Dear Editor:
On March 17, the Town Administration presented its preliminary budget to the Town Council. The Business Administrator and the CFO presented a large amount of information competently, but some of the details may have come across as opaque. Town Council members had questions and aspects of the presentation warrant further transparency. Sources for the tables shown are from the Town Budget. The fund balance table rearranges the numbers presented at the meeting.
In the January 6 Town Council meeting, the Town Council had a chance to reverse two PILOT (Payment in Lieu of Taxes) projects passed in December. Given recent developments in the budget process, the failure of the Town Council to discuss the reversal of the two PILOT agreements has taken on greater prominence. Based on the Parsippany Focus article of March 20, 2026, on the 1515 Route 10 PILOT, traditional tax collections would be $582,241. However, under the terms of the PILOT agreement, the amount to be collected in 2026 is $296,821.97 per page 16 of the Municipal Budget.
Another PILOT, 2 & 3 Campus Drive, is online and will generate taxes in 2026, undoubtedly a much lower amount compared to traditional taxes. Since late 2023, it was argued that PILOT projects were a giveaway to corporate developers, especially when construction of the warehouse on Parsippany Road was already well underway. The counter to that argument is that those properties were idle and only generated land taxes. However, Parsippany is in an ideal location with an excellent, commerce-friendly road system, extremely attractive attributes for developers. The whole point of a PILOT is to provide incentives to develop properties. Since the project was more than half complete in December, no incentive was necessary for the developer to complete the project.
The increase in the town budget is driven by the 34% increase in health insurance benefits. The school district faced a similar increase, hence the proposed 6.5% increase. Last year, the school district was limited to a 2% revenue increase and staff reductions were necessary to balance the school budget.
On Page 8 of the presentation, Fund Balance Review, the columns, as presented to the town council, were not presented in logical order. The table on the next page shows the “roll” of the fund balance. Starting with the Beginning Balance plus the “Amount Generated,” minus the “Amount Used in the Budget” equals the Ending Balance, which becomes the beginning balance in the following year. The CFO noted that the amount used each year should not exceed the amount generated in the previous year and this table reflects that statement.
Beginning Balance 2021 Inferred. Not shown on Town Provided “Fund Balance Review”
Ending Balance “rolls” to/becomes Beginning Balance in following year
Per Town CFO: Annual draw should not exceed prior year’s amount generated
TBD – To Be Determined
The ending fund balance at the end of 2021 was only $1,005,163. Accordingly, since no positive fund balance was generated in 2021, none was applied in the 2022 budget. Beginning in 2023, amounts used in the budget were close to the amounts generated in the previous year with 2024 being an exception. By the end of 2025, the fund balance had increased to $9.4 million.
The CFO said that taxes not included in 2025 are excluded from revenue as part of the 2026 budget. However, in 2026 Parsippany will receive revenue from PILOT projects. That means taxes will increase more than is necessary given unbudgeted funds received from PILOT projects.
The pie chart presented at the Town Council meeting includes 60% of the pie allocated to the schools. However, depending on which budget is viewed, the school budget, the largest component of the town budget has not been included. See below:
Note: Line 1 Surplus = Amount Used in Budget on Roll Forward of Fund Balance
Total General Appropriations less line 5, Reserve for Uncollected Taxes = $98,275,040 – Total General Appropriations. See Line 1 Below.
Note Local District School Tax, County Tax, Special District Tax and Municipal Open Space represent “flow throughs” where inflows equal outflows.
Questions for consideration:
Given the alarming 9.5% increase in Municipal taxes, along with the 6.5% increase in the school budget, will the town reconsider its plan to fill over $1 million in job vacancies?
What savings would result from a hiring freeze? What is the impact on headcount? What is the impact on services?
What is the exact dollar increase in health insurance costs from 2025 to 2026 and what portion of the 9.5% tax increase does that represent?
Are there cheaper alternatives to the State Health Benefits Plan? How much savings would there be by switching to a municipal health insurance fund?
What is the current outstanding debt and what is the average interest rate on that debt?
How much debt principal was repaid in 2025?
What is the breakout of principal and interest on debt service?
Are any new debt issues planned in 2026 or future years?
It is intended that this information will be useful, especially for those who plan to attend the Budget Town Hall or who may have missed the last Town Council meeting.
Jack S. Raia
