Montclair's Financial Bind

Montclair was supposed to be on the verge of approving a $69.9 million 2010 municipal budget that would spark a 6 percent hike in property taxes. But with both Town Manager Marc Dashield and Chief Financial Officer Gordon Stelter on vacation this week, it's anyone's guess how much progress is being made on budget negotations.

In the meantime, with the help of Town Councilors Nick Lewis, Cary Africk, as well as Mayor Jerry Fried, Patch has compiled this list of frequently asked questions related to Montclair's financial predicament and what the future might hold for taxpayers.

How is your tax bill divided?

The municipal portion of the budget represents about 26 percent of your tax bill. The school budget represents about 58 percent of your bill. The share of your taxes that goes to Essex County is about 16 percent. The total tax increase will end up being around 6 percent, "a painful number," Fried said. The municipal portion of this will be around 10 percent.

What are Montclair's debt obligations?

Lewis said that there are bond and note payments totaling $7.54 million that the Township is absolutely obligated to pay. "The ominous thing is that this amount is going to increase in future years as the town switches its debt from notes to bonds, which will require larger payments, but will at least start paying down the principal," Lewis said. School debt payments total an additional $4.42 million that can't be avoided.

Can't Montclair rely on new development?

Fried says that Montclair is almost totally "built out" ... there are few parcels of land left for new construction. The total valuation of Montclair is about $7.4 billion. Adding a $100 million development would be quite a big individual project, but would only increase the tax base by about 1.4 percent of the total, "so even in the best case scenario, where few services would be consumed, the best a resident could expect would be in the area of a 1 percent reduction, around $150 for the average taxpayer." The Township is now in the process of hiring a new Township Planner, one with a strong background in economic development as well as the more common experience of responding to plans and complying with state regulations.

Why is Montclair's revenue dropping so dramatically?

The Township relies on property taxes and other revenue items to cover its expenditures. This general revenue is projected to decline from $18.9 million to $15.7 million, a 17 percent drop. The major reasons behind the decrease, according to Lewis, are:

Reduction in budget surplus: "The 2009 municipal budget provided for a surplus of $3.35 million. Instead the surplus is $1.5 million. I will ask the auditors to report on how this occurred," Lewis said.

Interest Income: Interest rates are at historic lows and the town is projected to earn $280,000 less on its investments. Of course, the town also saves money on the interest it pays on the notes it has issued to fund its debt.

Construction Fees: In a reflection of the economic downturn, these fees are projected to be $166,000 lower in 2010 than 2009.

Municipal Court: The fees from the court are projected to decrease by nearly $200,000.

State Aid: Gov. Chris Christie cut state aid to Montclair by approximately $850,000.

What are Montclair's unavoidable expenditures?

Here are just a few, according to Lewis:

Health insurance premiums for municipal employees and some retirees increased by 16 percent, costing the Township $730,000

Pension contributions, which are mandated by the state and which have been increasing by double digits every year, are up by another $502,000 this year.

Employee injuries require the Township to set aside an additional $100,000 to pay costs associated with workers compensation claims. This reflects a rash of fairly recent injuries in the fire department.

Tax Appeals continue to be a concern. The Township must reserve $300,000 to pay for these appeals, double what it reserved last year.

Budget law requires the Township to set aside a reserve for uncollected taxes. The economic downturn has led to a decrease in tax collection and therefore the amount must be increased by $725,000.

This adds up to $2.2 million in additional expenditures over last year that the Township must pay. This does not even take into account the increases in pay that town employees are entitled to under their collective bargaining agreements. These increases average around 2.25 percent, although the police are currently in binding arbitration, which will set their salary and benefits.

When will the Township's budget be approved?

Although the Township had indicated the budget would be approved this month, Africk said: "quite frankly, I don't know when the budget is coming up for approval."

What are some areas in which residents have suggested cuts?

Fried said the following have been under consideration:

Police: We are several officers below the level that allows us to do "Community Policing", which includes a number of services in which police patrol visibly and interact with the public. Ideally, the Council would like to restore this but we accept the need to keep expenditures down.

Fire: Because the force size depends on fully staffed crews rather than individual firemen, our choices are either to take a truck out of service or close a firehouse. The Council considers this a last resort and accepts the guidance of professionals that such actions would prevent us from confidence that fires would have the response that State guidelines demand. We also do not want to jeopardize the almost $1 million arrangement in which we provide fire protection for Glen Ridge.

Library: The current cut is likely to be around 11 percent to 13 percent, severely curtailing services that had been increasing even with years of frozen or reduced budgets.

Recreation: Full- and part-time staff cuts have already reduced pool hours and scaled back town events. Most programs are run by volunteers but administered by township staff.

Early Childhood Education: It's likely that a cut will be made in the range of 15 percent to 20 percent, all of which would go to scholarships for lower income families.

Sanitation: We need two scheduled pickups of some kind (waste, recycling, etc.) to avoid overtime costs. Outsourcing trash might save a few dollars per year but has not been recommended in the past because of the possibility of increased costs or decreased services because of cutting staff who are used in plowing, storms, and other occurrences. This is something we will be looking at as an option in the coming year.