The 2019 budget approved by the council majority doesn’t even come close to recognizing the seriousness of the town’s finances or consider the financial harm it will cause. In 2020 taxpayers should prepare for a larger tax increase and/or significant cuts to expenses that will likely require substantial layoffs, loss of services and elimination of improvement projects.
This year a 9.2% tax increase balances the budget with no utility surpluses. If you take a look at the history from 2012 through 2017, the town spent $9.4M more than it earned. Instead of assessing adequate taxes to pay the town’s expenses it took $9M from the utility surplus. This policy avoided raising taxes and obscured the operating deficit.
When sewer fees were reduced in 2010 utility revenue and surplus began decreasing. As the town continued to take more and more of the surplus, the utilities were forced to incur debt to cover their operating expenses. From 2012 through 2017 the utilities incurred $15M in longer term debt with 2.5M of that amount in interest. While there are reasons that justify debt in the short term, for the most part taxes and other forms of revenue should be used for operating and shorter-term expenses. The previous administration did not adhere to this financial principle which contributed to the town’s current financial difficulties.
Even though the town was taking more of the surplus and failing to raise sufficient revenue, in 2013 and again in 2017, the mayor proposed and council approved two (2) zero tax increases. For 2 years no new revenue is generated when just the statutory expenses alone totaled $6M in those years. The town’s operating deficit continues to steadily increase.
The decision to take surplus instead of assessing reasonable incremental tax increases made the town too dependent on the surplus; it’s why a 9.2% tax increase is necessary and the surplus is being depleted. It is not because of last year as some would like you to believe. It’s inconceivable a $9.4M deficit happens in a year. It’s because it’s financially irresponsible to endlessly spend and borrow. If anyone managed their finances this way, they would soon be bankrupt.
So, if taxpayers are disappointed that taxes need to be raised, it’s understandable, but direct that disappointment at the financial decisions from 2012 to 2017 and those who made them.
Today, the utility still is incurring debt only at higher interest rates and it will continue to do so until the town raises sufficient revenue to resolve the $9.4M deficit and is no longer dependent on the surplus. It’s imperative that the utilities begin to raise enough revenue, before as experts forecast, the surplus runs out within the next 4 years.
The plan Councilmember Peterson and I support incrementally raises revenue for both the town and the utilities. 4.7% tax increase will begin to raise town revenue and a minor utility fee increase, supplemented by commercial entities, reduces new utility debt and grows the surplus. Even with this financially responsible plan it will be very difficult for the town to recover.
At the meeting on April 16, I asked the Council President and council members who served during those 6 years from 2012 to 2017 to share with the rest of the council and the public their plan to recover a $9.4M deficit before the surplus runs out. There was no response.
Let’s all hope if Parsippany has the same town council majority in 2020, they have a real fiscally responsible plan instead of continuing the history of spend and borrow and cutting more positions.
Parsippany-Troy Hills Township Council Vice President