Common Council - Regular Meeting

Um, I thank you all for being here tonight for this. Um, I will try to get through this swiftly and and point out the interesting pieces of the budget. Um, first I just want to tell everybody we're going to quick go through um the process and the timeline, the challenges that we face for 2026, what our financial totals come to, um the general fund budget summary points, tax base evaluation. some people budget nerds like me, we love that stuff. Um the property taxes, which everybody's always interested in, the impact of the budget. Um quick go over the general fund revenues and appropriations, our debt position, which is important, and um our capital budget. We did go over this briefly uh in our capital workshop back in December, but um well, actually, we went over it in depth there. We'll go over it briefly uh this evening. So, it probably seems to many people like this budget just all of a sudden we're talking about the budget. Well, the budget starts in September. Um, formally starts in September. We're kind of working it all year and you'll see that as we go through. Uh, but we commence the process with all the department heads in September. Uh, department budget budgets are submitted to the CFO and the finance director in October. And between October and December, we're making revisions. um going back and forth with that. And then in December, we have the capital budget uh request. Capital budget is important because while it's separate uh and it is a plan until you adopt the ordinances, the amount of money that you need for the down payment has to be in your operating budget. So, we have to get that. Oh, thank you. Actually, I wonder if I could do this so I could be handsree. Can everybody hear me better with this? Is that okay?

No. Yes. Yes. Okay. All right. Thank you.

I thought I was loud enough. I apologize. Um Okay. So then in January and February, we go over the operating budgets in the finance committee. So our finance chair, um Shantel Lamb, uh I want to say Lman and then I see your emails that says Garcia. um and Jacqueline Larosina Clare to uh our mayor Elizabeth Fagan are all on the finance committee and and we meet with all of the department heads and we go through the budgets uh during that time frame and then we come here and here we are April 7th introducing there are timelines there are statutory dates that we have to follow so this is the latest that we can introduce our budget and then you have a 28 day period between introduction and adoption we'll have the public hearing on May 5th and that's when everybody can ask questions um and you'll have some information up on the website tomorrow if you want to take an in-depth look and uh that may prompt some questions from folks. So this is the 2026 municipal municipal budget overview. Um these are the challenges. So uh just a quick synopsis of it. We did have a loss in what we realize on interest and investments. So, we had to budget $350,000 less this year. Um, so that's a hit to our revenue. Um, we also had an issue with the Atlantic Health Systems. There's a hospital bed tax. That was new legislation that came in in 2022, I believe, and we had to go back and pay the county of Union their 5%. We tried to negotiate something um and we were unsuccessful. And so we had to take a loss this year and pay them the $81,940. So that's a little bit less money for the municipality this year. Um on the appropriation side, we had a pretty big

increase in our municipal operation expenses, 7.6%. um 245,000 of that was in salaries and wages and uh over just about 1.5 million was in all of the other operating expenses across the various departments. Some of the bigger uh pieces of that 1.4 was $100,000 increase in our legal and professional contract costs. Um 170,000 increase in utility costs. As you can imagine, that's all going up. It's going up for us at home. it's going up for us here in the city. And then an 88,000 increase in our healthcare insurance premiums. Uh that is also happening across the state uh and across the country. So hopefully at some some juncture we'll be able to get something done to try to control that. Uh with all of that and all of those challenges, this is our financial summary total uh in the general fund, the municipal budget in 2025 as adopted. You can see it was 59,769,000 in change, 63,427,000 in change for 2026. That's a 6.1% increase. The capital budget is up 1.6% um at 5,340,000. So the financial summary total includes both the operating budget and the capital budget. And for 2026 that is 68,767,000 in change. That's a 5.8% increase with the capital and the uh operating municipal budget. Uh to break it down for the soar utility and the parking utility which are outside of our general budget. Um they are self-quidating. They fund themselves. So the revenues raised within those utilities offset all the costs in those utilities and uh there's

