Budget is policy.
Budget is spin.
Budget is sleight of hand.
In Aberdeen, budget is all of the above.
Although the final budget was adopted a month ago, the final numbers have not been posted and we’re reduced to relying upon “press releases” from the town council. Still, we do have the initially proposed budget and the final numbers are likely similar. The initial budget also provides a great window into the township’s budget approach.
Sheet 3B of the initial budget states the following:
Maximum Allowable Amount to be Raised by Taxation 10,690,838
Amount to be Raised by Taxation for Municipal Purposes 10,690,314
The township started the budgeting process from the maximum amount it could tax residents and then worked backwards, looking to make small cuts here and there.
In the township’s “press release,” they crowed over reducing the tax increase to just 3.67%, nearly double the supposed 2% cap, over twice the school district’s 1.5% tax hike, but only half the originally proposed 6.3% hike. Hence the repeated messaging that Aberdeen’s residents should be thankful they’re not being taxed even more.
Then there are those pesky details like the vanishing surplus.
In 2006, the surplus fund was $1.5 million. Now it’s down to just $230,000. The purpose of the surplus fund is to prevent “rainy day” tax hikes that never disappear but simply get added to the following year’s baseline. Last year, they blamed the tax hikes on tax appeals. This year it was Hurricane Sandy. Next year, it will be something else. Last year’s tax hike is never enough to cover this year’s problem.
But even this is yesterday’s news. According to the budget (Sheet 39), the surplus fund will be drawn down to zero by the end of this year.
Last year, Moody’s downgraded Aberdeen’s $15 million in outstanding debt stating, “The downgrade to A1 reflects the borough's weakened financial position following fund balance draws in each of the last seven years.” (The $15 million debt only reflects general obligation bonds and not sewer utility bonds.)
Remarkably, debt payments have remained stable around $1.5 million per year. The township achieved that feat by finally cutting its road program to affordable levels, just $1.1 million per year, down from $3 million per year in 2007. Expect more programs to get crowded out as costs continue to spiral.
Another money scheme is the PILOT program – Payment in Lieu Of Taxes. The school district gets two-thirds of the property taxes but the township keeps over half the PILOT money. That effectively transfers about $100,000 a year from the school budget to the township budget.
Police department salaries and expenses is only up 2% this year but that’s mainly because virtually every officer has reached the top of the pay scale and is earning over $100,000 a year plus benefits. Annual contributions to the Police and Firemen’s Retirement System are up a whopping 9% and will top a million dollars next year. (As an aside, my personal experiences with the ATPD were always outstanding and I’ve come to appreciate the ATPD far more since my move to NYC. I recently installed a dashboard camera to protect myself from the NYPD whose actions I’ve witnessed to range from awesome to criminal.)
Electric is down $20,000 due to the solar panels. Or, in Aberdeen terms, the savings is about 1.5% of what gets paid annually to CME.
Library funding is back to 2007 levels, the one area the township has “succeeded” in controlling costs.
What can be done to reduce taxes? Implement a 2% cap with no exceptions, open engineering services to competitive bidding, and develop commercial areas.
Since those suggestions will never be implemented, the only other option for people looking for lower taxes is to move. >>> Read more!
Tuesday, July 9, 2013
Budget is policy.