April 8 Town Council meeting

Council approved proposals to increase the cost of the wading pool renovation project another $30,000 to more than $300,000, formally introduce the 2014 municipal budget with a proposed tax increase, award a total of $62,000 for two engineering contracts, and incorporate the results of an arbitrator’s award to the police patrolmen union that the administration had estimated at approximately $900,000 at its April 8, 2014, meeting.

The meeting agendas and related materials are here. Video of the meeting -- downloadable and indexed so you can quickly find the topics you’re looking for – is here.

Council approved formal introduction of the township’s 2014 budget of $73.3 million, an amount identical to the 2013 adopted budget. The proposed budget projects a slight increase in the municipal tax levy (the amount of tax revenue required to fund the budget) to $49.9 million, up $56,476, and a 0.9% increase in the tax rate (which multiplied by the assessed value determines the taxes paid by property owners).

At the March 25 council meeting, a council majority voted 4-1 (me voting no, because of cost and safety concerns) to approve a construction contract for renovation of the wading pool at Ginny Duenkel pool for $227,723. At the meeting, Bill Kehoe, head of recreation, told the council that the winning competitive bidder, Cypreco Industries of Neptune, had offered earlier that day to reduce its alternate bid for a full reconstruction from $39,723 to $30,000, which would make a combined bid of $257,723. He said he would be able to obtain a $15,000 grant from the Colgate Foundation that would reduce that cost to the town to $15,000.

Cypreco was awarded the base bid as the lowest competitive bidder. But when the alternate bid for a full reconstruction is included, All State Technology of Oak Ridge offered a lower combined bid of $253,000. All State had also bid to reduce the cost another $4,000 if proposed tile was replaced by plaster, where Cypreco had offered no discount. However, All State was disqualified for not listing a plumbing sub-contractor.

Council approved the change order to the approved contract of $30,000 (4-1 with me voting no). The resolution listed the town as paying all $30,000 of the increase. But the town chief financial officer, John Gross, said the resolution would be amended to reflect the $15,000 grant from the Colgate Foundation. Mr. Kehoe said the foundation was also paying the $19,352 for six water toys that are part of the project.

The change order brings the total cost of the project to more than $300,000 including the construction contract and water toys, as well as $12,800 for design fees, approximately $2,500 for a 50-foot retaining wall as well as unspecified costs for a railing, previous town work to clear the site and the engineering department’s plans to manage the project itself.

The project cost is partially paid by a county open space trust grant of $150,000 (which is essentially a partial return of the county open space tax paid by town property owners) and $34,352 from the Colgate Foundation – bringing the town’s direct cost to more than $110,000. The town had last year proposed to fund $143,201 of the cost from the capital budget, 95% of which would be borrowed. The town plans to have the facility ready for the 2014 pool season.

Council also approved an administration request for two engineering contracts, obtained through competitive proposals, to:

- T&M Associates of Middletown, for $39,300, to provide investigative and remediation services at the Public Works building on Lakeside Avenue. The town removed a leaking gasoline tank a decade ago, according to a letter to the council from Town Engineer Leonard Lepore. The letter said PMK Group of Cranford has previously provided investigative services. PMK was acquired by Birdsall Services before it entered bankruptcy proceedings and went out of business in a political-contribution scandal. T&M was pulled into that scandal when it was sued last year alleging that a Birdsall executive had joined T&M and took confidential documents that helped win business for his new employer http://bit.ly/1e3koKT. Council awarded T&M a contract in January for $226,850 for investigative and remediation services at the old town garage on Lindsley Avenue and firehouse on Pleasant Valley Way.

- Hatch Mott MacDonald of Iselin, for $22,700, to prepare an asbestos management plan and HVAC preventive-maintenance plan for the town’s four firehouses and the First Aid Squad building. The work is the result of multi-agency health and safety inspections. This work could lead to additional cost if the work shows that asbestos remediation is required.

Council approved on first reading the administration’s proposal to update the salary ranges of the police force to reflect a February 8, 2014, interest arbitration decision of the labor contract between the town and its patrolmen’s union. In general, the decision awards annual pay increases similar to those of the other town unions in the last round of contract negotiations -- zero in 2010 and 2011, and 2% increases in 2012 and 2013. The top salary for patrolmen rises to $87,870 and for new officers in training of $43,065. The union had asked for 3% raises in each of the four years of the contract.

The decision also directs all patrolmen to receive stipends of $625 for 2012 and another $625 for 2013, which the arbitrator wrote reflected the labor agreement with the firefighter’s union that provided $3,000 stipends (a change from 2% of base pay) to those who have Emergency Medical Technician certification.

