Point Boro Must Cut $1 Million from Proposed Budget and Introduce by Next Week

Point Borough has one more week to decide how to use furlough days and possible layoffs to cut spending by more than $1 million to help meet an overall budget shorfall of $2.6 million.

The Borough Council must introduce a budget sometime during the week of June 6 or must again ask the state for permission to have more time to introduce its budget, said Borough Administrator David Maffei on Wednesday. He said the state has already given the borough a couple of extensions going back to March.

If the borough does not introduce by next week and does not again ask the state for an extension, it risks state fines on individual council members, Maffei said.

The borough is likely imposing 33 furlough days on all employees, except police, and may also impose layoffs and cuts to municipal services as it tackles the fiscal crisis. State law prohibits municipalities from furloughing police.

The council is scheduled to meet at 5:30 p.m. Thursday for another budget workshop and must then schedule an additional meeting next week for budget introduction.

The borough must reduce its expenses inside a state-mandated 2 percent spending cap by more than $1 million to help meet the overall shortfall and also to comply with a state mandated 2 percent cap on local tax rate increases, said Councilman Chris Leitner on Wednesday.

"Layoffs are still part of the equation," Leitner said. "We're trying to minimize that as much as possible. You may see layoffs as part of the introduction of the budget, but ongoing negotiations with employees and their collective bargaining units may change those numbers and we may not have to do those layoffs by the time we adopt the budget."

Some expenses, such as salaries, benefits and basic operating expenses are calculated inside a spending cap, while other expenses, such as those for capital projects, are outside the spending cap.

Mayor William Schroeder said at Tuesday night's budget workshop meeting that the council is listening to public input regarding how budget decisions should be made and that many options are being considered.

Schroeder also released a prepared statement on Tuesday night saying that the shortfall is $2.6 million, possibly necessitating furloughs, layoffs and lower levels of municipal services.

The statement began, "When I began my term as mayor this January, we knew that the borough’s financial situation was dire. We were left serious budget issues due to the prior administration’s poor planning.

"But due to the lack of accurate record keeping, it was impossible to determine our true financial position. We were required to bring an auditor in to reconstruct last year’s books, which has taken several months and has cost the taxpayers over $50,000," the statement says.

"The auditor’s report and a review of reconstructed financial records showed that last year, the borough failed to meet the minimum requirements for public record keeping," he said.

"Legally-required financial records were incomplete, erroneous, and illegible and $3.7 million of public funds were improperly recorded or not recorded at all," he said, referring to work done by former borough chief financial officer Judy Block.

Block has responded that she did nothing wrong.

"In fiscal year 2010, $26.5 million in debt was issued but not recorded," the mayor's statement says. "The prior administration’s 2010 budget represented an irresponsible mismatch between recurring revenues and expenses.

"Point Pleasant Borough is left with a $2.6 million budget shortfall for Fiscal Year 2011, which, without other solutions, would require a roughly 23% tax increase to balance. This is an untenable position and must be resolved."

A draft budget prepared by borough auditor Thomas Fallon calls for a 23 percent increase, without using any furlough days, layoffs or municipal service reductions.

However, at last week's budget workshop meeting, Fallon emphasized that draft document was just a starting point for council to work with, not a budget that meets the state-mandated 2 percent cap on tax increases.

Schroeder's statement continues, "The combination of debt and budget shortfall left to us by the last administration has created this fiscal crisis. There is no disputing the math - the problems they left require drastic solutions.

"We are making the tough choices that it will take to fix it – and that means putting everything on the table in order to minimize any tax increases or service cuts," he said in the statement.

"We are currently working with our financial advisers to create a three-year plan for solvency," the statement says. "This plan will identify potential cost savings and possible increases in revenues, and may require furloughs, layoffs and cuts in services to minimize tax increases. It will require constant monitoring and changes as the situations around us change.

"We commit to keeping you fully informed as the situation continues to unfold and we as we come close to the adoption of this year's budget, we continue to appreciate your ideas and suggestions.

"I, and all the members of the council, are working together and with the community to resolve this situation.  If you have any questions or comments, please call us at (732) 746-2000," the statement concludes.

Fallon said at the Tuesday night meeting that part of the budget problem is due to a drop of nearly  2 percent in the tax collection rate.

The rate was about 97 percent in 2008 and 2009, but dropped to 95.5 percent in 2010, which creates a deficit of approximately $550,000 in tax collection revenue, Fallon said.

"You really need to stay on top of your tax collection," Fallon said.

Schroeder pointed out that imposing furlough days on staff members means they have less time to work on aggressive tax collection.

Tax Collector Bernadine Pearce said, from her seat in the audience, "There's nothing you can do when people don't pay their taxes. When people don't pay their water bills, you can shut off their water.

"But when they don't  pay their taxes, there's nothing you can do until the tax sale at the end of the yar and they have to be behind in taxes a whole year," she said.

Council members said that for the upcoming budget, they will likely anticipate a tax collection rate of 96.54, which is an average of the rates for the past three years.

A small group of parents with children registered to attend the borough Recreation Center's preschool program in September were at Tuesday's meeting with a petition of about 120 signatures.

"We're asking you to reconsider closing on Fridays, due to the hardship it causes parents and that it's detrimental to the children's education," Chris Ward, a preschool parent, told council.

The plan, so far, is to have the Recreation's preschool close on Fridays for furloughs.

Jennifer Fisahn, who has a four-year-old son scheduled to attend the preschool in September, told council that the preschool parents have payments due in June and want answers before paying up.

Leitner said he would ask the Recreation Department if they can give parents extensions on payments so parents can at least get answers on scheduling issues before they have to pay any more money.

Some parents have payments due Wednesday, while others have payments due on June 10, depending on what type of payment plan they are on.

Some parents have paid $50 deposits, while others, like Andrew Loboda, have already paid more than $700 for his daughter to attend the preschool for the entire 2011-2012 school year.

"I'd rather pay more tuition than have furlough days," Loboda said.