nothing in the general budget that pays for for those utilities. In fact, the utilities do contribute uh some to the general fund that helps to offset taxes. Um so in the sore utility for 2026 we are at with the operations and the capital we are at 8.7 million. That's a 2.9% change. And with the parking utility, we are at 6.2 million, which is a 2.4% increase. Um, bringing the total financial budgets with the general, with the soar, and with the parking to 83,760,000 and change. I think it's important to note and and we'll see it in the end, but um the last several years uh and and during my tenure with the city since 2019, the parking utility budgets have been very small. I mean, sometimes nothing, sometimes 55,000, but last year and this year, we are working to fund improvements at our tier garage, which is in need of renovation. So, that's why you see uh larger numbers um in in the parking capital budget. Just a quick comparison, it's up 5.2% if you take the financial totals, 79 million versus 83 million. And this is the taxbased valuation breakdown. Um, we went from I think it's on the next slide 3.380 to 3.4 million. So we had an increase of uh sorry billion we had an increase of 30 million in the net assessed valuation. Um, if you're not familiar with it, it does reduce the impact on the property taxes because whatever the net assessed valuation goes up, it it automatically generates uh additional revenue, additional tax dollars. So, it offsets what you'd have to increase to the already existing base. And this breaks it down uh if anybody's interested, and it'll be up on online tomorrow, but it

breaks it down between our residential, commercial, industrial, apartment, bacon land, etc. This is a chart that just shows you a quick glance of the taxbased growth talking about net assessed valuation. Um in 2023 it went up $81 million. That was fantastic. So that was super helpful. Uh but we've had you know between 25 and 35 million increase a year in the net assessed valuation. Uh you can take a kind of in-depth this is represented by um billions over there on the left. So, as I said, when the net valuation increases, there's an automatic increase in tax revenue um before hitting any existing properties. So, in total tax revenue increase, it's 1.42 million. Based on that, for the municipal portion of the tax, it's about 298,000 for 2026. So, it's about a 0.009 cent taxbased growth impact just with the net assessed valuation. This is a chart that shows you I think everybody likes this chart. It's pretty interesting. This is the property tax rates from 2021 to 2026. Um you can see that uh it breaks everything down and gives you the total. This is estimated. We're still waiting for some final numbers. U but the municipal tax rate for 2026 is.97 up from 0 943 in 2025. You can see all the way to the right the percent change between 25 and 26. It's a 2.9% change. Uh we have the school district, the county along with the open space for the county, um the local school debt service and the library. So in 2025, the total tax rate um as certified by the county was 4.471

and this year as estimated it is 4.636. So overall, that's a uh combined 3.7% increase. I love this slide. This slide just gives you the breakdown. You look at your dollar and you see what percent of your dollar goes to what portion of taxes. So um the school district, pretty typical. The school district is 49.33%. They're usually around that 50% mark of any municipality's taxes. um where you do have a school system and not a regional. Um county and open space is 23.81% of your tax dollar. The municipal portion of your taxes is 21 cents of that dollar. Uh school debt service 3.6%. Um and the library 2.3. Um, if you've heard me do this before, and I say this every year because I really mean it, 21 cents of your dollar goes to your municipal um services. So, everything that you deal with and get uh on a daily basis, your garbage pickup, your public safety, all of that is in that 21 cents. Just reiterating that for every property tax dollar build and collected, this the city only retains 21 cents of that to fund all of the municipal budget needs. So this is a slide that shows you the total property tax bill comparison. So if you look at the average residential home assessment valued at 445,000 in change in summit, this is what your tax bill would be in 2025. This is what it was. Uh at the municipal level it was $4,155 of your tax bill. Uh this year it's four $4,317.

