You have ato wonder if the people who drafted South Brunswick’s proposed municipal budget have been paying attention to what has been happening at the state level.
The $49.5 million budget presented to the Township Council on Tuesday by Township Manager Matt Watkins follows in what has been a long line of South Brunswick spending plans, relying on its surplus account to offset what otherwise might be a tax increase.
The township is planning to use 95 percent of its surplus account as revenue, more than $9 million, which is about three-quarters of a million bucks more than it used last year. The problem, however, is that doing so leaves less than $500,000 in its surplus account with no guarantees that the account will grow enough over the course of the year to allow the township to use the same amount of surplus as revenue next year.
That could leave the township in a hole next year, before anything else is taken into account.
Recent history is our guide: The township’s surplus account shrink from $8.2 million in 2001 to $4.5 million in 2006, before a minibuilding boom helped drive it back up to $10.5 million last year. The council spent $8.5 million of that last year, with development helping generate enough new revenue to boost the fund to about $9.7 million.
That means that $7.7 million in new surplus was generated during 2007 — about $2.5 million less than was generated in 2006. If the township creates the same amount of new surplus in 2008 as it did in 2007, that will leave it with about $8.3 million or so in its account — almost a million bucks less than it is using this year. That’s a huge gap that would be difficult to plug.
Township officials are optimistic that surplus growth will be enough to avert such a gap, but external factors leave me dubious. The national economy is tanking, led by a sinking real estate market, and New Jersey’s economic woes have become legendary. The economic climate would not seem to favor new ratable construction — in fact, the ratable base has staganated (it actually shrank by a quarter of a percent in 2007).
Unless there are major projects in the pipeline that are likely to get their certificates of occupancy in 2008 and that will generate tax revenue, it seems a dangerous gamble to burn the surplus account like this.
Then again, keeping taxes from going up during an election year is not the worst policy — so what if the fallout won’t hit the budget (and taxpayers) until 2009.
South Brunswick Post, The Cranbury Press
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