out of the equation and focuses only on what taxpayers are actually paying. $511, 637 (448, 837) $62, 800
Overview: 2017: Our Budget Journey In summary: l l l The first draft budget showed a 7. 2% tax increase, driven largely by the loss of an $800 K tax credit and a salary expense increase that was largely contractual. Actions taken resulted in $530 K of favorability, bringing us to a draft budget with a 2. 9% increase over 2016 – this is the budget we introduced on March 22. A second round of actions drove $115 K of additional favorability, lowering the increase to 1. 9%. Tax Assessment (in $$) Total Valuation Tax Rate Increase over Prior Year 6 2012 $12, 182, 001 $2, 247, 301, 415 0. 523% 2013 $12, 362, 778 $2, 228, 146, 086 0. 555% 2014 $12, 578, 271 $2, 192, 403, 361 0. 574% 2015 $11, 913, 643 $2, 075, 371, 065 0. 574% 6. 1% 3. 4% 0. 0% 2016 $12, 128, 332 $2, 078, 099, 910 0. 584% 1. 6% INTRODUCED 2017 $12, 734, 790 $2, 120, 430, 081 0. 601% PROPOSED 2017 $12, 618, 665 $2, 120, 430, 081 0. 595% 2. 9% 1. 9%
Expenses: Impact of Fixed Costs: Our largest expense relates to our human capital. While the Borough has other non-controllable expenses, the line items related to salaries and benefits make up the majority. In 2017, we are actively managing Retiree Healthcare Costs by working with our broker to perform an audit of participants, benefits, and premium, never before done in Red Bank. This will benefit 2018 and future years. – Retiree Healthcare Costs Police 2012 $1, 506 4, 617 2013 $1, 567 4, 822 2014 $1, 556 4, 657 2015 $1, 505 4, 863 2016 $1, 516 4, 947 PROPOSED 2017 $1, 486 5, 212 Salary (non-Police) Total, Personnel-Related Major Lines 3, 050 $9, 173 3, 220 $9, 609 3, 304 $9, 517 3, 601 $9, 968 3, 813 $10, 276 4, 133 $10, 830 $12, 182 $12, 363 $12, 578 $11, 914 $12, 128 $12, 618 Municipal Tax Levy Non-controllable Personnel Costs: as % of Total Budget 7 75% 47% 78% 48% 76% 48% 84% 49% 85% 48% 86% 50%
Expenses: Other Expense Budget Lines: 8
Revenues: Additional Challenge: Tax Money Remitted by Utilities to Red Bank, Held by the State of NJ Collecting this for just one year would generate a 13% tax cut for 2017: • This is tax $ paid by public utilities based on presence in Red Bank (e. g. length of lines installed) • NJ keeps the $, driving up residents’ property taxes! State Aid Impact Calculation* Year Acutal Amount Received State Aid Formula Excess/ (Deficit) 2001 2002 2003 2004 2005 2006 2, 549, 040 2, 567, 295 2, 601, 970 2. 50% 1. 00% 2. 50% 3. 50% 4. 50% 2, 549, 040 2, 612, 766 2, 638, 894 2, 704, 866 2, 799, 536 2, 925, 515 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2, 601, 970 2, 593, 666 2, 528, 825 2, 011, 681 2, 011, 681 5. 50% 5. 00% 6. 50% 0. 00% 2. 00% 3. 50% 2. 00% 0. 50% 1. 50% 0. 25% 3, 086, 419 3, 240, 740 3, 451, 388 3, 520, 416 3, 643, 630 3, 716, 503 3, 735, 085 3, 791, 112 3, 800, 627 (484, 449) (647, 074) (922, 563) (1, 439, 707) (1, 508, 735) (1, 631, 949) (1, 704, 822) (1, 723, 404) (1, 779, 431) (1, 788, 946) 47%- 51, 667, 924 (14, 390, 411) 28%- 37, 277, 513 9 Implicit Price Deflator * Per the NJ League of Municipalities - (63, 726) (71, 599) (102, 896) (197, 566) (323, 545)
Revenues: Actual JCP&L Tax Received v. Amount Due Calculation of State Energy Tax Obligation 4, 000 Despite climbing tax collections from Utilities, the amount given back to Red Bank by the State of NJ has stayed flat – driving up residential property taxes 3, 500, 000 3, 000 2, 500, 000 2, 000 1, 500, 000 1, 000 500, 000 Received 10 Statutory Amount 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Expenses: 2017 Salary and Benefit Information: Employment Contracts: ● CWA and PBA have been negotiated for three and four years, respectively. o We are negotiating the three-year CWA contract, which expired 12/31/2016. o We are in year 4 of the four-year PBA contract. ● Our goal is to contain employee costs to attain long term savings, and yet attract and retain qualified employees. Insurance Premiums: ● In 2016 the Borough put the healthcare plan out to bid, achieving cost savings of $127, 400 in the 2017 budget as a result. ● In 2017 employee contributions will increase from $523, 300 to $600, 000. ● The Borough accomplished some costs savings through alternative health plans. 11