So it's a $162 difference in the municipal taxes again on the average assessed home. Um and that breaks down to about $13 and change. 1350 I think um a month for your municipal services. Um again, uh the library is $35 additional. Uh the local school debt service is $193, the county open space estimated at 102, and the local school district um at 441. So, if you live in a home that has the average assessed value of 445,000, if that's your assessment, your property tax bill would go up by $933 uh for 2026 based on these numbers. This slide shows you the municipal tax rate over 10 years from 2016 to 2026. Um, I think it's gone up 13. I I calculated this yesterday. I think it's 13.4 um%. So about 1.3% a year on average um is what the the tax rate has changed by. And then a little bit into um some detail around this. Uh these are the general fund revenues. Um you can see there's 26 compared to 2025 and and what that uh resulting change was for 26 we're using $100,000 more of our fund balance. Uh we are still leaving behind 20% of the fund balance. I think I show that in another slide coming up. Um, but I do have a a surplus fund balance policy that helps us with our bond rating and we always want to make sure that we are around the 15 to 20% retaining and that really helps us get those good rates uh when we go out to

bond. So, we're still uh not jeopardizing that policy that we created ourselves and and try strictly to adhere to. Um, local revenues are down. We talked about that. Um we we lost money um with our interest on investments. Um that was a big hit there. Um state aid is up slightly. Um don't be deceived though because the state aid for the municipality never goes up. It stays the same for so many years. Um that $46,000 increase is an increase in the state aid um to offset the school's debt, not the municipalities. So because I kind of looked at that and was like, "Wait a minute, what? It never goes up." It doesn't. And it didn't. Um grants are up. This is interesting. Um we finished the year with just over 2 million in grants in 2025, but um we started the year as budgeted with 608,000. It's really all in the timing with grants. We were just lucky this year that um $1.4 million in grants came in before we were ready to introduce the budget. That doesn't always happen. Um, if you watch these meetings, you see a lot of chapter 159s, and that's adding grants to the budget after we've adopted. Uh, but we got a lot of these upfront this year. Um, we're down a little bit in our enterprise enterprise contributions. Um, prior tax receipts, prior year tax receipts were down 5,000. Um, the municipal tax levy is up by 1.2 million. Um, and the school district's uh debt is up 1.49 almost 1.5 million. Uh, and the libraries tax levy is up by 276,000. Um, worth noting uh, and the percentages of the revenues are are right next to each one so you know um, how the budget

is funded. Um, but the library is the rate that they get is is determined by it's called a third of a mill calculation and the state decides what that is based on population. And so we don't have an option to change that. It is what it is and and that's how the library is determined. Um, and you can see here that uh the municipal tax levy represents 52% of all of the revenue that we take in um to support the operating budget. So this is this is the slide I was talking about. So we ended December 31st, 2025 with 10.6 million in fund balance and we are using 8.5 of that in the 20 I was supposed to say 2026. I missed that. We're using 8.5 of that in the 2026 budget, uh, which leaves behind just about 20% there, the 2.1 million. Some people have asked me in years past, why don't you just use it all to offset the taxes? The problem is that you need to regenerate that tax that that growth in those funds. So, if I took it all, we would start out with a structural imbalance right away in 2027. And uh I hope to be here doing another budget for you and that is not how I would like to start the year. So trying to be fiscally responsible. Uh we have two levy caps in the state of New Jersey. Uh the first one is the property tax levy. Everybody hears about that 2% property tax levy cap. We are actually $476,000 under the maximum tax levy amount that we could go to. Um so that is good. We there's another um cap levy that we'll get to in a second. Um this is the appropriation side of the budget. We just talked about the revenue side and

um this breaks down the total budget of 63,427,000 into the municipal operations and the other appropriations. Um, so 38 just about $39 million of the budget covers salaries, wages, and other expenses for all of the departments. It covers all of our utilities, it covers all of our insuranceances, um, that's health, that's workers comp, that's liability, that's cyber security insurance that we have now. Um and all of our statutory expenses, pension, social security, uh the other appropriations, 19 million449, that is the library levy, our grants, our capital improvements, uh the down payment for those, the municipal and the local school debt service, and the deferred charges and reserves. And then we have a reserve for uncollected taxes. Um people ask me about that a lot too because we have such a great tax collection rate. Um we usually collect about um 99.7 which is fantastic. Um and a lot of credit goes to our tax collector for that. uh the reserve for uncollected taxes is to cover what if you don't what if something happens and you're not able to collect you know somebody's taxes or several people's taxes or uh somebody becomes exempt from paying taxes. So the reserve for uncollected taxes helps make sure that the municipality is fully funded and can continue to operate and take care of paying for all of the expenses if taxes go uncollected. any portion of um I'm usually right around here. We do a calculation for this. I'm usually right around the 5 million mark. Uh if that is not used and we don't have to dip into that, that falls to fund balance again helping us for the next year. This is a breakdown much like the

