February 11, 2009 THE VILLADOM TIMES I • Page 5 Franklin Lakes Facing tough budget year, council considers options by Frank J. McMahon The Borough of Franklin Lakes, like many other New Jersey municipalities, especially those that have enjoyed a rising tax ratable over the years, is facing a very difficult budget process that could result in a reduction in the borough’s workforce or a reduction the services provided to the public. Councilman Steve Marcus, chairman of the council’s Administration Committee, which includes finance and personnel issues, provided a bleak outlook to the council. He advised that an initial review of this year’s budget indicated to him that the borough is currently $969,000 over last year’s $15 million budget and there is a four percent cap imposed by the state on any increase in the municipality’s $8.8 million tax levy. Marcus explained that about half of the budget increase would be the result of payments that must be made on the bonds issued last year. In addition, medical costs have risen $367,000, although a third of that will be reimbursed by the public library. He said there is real possibility that there will be another loss of state aid this year and that could widen the gap even further. “There are only two ways to decrease the budget,” Marcus told the council, “by reducing headcount or services.” He added that any cuts in personnel would not be retroactive to the first of the year, so if there is a reduction in personnel it would have to be greater than normally needed to recoup the entire year’s salary benefit. “So it’s a sticky situation we have here, and it must be addressed quickly if the reduction is to be in head count and not services.” Marcus said he strongly opposes deferring a portion of the borough’s pension obligation because that would be mortgaging the future. He advised, however, that the borough could apply to the state for a waiver from the cap, but Governor Jon Corzine has indicated that the state will not step in and help, and the four percent cap is firm. “Towns riding the development wave will be affected more than other towns,” Marcus said, “and it’s time to pay the piper.” He was referring to the net valuation of the borough, which usually rises every year due to new development. That net valuation of the borough is important because it is a key element in the calculation of the borough’s municipal tax rate, which is determined by dividing the total taxes to be raised by the borough by the net valuation of the borough in hundreds of dollars. When net valuation rises, there can be more spending without raising the municipal tax rate, but when it does not rise, as is now the case due to the slow housing market, any additional spending, whether discretionary or not, will increase the borough’s municipal tax rate. The borough’s total tax rate will be impacted by any increase in the municipal tax rate, but it will also be impacted by any rise on the county, local school district, and regional school district tax rates and all those entities are expected to face the same problems with their budgets as the borough. “It’s not a good situation,” Marcus said. “We need to be prepared to go through department by department to see where we can cut back and come up with an action plan.” “We are going to have to think of everything possible to get through this,” Mayor Maura DeNicola told the council. She once again asked the council to consider a formal resolution declaring a hiring freeze in the borough and to look for areas that can be cut, or for increased revenue. “I would like to stress that I have been asking the council for a hiring and spending freeze, aside from emergency items, since October,” DeNicola said, “and utilizing and training our current staff for greater flexibility and efficiency rather than hiring additional personnel in individual departments. We are a small town.” Marcus and the rest of the council were originally reluctant to institute a hiring freeze on the basis that it could hamper the efficient operation of the borough if personnel replacements become necessary. But after the somber report by Marcus, there was a consensus to move forward with a resolution to that effect as long as it is worded in such a way as to leave some latitude to conduct the borough’s business. 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