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 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.