Questions & Answers on the Budget
1. What are the major increases in revenue for the SFY 2004 Budget other than Federal and State Grants/Aids with offsetting appropriation?
The major increases in revenues in the SFY 2004 Budget other than Federal and State Grants (or other items) with offsetting appropriation are as follows:
| DESCRIPTION
|
INCREASE
% |
AMOUNT |
| Amount to be Raised by Taxation | 7.59% |
$1,693,041 |
| Surplus Anticipated | 29.43% |
$1,670,000 |
| Sale of Land | 100% |
$307,500 |
| FEMA Reimbursement | 100% |
$261,946 |
| Alcoholic Beverage Licenses | 430.00% |
$215,000 |
| Reserve for Tax Appeals | 100.00% |
$200,000 |
| Capital Fund Surplus | 500% |
$125,000 |
See
Appendix (i) for more details.
2. What are the major reductions in revenues in the SFY 2004 Budget other than Federal and State Grants/Aids with offsetting appropriations?
The major reductions in SFY 2004 revenues other than Federal and State Grants/Aids with offsetting appropriations are in the following areas:
DESCRIPTION |
DECREASE
% |
AMOUNT |
| Interest on Investments Deposits | 46.05% |
$350,000 |
| Delinquent Taxes | 15,74% |
$240,000 |
| Extraordinary State Aid | 100.00% |
$200,000 |
See Appendix (i) for detailed explanations as to the decreases.
3. What are new items in revenue for the SFY 2004 Budget other than Federal and State Grants/Aids with offsetting appropriation?
New items in revenues in the SFY 2004 Budget other than Federal and State Grants with offsetting appropriation are as follows:
DESCRIPTION |
AMOUNT |
| Sale of Lane | $307,500 |
| FEMA Reimbursement | $261,946 |
| Reserve for Tax Appeals | $200,000 |
4. What are the major increases in appropriation other than Federal and State Grants/Aid with offsetting revenue items?
The major increases in appropriation for the SFY 2004 Budget include the following:
DESCRIPTION |
%
INCREASE |
AMOUNT |
| Public Safety - Salaries & Wages | 8.16% |
$769,740 |
| Emergency Appropriation | 452.37% |
$704,738 |
| Debt Service | 9.63% |
$512,082 |
| Group Insurance | 6.76% |
$416,861 |
| Police Settlement | 100.00% |
$350,000 |
| Snow Emergency | 100.00% |
$349,262 |
| Employee Termination | 300,000.00% |
$299,900 |
| PFRS | 171,807.00% |
$171,807 |
| Salary Adjustment | 25.47% |
$129,081 |
See Appendix (ii) for more details.
5. What are the major reductions in appropriations in the SFY 2004 Budget other than Federal and State Grants/Aids with offsetting appropriation?
The major reductions in appropriations for SFY 2004 Budget other than Federal and State Grant/Aids with offsetting appropriation are as follows:
DESCRIPTION |
%
DECREASE |
AMOUNT |
| Reserve for Uncollected Taxes | 13.14% |
$443,465 |
| Unfunded Capital | 96.28% |
$292,706 |
The appendix (ii) explains the reductions
6. What are new items of appropriation in the SFY 2004 Budget other than Federal and State Grants/Aids with offsetting appropriation?
New items of appropriation in the SFY 2004 Budget other than Federal and State Grants with offsetting appropriation are as follows:
DESCRIPTION |
AMOUNT |
| Police Settlement | $350,000 |
| Snow Emergency (separate line item due to partial FEMA reim.) | $349,262 |
The changes in Federal,
County and State Grants/Aids Revenue with offsetting appropriations include
the following items some of which were a one time funding project: 8. What is the level
of State Aids/Grants compared to SFY 2004? The most notable change to the SFY
2004 Budget is the COPS in School Grants. This grant has expired and has been
removed as a Revenue item in the Budget. State Aid was decreased by $200,000
due to the uncertainty of Old Bridge receiving any Extraordinary Aid. However,
the Energy Tax Receipts State Aid figure was increased by $35,582. 9. What is the Bond
Rating for the Township? In January of 2003, Moody’s Investor
Services maintained the Bond Rating for the Township of Aa3, but placed the
Township on their Watch List. Fitch IBCA maintained the Bond Rating of AA-,
but added a Negative Rating Outlook. These ratings reflect concerns over continued
drawing down of Fund Balance by the Township. Guarantees were made by the Governing
Body that the Township would rebuild Fund Balances beginning with the SFY 2004
Budget. As a result, the SFY 2004 Budget allows for an increase of $190,417.82
in the Fund Balance. 10. How do the present
Bond Ratings affect the Township? The current Bond Ratings will help
the Township save thousands of dollars on interest on bonds sold in 2003/2004.
A poorer rating would mean higher interest rates. 11. What is the
breakdown of Emergency Appropriation figures in the Budget? The Emergency Appropriations
in the Budget is shown below. This amount is high due to a particularly bad
winter in SFY 2003 and excessively high Police Overtime.
7. Were there any changes in Federal, County and State Grants/Aids Revenues
with offsetting appropriations?
Body Armor Grant
Clean Communities
COPS in School Grant
Title III - Transportation
DESCRIPTION |
AMOUNT |
| Public Safety Overtime | $720,000 |
| Snow Removal | $457,500 |
| Down Payments | $50,000 |
| Accumulated Absence | $25,000 |
| Heating Oil | $1,500 |
12. What are the changes in Debt Service over the previous year?
The Table below shows that changes in Debt Service of SFY 2003 over SFY 2002. The Net Total Debt at the end of SFY 2003 is $2,031,952 higher than SFY 2002. The statutory debt limitation is 3.5%, and currently Old Bridge is at 1.77% compared to 1.76% in SFY 2002.