revenues of the appropriations. Um you can see what percentage of the appropriations each category makes up. Um, public safety tops charts 19% of the budget. Um, community services is 13.5% of the budget, followed up by our insurancees and our pension and social social security which both come in at almost 9% each of the budget. Um, you can see that what the increases are. Our insuranceances overall went up by 846,000. um the health insurance actually would have gone up much more. It ends up being like a 25% increase, but we had a 34 12% increase. Uh we were able to work with a broker and we were able to uh motivate folks, especially younger folks who work for the city who, you know, they're young and maybe they're not married, maybe they don't have families to go into plans that cost less for them because the increase hits every municipal employee in the pocket that has health insurance and it hits the municipality. So, it's on both sides. So, um, some folks were motivated by that big increase to take a different kind of plan that cost them less out of their paycheck. And it also helped the city instead of going up 34 1.5%, we only went up about 25%. Um, which is still a lot. I don't I don't say only lightly, but uh, 34 and a half was pretty terrifying. So, um, we're in a better place than we were. Uh this rounds out the rest of the appropriations. Um the library, the grants. Um municipal debt service is the largest in this category at 10%. Um and school debt service follows right behind

at 9.1%. Um we actually went down in our municipal debt service this year by 362,000. That's just by virtue of the schedules for our repayment of bonds. Um, we will be going out to bond. You'll see all that on the agendas coming up um in June. We'll probably be going out, I think I'm mature, in July. So, we'll be going out for a bond sale. Um, and what what I do try to do is to make sure that our debt service repayment schedules are as even as I can make them. So, when we have a dip like this, this is when it's a good time if the market is good for it. um if we have uh enough and we do that makes it worthwhile because there are costs to going out to bonding. So you just have to be really smart about your timing and about um the amount that you're going out for to make it worth it. So it'll kind of it should fall in and then even out. So it might go up next year because we'll take on you know we'll take on permanent bonding instead of just notes. But we try to keep the schedule pretty even. This is the other cap, the appropriations cap, which um a lot of people say the CFOs, we all talk about it all the time. It doesn't really make sense anymore. Um because you have the 2% property tax levy cap. So having an appropriations cap where you have to keep your appropriations that are within cap under 3.5%. Um so we're under that by 1.2 million. you know, how much sense does it make when there are costs outside of cap like part of the health insurance and different things that are allowed to go up anyway? So, it's here. It's a part of the budget. I put the slide up, but I don't know how much value it really has anymore. um a closer look at salaries and wages

and the general budget which covers all of the municipal employees except for some that are attributed to the so utility and those who work um for parking services and then those in the UCCC office. So in um the general portion of the budget which is most of our employees salaries are up by 245,000 and change. It's about a 1.3% increase. Um, in the store utility, we did move a couple of salaries over where people are doing more work in the store utility than for the general fund. So, that's why you see a little bit of an increase there. Um, and then parking services went up by 28,000. Uh, because it's a much smaller salary budget, it looks big at a 5% increase, but um it's just less employees in that division. And then the uh uniform construction code UCCC office that is what we call a dedicated trust fund. It doesn't impact um any residents or or uh commercial anybody's taxes, property taxes, um they're funded by their fees. So if you need to use them and pay for a permit or whatever uh you may need to deal with with them, that covers everything. It's a dedicated by trust. We don't take any money in from them as a city um into our budget and uh they are able to um operate. That's up 2.1%. So overall uh it's $373,000 in um salary increases and overall 1.8%. Um keep in mind there are three collective bargaining units in there. We have um the team serves which is DPW. We have our police and we have our fire. And then the rest of the city staff is um not they're they're non-union. They're called non-unions. So there's no collective bargaining agreement for those folks.