The stipend for detectives was increased from $1,000 to 1,250 for 2012 and $1,500 for 2013. The decision is here. The administration had previously estimated the cost related to the arbitration decision at $900,000. Mr. Gross said at the meeting that he did not yet have a cost of the award.

The ordinance also would also set top pay for the police chief at $160,571, deputy police chief at $142,157, captain at $125,743, lieutenant at $111,277, and sergeant at $98,480.

The ordinance will have a second and final reading, including a public comment hearing, at the April 22 council meeting.

The other proposed ordinance on first reading would allow the town to potentially exceed the state cap on annual appropriation increases to 3.5% from 2.5%. The law allows the municipality to “bank” the unused portion of that potential increase, estimated in the ordinance at $1.725 million in additional potential spending. That “bank” would be available to offset appropriation increases that would otherwise exceed the cap in the following two years. The proposed ordinance will have a second and final reading, including a public comment hearing, at the April 22 council meeting.

I’m still unclear on all the proposed expenditures in the proposed budget. The council majority added spending at the March 1 statutory budget hearing, so at this point it’s unclear where exactly the budget stands. Prior to the meeting, I asked Mr. Gross for those figures. He said at the meeting that he misunderstood the request and would have to provide them later. I haven’t received this information as of the posting of this blog.

In addition to the projected municipal property tax increase, the proposed budget also shows:

- The administration expects another decline in total assessed value – a decline of $41.6 million, or 0.74%, to $5.59 billion from $5.64 billion. A decline in assessed value, also known as the tax base, means less revenue is produced from a given tax rate.

- The administration projects that taxes on the average assessed value single family home will rise 1.2% to $3,031 from $2,995.

- When the municipal tax levy is added to the statutory town library tax and town Open Space tax, the proposed total municipal tax levy declines slightly by $1,083 to $51.97 million. The decline comes from the fixed tax rates for the library (0.0346% of assessed value) and Open Space (0.003%). When the tax base declines, so does the revenue to the library and Open Space fund.

- However, the total municipal tax rate rises 0.87% to 0.9296%. This means that taxes on the average assessed value single family home will rise 1.2% to $3,159 from $3,121.

I’ve asked the administration to put the introduced budget on the town website. But as of this blog posting, that hasn’t happened. So I’ve posted the introduced budget to West Orange Grassroots, a website I maintain on West Orange municipal government. The budget is here. The budget data I cite in this post are highlighted on the following pages:

- Sheet 3b_iii / PDF page 9
- Sheet 3b_iv / PDF page 10
- Sheet 43 / PDF page 65

The projected increase in municipal property taxes appears at odds with Mayor Robert Parisi’s statement during a presentation at the council meeting on the budget and taxes. At the end of his presentation, he said: “Most importantly, in 2014, after four years of three zeroes and one year of a 1.47% increase, the 2014 budget introduced to the council was a no tax increase. Spending levels were the same. And for the fourth year in five years, we are not raising municipal taxes.”

First, as you can see above, the 2014 introduced budget projects an increase in both the tax levy and the tax rate. Second, the mayor claims that last year’s tax increase was 1.47%. He appears to cite the increase in the tax levy. However, property owners don’t pay the tax levy. They pay the tax rate, which is the rate required to generate sufficient revenue from the tax base to fund the tax levy.

But when the tax base is declining, as it did last year by more than 1%, or nearly $62 million, a higher tax rate is needed to generate the same amount of revenue. That tax rate was 2.3% -- a rate increase nearly 60% higher than the one cited by the mayor. This was confirmed by administration officials at the meeting, as well as at the September 17, 2013, council meeting in a discussion between me and Mr. Gross.

Third, we don’t really know for certain at this point in the budget cycle what either the tax rate or the final budget will be, because these elements are subject to change over the next several months. Budget materials that pre-date the introduced budget are on the town website here.

In other legislation of interest, council approved proposals to:

- Renew a contract with Montclair YMCA to rent time at the pool.

- Authorize temporary budget appropriations pending adoption of the 2014 budget.

- Calculate the 2014 property tax collection rate by taking into account $506,809 in successful property tax appeals in 2013. This would lower the 2014 reserve for uncollected property taxes by the same amount. The net effect of this action would be to lower 2014 total appropriations and reduce the tax levy. If tax appeals turn out to be higher than expected, this action could potentially reduce future surplus by reversing the effect and requiring additional reserves.

If you’d like to contact the council with your thoughts on any of these issues, please send an e-mail to council@westorange.org or call 973.325.4155 to leave a message.

I’m a West Orange Township councilman since 2010, reachable at jkrakoviak@westorange.org. I'm a business communications consultant in my spare time.