Kearny’s municipal government is shedding part of its support system by opting not to rely on the state’s transitional aid it has received for the past two years.
That fact is reflected in the preliminary version of the town’s municipal budget that Mayor Alberto Santos and members of the Town Council approved for introduction last Tuesday night.
Because a final budget is not expected to be adopted until the public hearing slated for May 10, CFO Shuaib Firozvi said the town would likely be mailing out estimated tax bills for the next quarter.
As now drafted, the proposed spending blueprint calls for total appropriations of $74.4 million – down a bit from last year’s $75.2 million – but of that total, $42.8 million must be raised by local taxation, which represents a 1.5% increase over last year’s tax levy, according to Firozvi.
For the owner of a house assessed at $100,000, that will mean a $67 tax hike from the municipal portion of the budget, plus a projected $211 boost in school taxes (if the Board of Education’s preliminary budget holds), plus a $46 uptick for county taxes, for an overall increase of $324, Firozvi said.
Last year, the town pocketed $1.5 million in transitional aid from the state.
By choosing not to apply for that funding, the town will also be freeing itself from the veto power held over Kearny by the state government.
Every major purchase and/or bonding, every employee hiring, every municipal labor contract had to pass the rigors of the monitor’s review under terms of the town’s acceptance of the special aid.
In one instance last year, the monitor rejected the town’s plan to borrow money to help finance a portion of the dog park in Riverbank Park. Instead, the town reallocated unspent funds from previous bond issues to the project.
In another case, the state was adamant in blocking the governing body’s efforts to secure health coverage because it considered the positions of mayor and council member part-time positions and, as such, ineligible for coverage.
Asked to assess the influence of the monitor, Council President Carol Jean Doyle, who heads the council’s finance committee, said that it tended to tie the government’s hands because it would typically take “four to five days to get an answer” on an issue.
“I think it was a matter of [the state] not having enough help,” Doyle said, to assess a fiscal proposal by the town in an expeditious fashion.
“When you have people in administrative offices like Shuaib and [town administrator] Michael Martello performing so efficiently, I think it makes sense to rely on those people. I think we’ll be in better shape without the aid,” Doyle said.
Asked why Kearny was not applying for the special revenue this year, Santos said that the town would lower operating costs by $851,000 by cutting labor costs by capping new contractual increases at 2%, “including step movement on salary guides and longevity” and by reducing debt service payments by $1 million (from $8.7 to $7.7 million) through “careful capital budgeting” on infrastructure projects.
Investors in the bond market tend to look askance at communities receiving special state aid. As of mid-January, when Kearny last borrowed money, the town’s bond rating was “enhanced A3, with an underlying rating of BAA1,” Firozvi said. In the eyes of the market, that makes repayment “subject to moderate risk,” he said.
Santos added that, “The balance of the $1.5 million in transitional aid that we’re not applying for this year [will be] made up with increased revenues from fees for construction permits and the like and the 1.5% municipal property tax increase in the introduced budget.”
But some potential additional municipal tax bite will be offset, according to Firozvi, by the use of $1.8 million in surplus. And, he said, employee pension costs were down by $332,000 but, as Santos noted, that was offset by an increase of $740,000 for employee health insurance.
Some new revenues will be generated by the refurbishment of Kearny Point, an industrial facility in South Kearny, and the lease of space to multiple tenants, Santos said. The mayor said he was “disheartened” by the projected school tax hike but added that was something over which the municipal government had no control.
Something else the town couldn’t control was the severe winter snowstorm that blanketed local streets and for which, Firozvi told The Observer, Kearny received bills totaling $156,820 exclusively from outside contractors, plus $36,000 for salt. Overtime for municipal DPW personnel was $57,000 for an overall total of approximately $250,000, Firozvi said.