Okay. The current debt position. Um we are required to do an annual debt statement. You can find that up in the finance section, the reports of the finance section of the website. Um and our statutory equalized valuation um it's three the average of three years the last three years. So it's um as of December 31st 2025 it's 10 million and change. Um we are allowed to borrow um up to 2.5% of that. So that's 352,000 and change. Um I'm sorry 352 million and change. Um so right now our outstanding statutory debt is 63 million and change. Um we could actually borrow another 289 million um and still be within the guidelines um and the statutory requirements of the state. Uh but I'm happy to say that we are under 1%. We're not even close to that 2.5 at a 625%. This is just a quick glance at our debt, our past capital budget. So, it just shows you from 2017 through 2026 what we're paying in um bond principle each year. Uh and what our capital budget is for that year. And we're just talking about general. We're not talking about parking utilities budget or store utilities budget. if you um take a deeper look at this and and you might 2019 might jump out at you, but uh we bonded for a firehouse. So that's the only year where you see a pretty large number in the capital budget. And then a quick dive into um our city departments and their capital budgets. Uh as I mentioned, the general fund budget is at 5,340, parking services at

2,593. The bulk of that being uh the second half of the renovations um raising the second half of the money for the renovations for the tier garage and the store utility various projects around town um at 2,250. Uh this is the change from year to year between uh you have fire the reason why it's up 935,000 this year is because there is um a fire engine this year in that capital budget. Um, police is just looking at cars this year. Um, that's up 135,000. Community services is down by 35. Community programs, we've done a lot a lot of work recently, as everybody knows, and and we've funded a lot of projects. They're down by 700,000. Um, and we don't have anything. Uh, we did some renovations and administration and clerk, and we don't have any of that going on right now. So, that's down. So overall, we're up in the capital budget by $82,000 this year. This is a quick glance at your parking services and your Soore and what those budgets are. Um you can see Soar's up by 105, parking's down by 132. Um nothing crazy there. Fire department, again, they're looking at an engine replacement, turnout gear, small equipment, fire hose replacement, and rescue equipment. I mean, other than the engine replacement, this is all uh pretty standard on an annual basis for the fire department uh to operate safely. Police department did have some other requests, but they shaved it down. The chief was super helpful shaving down our capital budget a bit and um we are looking at vehicle replacements and we're going to try to find some creative ways to get some of the other um items that uh he's looking to do. Maybe we can find some grants. So, we're going to look at that. um Department of Community Services,

almost two million in infrastructure projects. That includes road improvement projects on Beakman, Michigan, Orchard, Pinrove to name a few. Um the micro paving program, the public works does a paving program. Um stream scouring and stabil stabilization. Um Ascot Way stream dredging and maintenance projects related to storm water. uh and traffic and safety projects with um uh rapid flashing beacon installations, um pedestrian safety improvement, pedestrian safety improvement projects and sidewalk infrastructure projects uh which we do every year. Also, vehicles and equipment um coming to a total of 740,000. The biggest of those is the street sweeper. They cost $350,000. Um, it's expensive to keep our streets clean. Uh, and a rear packer garbage truck, which is 175, and a couple other pieces of equipment. In terms of our buildings, we have 125,000 budgeted in the capital uh program for building upgrades, improvements, masonry, and wall repairs at city hall. And we have another $50,000 um in building upgrades for Cornog Fieldhouse. Department of Community Programs. As I said, they're down by 700,000, but they do have a $680,000 capital budget. Um it includes $200,000 for um playgrounds at Memorial Fields and an East Summit playground um for baseball and softball fields at Memorial um at the uh slide repair repairs and replacements at the aquatic center. Um phase two of the Tatlock playground uh the memorial field tennis court replacement and park furnishings

