Municipal Officials Get Tax-Cutting, Planning Tips

Facing financial caps on the growth of their local tax levy, a declining tax base, and rising health care and pension costs, municipal officials were presented cost-saving options at the Eighth Annual Morris County Municipal Summit.

The event at County College of Morris was hosted Wednesday by the Morris County Economic Development Corp. and featured discussions that presented some alternatives to business as usual.

The session was divided into parts, each focusing on a different aspect of planning for local government: Spokesmen of the Morris County Improvement Authority Saving discussed ways to save on energy costs. Auditors suggested ways that towns could adopt better planning models in their budgeting and examine how goods and service were funded.

And Finally, keynote speaker Wayne Staub, director of the Office of Economic Growth and Sustainability in the state Department of Environmental Protection, told attendees that his office is charged with developing sustainability programs that both protect the environment and provide opportunities for the growth of green energy manufacturing and power projects in New Jersey.

Rethinking Energy

Stephen B. Pearlman, attorney for the Morris County Improvement Authority, and Joseph Santaiti, vice president of Gabel Associates, described how officials could take advantage of a new energy-saving program under development by the authority.

In 2009, the authority launched its solar-energy program, which eventually installed 14,000 solar panels on 19 school and government buildings. The panels are planned to generate 3.1 megawatts of electricity and save $3.8 million over the 15-year life of the project.

Pearlman said the authority is now looking to partner with towns and school districts on an energy efficiency program aimed at replacing aging boilers and appliances, and installing new lighting and insulation, for example.

Funding would be made available through the improvement authority and supported by the county, which uses its AAA bond rating to obtain lower interest rates on bonds than most towns can. Pearlman said the authority would bundle individual proposals from towns and schools into a single bond issue to secure the best interest rate.

And ultimately, government would pay back the cost of upgrades by the energy savings they produce.

The authority's financial programs would allow towns to take advantage of energy audits most many completed last year at the request of the state. Many towns merely set those audits aside instead of acting on their recomendations, Pearlman said. But he said the program suggested by the authority would give towns an option for proceeding with green renovations that could save them money in the long run.

Planning for the Future

New approaches to annual budgeting could also produce savings, said Joseph Kovalcik, assistant treasurer for Morris County and Bud Jones, a partner in the accounting form of Nisivoccia & Co.

Kovalcik noted towns actually face two caps in their budgets—a 3.5 percent cap on appropriation increases and a 2 percent cap on the growth of the tax levy, the amount of taxes required to fund the annual budget. There are exceptions to what budget items are included in the cap, he said: health care and pension costs, capital expenses and debt services are outside the tax levy cap but are part of the total budget.

The state health plan, which towns can join for health insurance coverage, is expected to call for a 16 percent increase for 2012, he said. While that item is not used to determine the tax levy cap, the increase, along with similar pension cost increases, represents many thousands of additional dollars that are included in the actual budget, he said.

Jones said towns need to adopt longer-range planning, especially for capital purchases, and begin to ask how the services offered meet the core mission of the government.

Some of his municipal clients have started paying for some capital expenses, like small equipment purchases or annual road repairs, as part of their annual budgets. The shift has reduced long-term borrowing, he said.

A review of how a town borrows money—there are financial plans that can cover short-term, medium and long term borrowing—might produce a program that proves more flexibility and eventually lower borrowing costs.

Aiming for Sustainability

Staub said his division is charged with implementing Gov. Chris Christie’s energy efficiency and sustainability programs.

The goal is to increase the used of renewable energy in the state, such as the effort to build wind turbine farms off the Jersey Shore, place solar energy installations on landfills, parking lots and other places that would allow a more local generation of power, and provide opportunities for New Jersey manufacturers to get in on the development of these new energy sources.

New Jersey manufacturers might not construct the 600-foot blades, Staub said, but there are “a thousand smaller parts” that are necessary when building a wind turbine.

Such an effort would support the rebirth of the state’s manufacturing sector, he told attendees.