South Brunswick Republicans — or at least Republican candidate John O’Sullivan — appear ready to turn the South Brunswick Township Council’s use of its budget surplus into a campaign issue this year.
In a letter to the editor of our paper last week, Mr. O’Sullivan criticized the council for spending $9 million of the township’s $9.8 million surplus to balance its books this year and “hold the tax rate steady.”
Is this a good idea? What happens next year when costs for services, salaries and commodies rise and pension expenses increase? Where do we get the money then?
This year is an election year with three council members running for re-election. Next year there is no municipal election.
Is it a coincidence that the council is applying this short-term fix of sacrificing the current surplus in an election year, knowing that the following year will require either a significant tax increase or a dramatic cut in services?
Mr. O’Sullivan is It’s a simplistic understandingTownship Council Charlie Carley, who is up for re-election, issued this response this week, which will run on Thursday:
the surplus represents revenue (mostly property taxes) collected by municipal government in excess of what is needed to operate town hall (pay for police, public works, library, senior programs, etc.) for that particular year. Much of that Dec. 31 excess is typically rolled over in the following years operating budget. By the next Dec. 31 — lo, and behold — the surplus has typically regenerated itself as new ratables (which for the purpose of that particular budget year are unanticipated sources of revenue) come on line.
In South Brunswick, we have concentrated on the expenditures side of the budget. While it’s good that the town’s ratable base is growing, it’s more important that the mayor and council are keeping municipal spending in check. In fact, discretionary municipal spending has lagged the rate of inflation these past four years and the municipal workforce is significantly reduced in that same period.
He questions criticism, saying the current budget “is typical of the budgets of the recent past — a budget that maintains services, where discretionary spending remains flat, and the property tax rate is stable.” What is the point, he asks, of having “town hall stockpile the annually recurring surplus and so have to hike the property tax rate.”
The surplus is excess collection of property taxes its the peoples money. Why hoard the peoples money and pursue a policy of over-taxation for the sake of building a cash stockpile?
Even in good times its never good policy to raise taxes just for the sake of raising taxes no government should ever feel an entitlement to the peoples money. In tough economic times, raising taxes should be the last option exercised by government.
One hopes that the surplus debate plays itself out on a much higher — and more honest — level. Mr. O’Sullivan attempts to cast the Democrats in charge as being prfligate over-spenders who are doing little more than delaying a tax hike until after the council election. His defense of maintaining a surplus, however, lacks any substance or understanding of the roll surplus plays in municipal budgeting. While the council needs to keep an eye on next year’s potential costs, the reason that spending down the surplus is such a dangerous move — especially in a down economy — is that revenue is not likely to be generated at the level necessary to rebuild the account. If it generates less than $9 million, it will not be able to match this year’s contribution and it either will have to cut spending or increase some other revenue — most likely property taxes — to plug the gap.
Mr. Carley alludes to this, but disingenuously reports that the surplus “has typically regenerated itself as new ratables.” But this has happened just once in the last eight years and is unlikely to happen at a time of recession, especially with the township getting closer to build out.
As we’ve written before, it would be fiscally prudent for the council to raise taxes by a penny and work to cut about a half-million in spending from the budget. That would leave an addition $900,000 to $1 million in the surplus account to start the year and give the township a better chance to stabilize its use in the future.
In the end, the rule of thumb should be that no municipal governing body should be spending more of its surplus account than it thinks it can generate over the course of the year in new ratables and other anticipated but off-budget revenue (liquor licenses, for instance).
Hank Kalet 