sore utility requests in capital 2.25 25. There's 980,000 for infrastructure and sore TV. That's inspection and cleaning, the GS GIS mapping updates, um the Chattam Road building, which is where our DPW and SOAR headquarters are, and parking lot upgrades. Um there are 700,000 allocated for the Broad Street trunk line, for soar replacements at Woodmir Drive and Woodmir Pond, um Lorraine Road in place, and Sherman A and general repairs uh and system upgrades. There's another 320,000 for equipment and vehicles, a tractor with plow, trailer, backhoe, mobile lifts, um for the garage, and 250,000 for sore pump stations. There's upgrades needed at Constantine Place, uh Glenn A and River Road pump stations, and then general pump upgrades and grinder replacement program. Parking services, $2.5 million for the tier garage rehab project. Uh that adds to the 2.4 for from last year. Um and then the parking lot improvements of 93,000. So we're just about done. Um key highlights. So at the end of 2025, recall we had a general fund balance of 10.62 million. Uh we are using 8.5 of that um in 26 to offset uh property taxes. Um we used 71% of our fund balance last year. we're using 80% of it. Again, we're still within that um the surplus policy that we set forth. So, I'm not concerned about that. Just based on uh what happened with some of the revenues, it was it was worth taking in an additional 100,000 there. Um the overall municipal tax levy increase to balance the budget, um 1,217,000.

again, $30 million in new property value growth due to the increase in the net assessed valuation. Um that brings 298,000 into the municipal uh tax revenue. Um, overall the 2026 municipal budget is going to require a municipal tax increase of 0.027 of every $100 of assessed property valuation, which will generate approximately $920,000 in additional revenue um to deal with the increases that the city is seeing in terms of salary wages and operating. So, $162 of that 933 total tax bill increase related to the municipal tax rate, which is what we can control here. Um, that's the municipal portion and that's what we're able to control. So, based on the 445 average assessed home, that's the increase that you'd be looking at, $162 for the municipal portion. So when I said at the beginning, this is the last slide, but the budget gets introduced tonight, you have to have 28 days between introduction and adoption. Um, and we have a hearing scheduled for our May 5th meeting when people can ask questions and and we can dive into this deeper if anybody would like to. Um, and please do look at everything on the website, but just because the budget is introduced and it's adopted and it feels like it's over, uh, behind the scenes, we've been talking extensively, um, in the finance committee and in various other committees, um, about things that we could do in the future. What can we do to help? Because you're not really finding new revenues in local government. It's very hard to generate any new revenues. Um so we have to think about what can we do to to help in the future. So some of the ideas that we're

going to be looking into in various committees and vetting out um are one is exploring in-house recycling alternatives. Can we bring that in-house? Does it achieve any savings for us? Um determine any cost savings. If we change, don't throw anything at me, but if we change for curbside pickup instead of rear yard pickup, just looking at what that costs, what could we save? is is it worth it? Um investigating maybe police offduty platforms to determine if there's potential savings there. Um continuing to review city contracts for any price efficiencies. Uh that's something we do constantly uh and we will continue to do. Uh we're also researching some options for moving our telephone system to a computer-based system. Um we've gotten some feedback that that could save us uh well over $100,000. So that would be amazing. We are looking into that. Um, and if we're able to do anything, you know, some of these are take a little longer. Um, but like something like the phones, if we're able to do that this year, that'll just be savings. If we don't spend it, it'll go into surplus and it'll help us next year. Um, also, we have begun to do some work in various departments on the fee ordinances. We're going to study that further and just research customary fees in neighboring towns. You know, we found in some cases um the UCCC was looking and they found that we were charging I it's $20 for some type of permit and the going average was $100. We said, "Well, why don't we make it 25?" I mean, that's you know, a little bit of something, right? Um and then a cost analysis to see if u bringing a health insurance waiver. used to be something that um I did in other municipalities um and lots of municipalities across the state still do them where you have a waiver um for somebody who doesn't who opt not to take insurance. Maybe they take their health insurance through their spouse um and so they wave insurance with the city with the cost of insurance. Now, you know,

some of these plans are 38,000, 45,000, 46,000. Um, paying a $5,000 waiver may be well worth it, but we have to we have to vet that out because there are people who already wave and don't get anything. So, it's a it's an analysis. But these are just uh some of the ideas that we tossed around um and tried to think about how we could and there's I'm sure many more will come out of our various committees in ways that we can either um reduce expenditures, ways that we could raise revenues and try to offset property taxes um for the future. So the job isn't done and that is it. Thank you for sitting through that and I hope it was a little bit interesting.

Well presented. Thank you.