Expenses: 2017 Shared Services: The Borough achieves efficiencies of scale through shared service arrangements, and we are looking to expand these further in 2017. 12
Expenses: Putting It In Perspective: Some services provided to the residents at the local level: 13 Police Protection Storm Clean Up Building Inspections Public Information Street Lighting Snow Removal Storm Sewers Fire Protection Garbage Collection Parks & Recreation Code Enforcement Court Services Emergency Medical Services (EMS) Recycling Senior Center Animal Control Vital Statistics Sanitary Sewer Collection
Revenues: 2017 Grants: Grants Received: 1. US Older Americans = $29, 312 Others applications submitted and still pending: 1. Click it or Ticket 2017 Seat Belt Mobilization 2. Drunk Driving Enforcement Fund 3. Clean Communities Grant 4. Cops in Shops 5. Body Armor 6. Distracted Driving Crackdown 7. Alcohol Ed Rehab Fund 14
Discussion: Tax Rates and Usage Your Total Tax Bill l l The municipal taxes discussed in this presentation make up only one piece of your total tax bill. We levied $44, 589, 525 million in taxes in 2016 and collected $43, 730, 0980, which included all taxes (i. e. school tax, Red Bank municipal, Monmouth County, etc. ). The difference between the levy and the collection is due to tax appeals. We paid the following levies out to other entities in 2016: 1. 2. 3. 4. 15 $16, 545, 017 to the Local School District $ 9, 249, 069 to the Regional High School $ 5, 853, 285 to the County $ 512, 120 to the Special District Improvement District
Discussion: Tax Rates and Usage Tax Dollar Allocation Where does your tax dollar go? RB Library: 1. 6% Monmouth County Open Space: 0. 7% RB Borough = 26% Borough of Red Bank Monmouth County Schools = 59% County = 13% Red Bank Public and Regional Schools Red Bank Library Monmouth County Open Space 16
Discussion: Tax Rates and Usage 2017 Municipal Tax Summary: Proposed Tax Rate Proposed Increase in Tax Rate Average Residential Assessment 1 Penny of the Tax Rate on the Average Residence 1 Penny of the Tax Rate as Revenue to the Borough 17 0. 595 0. 0115 $362, 342 $36. 23 $212, 043 Translation: The proposed budget for 2017 increases the average tax bill by about $40.
Budget Areas of Focus: Red Bank Public Library Water and Sewer Utility Parking Utility 18
Red Bank Public Library In 2016 Over 46, 000 materials were used, including electronic services and print materials. 19 Many online resources available including Ancestry & Rosetta Stone! Ove r child 7, 000 a du re prog n atten lts and ded 20% rams grow last y our e th fr om ar, 2015 ! eople , 000 p 2 5 r ’s e Ov library. r u o ar used last ye s e c i v ser 41 pen o ow is n week! y r a Libr hours a
WATER & SEWER UTILITY 2017 Total Budget $7, 163, 800 l This represents an increase of $252 K or 3. 65% from 2016 l Key aspects of the Water & Sewer Utility: ● Self Liquidating ● Revenue Supports Operations § Water/Sewer Rents § Water/Sewer Connection Fees ● Full Time Employees (includes administrative & union) ● Licensed Operator (required position) ● Utility Debt Service ● Water Purchases - NJAWC ● Sewer Treatment - TRWRA 20
PARKING UTILITY 2017 Total Budget $2, 067 K l This represents an increase of $322 K, driven by last year’s rise in parking meter rates which increased revenue by approx. $250 K in 2016 and another $250 K in 2017 l Amount of surplus being used in the budget grows more than the increase in the parking meter fees – up by $324 K l Key aspects of the Parking Utility include: ● Self Liquidating ● Revenue Supports Operations § Parking Meters & Permit Fees § Parking Lease Payments ● Employees (includes administrative and parking enforcement officers) 21
Conclusion: Keeping You Informed: l l 22 The budget process of each government entity is open to the public. All residents are encouraged to become educated participants in the budget process. The budget and financial information is posted on our website at www. redbanknj. org The NJ Division of Local Government Services website is http: //www. state. nj. us/dca/lgs/
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