DESCRIPTION |
SFY
2002 |
SFY
2003 |
CHANGE |
| Long Term Debt: Serial Bonds | $33,805,000 |
$34,600,000 |
$945,000 |
| Short Term Debt: Bond Anticipation Notes | $11,300,000 |
$14,990,000 |
$3,690,000 |
| Authorized But Not Issued: Bonds & Notes | $12,694,133 |
$7,374,713 |
($5,319,420) |
| Loans: Green Trust, Infrastructure & EDA | $2,689,089 |
$6,611,461 |
$3,922,372 |
| Less: Deductions for School Leasehold | ($320,000) |
($256,000) |
($1,206,000) |
| Total Net Debt | $60,168,222 |
$63,320,174 |
$2,031,952 |
| Borrowing Power as per NJSA 40A:2-2 | 1.79% |
1.72% |
0.01% |
The Reserve for Uncollected Taxes is a non-spending appropriation required by law to be included in the budget of all municipalities in the State of New Jersey This is required in the budget for the shortfall of taxes not collected by the Township. The Township is obligated to pay 100% of all the taxes due to the School, County and Fire Districts, despite not collecting all the taxes for the year. Appendix (vii) shows a comparison of the percentage of collections and the percentage utilized for Reserve for Uncollected Taxes.
14. What is the difference between the Tax Collection Rate and the percentage utilized for the Reserve for Uncollected Taxes, since SFY 1993?
The difference between the
Tax Collection Rate and percentage utilized for the Reserve for Uncollected
Taxes since SFY 1992 are shown in the table below:
YEAR |
COLLECTION
RATE |
RESERVE
FOR UNCOLLECTED TAX |
DIFFERENCE |
AMOUNT
OF RESERVE |
TAX
LEVY |
| SFY 1992 | 93.74% |
95.26% |
-1.52% |
$3,480,551.97 |
$74,347,789.02 |
| SFY 1993 | 95.41% |
95.12% |
0.29% |
$3,893,653.89 |
$80,186,828.38 |
| SFY 1994 | 95.06% |
93.00% |
2.06% |
$5,401,841,80 |
$81,255,586.37 |
| SFY 1995 | 95.40% |
94.00% |
1.40% |
$4,837,698.39 |
$83,775,746.54 |
| SFY 1996 | 96.80% |
94.00% |
2.80% |
$4,935,982.00 |
$86,075,434.94 |
| SFY 1997 | 96.88% |
95.32% |
1.56% |
$3,890,893.28 |
$85,663,637.54 |
| SFY 1999 | 97.63% |
96.00% |
1.63% |
$3,358,724.00 |
$87,574,312.78 |
| SFY 2000 | 97.69% |
95.92% |
1.77% |
$3,410,064.00 |
$86,954,598.67 |
| SFY 2001 | 98.41% |
96.18% |
2.23% |
$3,339,858.00 |
$89,021,566.32 |
| SFY 2002 | 99.00% |
97.07% |
1.93% |
$3,136,201.00 |
$95,341,799.58 |
| SFY 2003 | 99.52% |
97.66% |
1.86% |
$2,692,736.00 |
$110,186,249.89 |
The risk of using a high of collection rate is the increased potential for cash deficits and other related financial problems. The table above highlights such a problem in SFY 1992 and 1993.
Further, it should be noted that the increase in the Reserve for Uncollected Taxes over the years is the result of the higher Amount to be Raised by Taxation. Also, it should be noted that a 1% decline in the Collection Rate will result in a loss of revenue generated of over $900,000.
The Township of Old Bridge experienced cash deficits of about $2 million in 1992 and 1993. This was mainly due to utilizing a higher rate for the Reserve for Uncollected Taxes than the tax collection. The differences between the rates were -1.52% in SFY 1992 and -1.71% in SFY 1993. The deficit contributed to the lowering of the Township’s Bond Rating and higher interest cost on its debt.
However, the conservative budgeting of the rates since SFY 1994, has generated surplus, maintained stability and improved the bond rating of the Township.
15. What is the major source of surplus and how is it generated from operations?
Surplus is normally generated from collecting more revenue than anticipated in the budget.It can also be generated from unexpended appropriation reserves or the cancellation of unexpended appropriations.
The unaudited surplus balance as at June 30, 2003 is $8,646,815.09. This amount is $1,860,417.82 higher than last year. We intend to use $7,345,000 of the surplus, almost 85% in the current budget. The surplus balance after the budget is $1,301,815.09. This is $1,141,447.27 lower than the high point in SFY 1997. The increase in Surplus Balance in SFY 2003 is a direct result of a higher generation of surplus revenue from Current Taxes Collected. This can be attributed to an unusually high amount of Added & Omitted Taxes during the year.
16. How does the proposed Municipal Tax Rate compare with previous years?
The proposed rate of $0.76 is at the same level as it was ten years ago.
17. What is the percentage of Employee costs in the current budget?
Total employee cost is about 58.3% of the current budget. This is made up of salaries and wages of $19.1 million, benefits of $6.6 million and termination costs of $0.65 million. See appendix (x) for an analysis of the percentages in the budget.