Surplus important to township budget

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Glenn Johnson, Cranbury committeeman

In the March 18 edition of The Cranbury Press, there was an article about Cranbury’s 2011 municipal budget.

Some of the reasons why four Township Committee members are in favor of an increase in the municipal budget of 2 cents were not included in the story.

Please allow me to present them now.

During our budget hearings in January we learned that, in recent years, more of the township’s surplus has been used than comes in to replenish it. We did some financial modeling, using different budget assumptions and different replenishment rates to make sure we weren’t reacting to an outlier.
In every projection we did, regardless of the budget assumptions and replenishment rates, the surplus disappeared in approximately four years.

Why is the surplus important? It is one of the factors the ratings agencies consider when assigning a rating to municipal debt.

A municipality must maintain a surplus equal to 20 percent of the total municipal operating budget to maintain the highest rating. So with the proposed $10.8 million budget, Cranbury needs to maintain a surplus of a little over $2 million.

We also set aside $1 million in the event Cranbury loses property tax appeals.

So when you subtract the $2 million we must keep in surplus to maintain our debt rating and the $1 million we set aside for tax appeals from our $4.9 million surplus, you see that what we have available for use is a surplus of $1.9 million.

At recent meetings, we were asked by members of the public to cut the fat from the budget. We went through the budget line by line in January, and there is no fat. There are only services.

Our municipal budget peaked at $12.5 million in 2006. The budget we propose for 2011 is $10.8 million. All excess appropriations have been reduced to more realistic levels over the past several years. The proposed tax increase maintains services at their present level.

I was not surprised that at our recent meetings no one stood up during the public portion to thank us for raising their taxes. No one wants to pay higher taxes than necessary.

In order to erase the need for the 2-cent increase, $320,000 would have to be cut from our proposed budget. What surprised me is that several people advised us to discontinue the Fourth of July fireworks.

There are three events each year that are emblematic of Cranbury: the Memorial Day parade, the Fourth of July fireworks and Cranbury Day. Our financial situation would have to be far more serious than it is now before I would cut the $7,500 for the fireworks display.

http://www.centraljersey.com/articles/2011/03/25/cranbury_press/your_views/doc4d8b59d7e6b51847351509.txt

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Just so we're all clear as it was not disclosed in the letter or subsequent posts here, we have more than a $1.9M surplus. It is closer to $5M. The idea that only $1.9M is "available" is based on a set of assumptions, including the idea that we need to keep $2M reserved to maintain an AAA bond rating, which is an opinion not fact, and the idea that it is non-discretionary to maintain that bond rating.

I can see both sides but it is disingenuous to imply the surplus is only $1.9M.

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