This week we completed our 2023 budget workshops. After getting a preview a few weeks ago that we were in tough shape, the Administration made progress streamlining costs. As of now, it appears municipal taxes will increase less than 2%, which is great news Here is a summary of what we discussed over our two day budget workshop meetings. Note: Any numbers mentioned in this update are tentative and subject to change. Final numbers will be provided to the public when the budget is introduced, likely at our meeting on March 13th. The budget hearing is then held 30 days after that meeting.
Residents are all encouraged to review the summary financial analysis our CFO prepared. You can locate it here: https://www.veronanj.org/budgetinfo.
Our total operating expenses are staying flat at $25.3 million. This is great work by our entire Administrative team. Every line item of our budget was looked at, and all department heads and our CFO worked hard to cut costs where they could, improve accounting, and put in necessary investments.
In 2022 we collected more revenue then what was expected. We collected $4.8 million vs $4.5 million that was budgeted. Our operations have now fully bounced back since COVID. Revenue was up for the Municipal Court and Recreation, and we received increased interest payments on investments. Revenue assumptions for 2023 will remain flat at $4.5 million vs the 2022 budget.
Our Fund Balance is very healthy. Fund balance is the positive difference between what you budgeted for and what you actually spent. We started 2022 with $5.8 million in fund balance and ended the year at $6.9 million. We do use fund balance to help us minimize tax increases, but its also important that we don't over-utilize it. It has been recommended by our Administration that we look to increase revenue so that we can use less fund balance in the future.
The total amount we will need to raise by taxes is $17.5 million, or a 1.68% increase from last year. This will average to be a $54 increase per average household. These figures don't include the taxes we pay to support the Library (which are determined by the State). Including the Library, municipal taxes will be $18.5 million, or a 2.13% increase. The municipal tax rate is projected to be 0.783, an increase of 1.77%.
The most interesting summary we produce is on page 10 and 11. Page 10 details how our taxes are broken down by service. On a monthly basis, residents on average pay $273 for municipal services. $89 of that is for public safety, $46 is to pay for capital projects and our debt on past projects, $32 for public works, $32 for garbage and recycling and public utilities, $31 for administration, $21 for recreation and community services, $10 goes to the library, $12 for miscellaneous services. Of your total tax bill, only 26% is for municipal services. The rest is the schools (56%) and Essex County (18%).
During the workshops we had a discussion on American Rescue Plan funds. We received $1.4 million from the federal government. We spent $396K last year to offset revenue loss. We have $1 million as a balance. It was recommended to us by the Administration that we use that balance on water and sewer infrastructure projects - where we have a lot of need. We have until 2025 to spend the funds.
Our utilities are where we have more financial challenges. The swimming pool utility has a very tight financial situation. This is why the Council has introduced fee increases across the board to bring in more revenue to help offset costs of our past, current, and future improvement projects. In 2022 the pool brought in $611K in revenue (vs $557K budgeted). Both AARP funds and capital surplus was used to help offset the budget in 2022. The pool's fund balance increased in 2022 by $12K. In 2023, the pool's operating budget (excluding salaries) will be lowered from $194K to $130K. Salaries for the pool are proposed at $350K. I want to commend the entire Administrative team on working so hard to pick apart the pool budget and make recommendations to the Council. Behind the scenes they had multiple meetings on the pool finances.
The water and sewer utility is also challenging. Despite the large rate increase we had to pass on to residents that raised water rates, we still had financial challenges in this utility. We used $800K in fund balance but only "regenerated" $270k. We had unforeseen issues at the plant that ate up budget. For 2023, we hope to get one of our two wells back on (after fixing our PFAS issue) so that we can start using our own water again which would help finances. Passaic Valley is increasing water rates by 6%. We will be conducting a real rate study this year to get a better handle on the finances. Additional funding opportunities, grants, and use of the ARPA funds are all going to be explored.
Some additional highlights from our budget meetings:
Across multiple departments we are back-filling positions that were budgeted for previously but not filled. We have had some departures but also need to increase staff in some departments.
The police department is planning to hire two additional officers. I am excited for this increase and hope it will result in more traffic enforcement. Traffic enforcement is a top concern I hear from residents.
We spent $400k on recycling in 2022. After we implemented our tagging program for inappropriate recycling we have very successfully reduced violation fees from the vendor that processes our recycling. This has helped to reduce costs. In 2023 we will start to focus on trying to recycle more metal - which is the only material that results in revenue back to us. We will also have a pilot for residential composting in the works.
Our costs for garbage removal are $1.7 million. Our contract is up at the end of this year. We are very concerned about what sort of rate increase we will receive. Other towns have seen very large increases. Expect many more conversations on this in 2023 and 2024.
The "mandatory minimum" Library tax (issued by the State) increased to $998,504 for 2023. Due to that increase, the Township did not need to add any budget support for the Library. The Library budget for 2023 will be fully funded by the mandatory minimum tax.
At our next meeting, we will discuss the final aspect of our 2023 budget process - capital planning. I am very excited to hear the Administration's recommendations on what big projects need to be funded over the next five years.
Feedback on the budget can be sent not only to the Council but also to our Township Manager and CFO.
Township Manager: https://www.veronanj.org/townmanager