On Monday night (March 30) the borough council will be voting on the introduction of its annual budgets, with a public hearing and final vote scheduled for April 27. In my experience, very little changes once the council takes its first vote so public feedback prior to that vote is paramount.

Right now we know that the community is facing an economic hardship unlike anything most of us have faced in our lifetimes, and we need the borough to craft a budget that helps all members of the community to the maximum extent possible.

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The mayor has proposed a handful of actions that may provide some relief, but I believe the council needs to do significantly more, and I am therefore recommending they do following:

  • Hold off on introduction of the budget. This week the state announced that it was pushing back the deadline for municipalities to hold a final vote until the end of May. Council should use the extra month to modify the budget to assist the community get through this crisis.
  • Give residents a complete and holistic view of the borough’s Balance Sheet, utilities, trust funds, etc. so the council and residents can have a complete understanding of the borough’s financial position before they make recommendations or say “Yea” or “Nay” on any proposals. I put a rudimentary one together last year for council, but it needs to be expanded and then updated annually to provide the community with full transparency into the borough’s financial health.
  • No Property Tax Increase for 2020-21. This saves property owners $292,224 over the instructions council gave at its last meeting to the administration. Last year we did the same after I noted how the borough’s coffers were $2,000,000 richer versus 2018. We saw a similar increase over the past 12 months so we need to do the same this year.Increase Electric Rate Cut (dividend) to $3M per year. This will save all consumers of Madison Electric (homeowners, renters, merchants, businesses and non-profits) an additional $1,000,000. The borough’s electric utility surplus has continued to grow, and it’s cost of purchasing electricity continues to drop. We need to pass more savings back to rate payers.
  • Eliminate Open Space Tax for 2020-21. This will save residents $642,000 This account currently has $1,450,000 available to cover any costs, and the only expense it needs to pay in 2020-21 is its debt service of approximately $325,000. The trust fund has $710,000 in grants from the state dedicated to help pay down this debt, so this item is more than covered. This is a good year to provide a break to residents as all open space projects should be on hold until the financial world stabilizes.
  • Eliminate any talk of increasing water rates. The utility is extremely healthy finance-wise, and it can continue to do all its projected capital projects without an increase.

As an offset, the borough should to do the following:

  • Do not add to any of the existing “Reserve” accounts, or any of the new ones proposed for the Electric Utility ($200,000) and COVID-19 ($200,000). Pausing the money scheduled to flow into reserve accounts that may or may not be used in 5, 10, or more years from now is prudent in an emergency, as is creating any new reserves for programs still “to be determined”. Additionally, if there are financial needs driven by the current crisis the borough has many millions of dollars in its budget that will never be spent and can be reallocated to cover any unforeseen needs as we did during Sandy.
  • Reduce the amount it has budgeted for electricity. The borough should charge all taxpayer supported meters (itself, the library and school district) a rate that covers the cost of electricity consumed, but eliminates the 30% profit it makes on every dollar it receives as revenue. This will also provide some relief for the school district which is facing a very large budget gap, something the borough does not have to worry about.
  • Reconsider some of the capital projects for 2020. Deferring a few for one year can free up a million or more dollars if the council feels they need an additional cushion.
  • Zero out the increase in the Reserve for Uncollected Taxes. This just pushes up the surplus year after year.
  • Reduce the amount of money going into the Capital account, utilizing a portion of the almost $2,000,000 surplus in that account to cover any shortfall for projects that need to be covered.
  • Finally, be prepared to draw down the municipal Free Balance if needed to cover any shortfall. This should not be needed, but also not discounted as a means of closing any budget gaps. Anticipating that some may be concerned about the borough’s financial health, some facts to consider:
  • The borough ended last year with a Municipal Surplus of $10,488,000, and a Free Balance (unutilized surplus) of $5,183,000. In 2012 (the year of Superstorm Sandy) the Free Balance was $1,565,000.
  • The Electric Utility has a Free Balance of $3,446,000. Borough Ordinance 65-2016- says that anytime theFree Balance is above $1,000,000 at the end of the year the borough should be using the additional funds to reduce rates. If ever there was a time to fully implement that rule, this is the year.None of the recommendations above would eliminate or reduce any of the borough’s current services, or endanger its infrastructure or the borough’s long-term fiscal health.
  • When you total up all the borough’s surpluses and reserves, including open space, we have $18,000,000 on hand, up about $12,000,000 from the $6,000,000 the borough had in 2012, the year Sandy hit.

Over the next twelve months a large number of the borough’s residents, merchants, non-profits, and businesses will be facing extreme economic challengers and we really need to utilize some of the $12,000,00 in surplus and reserves the borough has accumulated the past eight years to help our community now.

Patrick Rowe
Madison, NJ

Note: Mr. Rowe served as a member of council from 2014 – 2019, and as a member of the board of education from
2004 – 2013.