Jul 28, 2014
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36 Layoffs, Recreation Cuts Rejected by Town Council

Lawrence Township Council members, during their meeting Tuesday, rejected a budget-balancing proposal that would require the firing of 36 township employees, and instead voiced support for a referendum seeking voter approval of a tax increase.

Thirty-six township employees – including eight police officers and all emergency medical technicians – would need to be laid off and all recreation programs for children and adults eliminated in order for Lawrence Township to balance its 2012 budget under the latest alternative municipal spending plan unveiled by Township Manager Richard Krawczun.

The proposal, presented to members of Lawrence Township Council at their meeting Tuesday evening (Feb. 21), is not something that Krawczun supports in any way; it was simply the township manager’s response to a request made by council members for another alternative to the .

“I want to be very clear – unequivocally clear – this is a response to council’s request for information,” Krawczun said as he began to discuss the layoff plan. “I’m not making these recommendations. As I’ve pointed out to many people, many times, when we look down the bench to put somebody in the game, everybody’s [already] in the game. We have no substitutes... I keep hearing, ‘Run it like a business.’ In order to do the service correctly, we need these people.”

After listening to the specifics of the proposed layoffs and gutting of the recreation department, and the likely effects they would have on the township, council members resoundingly rejected the idea.

While adoption of a formal resolution authorizing such a referendum was put off till their March 6 meeting, all five council members voiced their support for holding – as per one of Krawczun’s earlier recommendations – a referendum in April asking township voters to approve an increase to the municipal tax rate that exceeds the state’s 2 percent tax levy cap.

"Personally, I wouldn’t be able to sleep at night." - Mayor Jim Kownacki

Mayor Jim Kownacki said he could not stomach laying off so many township workers. “Personally, I wouldn’t be able to sleep at night,” he said.

Councilman Greg Puliti said the layoffs would devastate the township’s ability to function and provide essential services like public safety. “I can’t tell you how many civic meetings I’ve had about the burglaries in Lawrence Township [which have] risen because of the economic times. We’re going to cut one, two, three, four, five, six, seven, eight [officers]? We’ll never solve any crimes in this town if we do that,” he said.

Under the plan presented by Krawczun Tuesday evening individual layoffs or selective cuts to the recreation department would not be helpful because all 36 layoffs and the elimination of all recreational programs would be needed to save enough money to plug the $2,275,000 gap that is at the heart of this year’s municipal budget dilemma.

Eliminating all recreation programs, leaving only funding for senior citizens’ programs and a handful of township special events, for example, would save only about $203,000, while firing the township EMTs and switching over to a contracted ambulance service would save only about $335,000, according to Krawczun.

Krawczun noted that nearly half of the township’s $42.35 million 2012 budget is made up of fixed costs – such as debt service, liability insurance, and fire hydrant fees – that cannot be touched.  

(A complete copy of the layoff proposal can be found in PDF format in the media box above. Audio from the meeting is also available from the media box. Budget discussions can be heard in the meeting audio Part 2 file).

"...What do we use to protect our firemen, our police, and all our road workers if there’s a hurricane or something like that? And that’s why I would not eliminate the EMS service." - Councilman Greg Puliti

As has been discussed at previous meetings, Puliti stressed the fact that the township’s budget difficulties are "not the result of a spending problem," but instead the product of the bad economy and the loss of $167 million to the township’s tax base in the last five years as the result of successful commercial and residential property tax appeals. He said he keeps hearing township residents asking the question, “Gee, didn’t council see this coming?”

“Mr. Krawczun saw this coming three years ago,” Puliti said. “We didn’t push this problem off. In the past three years we’ve had reductions of employees up to 10 percent, we’ve increased user fees to where they’re almost not user-friendly, we’ve refunded outstanding debt when something’s callable and it’s a lower interest and we can pay the cost so we can save money… We bid electricity out. We’ve had phone and energy audits. We bid out the phone service. We froze other appropriations and had reductions. We’ve reduced capital expenditures and, as you’ve heard before, Mr. Krawczun is getting us on a path of pay-as-you-go capital budgeting with no debt service. These are things we’ve done in the past three years.”

Puliti said he is adamantly against eliminating the township’s municipal emergency medical service because the township, ultimately, would have no control over a contracted ambulance service.  

“In an emergency when, let’s say, it’s a county emergency or there’s an emergency in another town, we have no control over those contracted ambulances. Even though we’re contracted with them, trust me, if the military says they need them, or if the county says they need them, or if the state says they need those ambulances, they’re gone. So what do we use to protect our firemen, our police, and all our road workers if there’s a hurricane or something like that? And that’s why I would not eliminate the EMS service,” he said.

Powers agreed, saying “In terms of EMS, sure you could outsource it, but then, guess what, once you outsource it you are at the mercy of the outsourcing company. He’s going to give you a discount that first year to entice you to switch over to that service but then once he has you switched over and that first contract ends, now you have no alternative but the outsourcing company. What do you think he’s going to do in that second contract? That teaser rate is going to disappear and it’s going to be higher… It’s a short-term gain, long-term loss.”

With regard to the township’s recreational programs, Powers said the youth sports and other activities offered to township children help combat childhood obesity and Type II diabetes, both growing problems throughout the United States. “Think about that next generation coming up in terms of the cost to our health system if we don’t do something to intervene and give recreational opportunities to our youth to stay active. They’re on the computers all the time,” he said.

Puliti noted that recreational programs also help keep children out of trouble with the police.

Having to use 97 percent of the surplus fund to balance this year’s budget would leave the township financially unable to respond to a natural disaster such as a hurricane or other unforeseen crisis.

When , he noted that in under to stay below the state’s 2 percent tax increase cap, the municipal tax rate would need to be increased by 5 cents and nearly all the township’s available surplus – or $4.87 million out of $5.02 million – would need to be used as revenue to balance the $42.35 million township spending plan.

That 5-cent municipal tax rate hike – from $0.84 per $100 of assessed property value to $0.89 – would mean the owner of a home assessed at the township’s current average of $160,828 would pay an additional $80.41 in municipal taxes in 2012.

Having to use 97 percent of the surplus fund to balance this year’s budget would leave the township financially unable to respond to a natural disaster such as a hurricane or other unforeseen crisis, and would also create “catastrophe” in 2013 because not enough surplus would be available as a revenue source to help balance the 2013 budget, Krawczun has said.

Krawczun has told council he estimates it will be possible to “regenerate” about $2.6 million in surplus this year, through the collection of delinquent taxes, along with fines and interest, and “unanticipated” revenue like fines generated by the red light traffic enforcement cameras on Route 1. That, according to Krawczun, means the township can use an equal amount of surplus as revenue to balance this year’s budget. But in order to leave the remaining money untouched in the surplus fund this year for use later in 2013, the township must find another way to plug the resulting $2,275,000 hole.

With that in mind, during the Feb. 7 council meeting, Krawczun presented his original budget-balancing alternatives.

Under the referendum plan, voters would be asked to approve an additional 9-cent municipal tax rate hike (in addition to the aforementioned 5-cent increase) that would generate the money needed to balance the budget. The additional 9 cents, bringing the municipal tax rate up to $0.98, would result in the average township homeowner paying $144.75 more.

The township could save money – and, in turn, balance its 2012 budget – by removing the cost of trash collection from its operational expenses. But such a move would cost the average Lawrence Township taxpayer more.

If voters reject the referendum, the only likely alternative council will have – short of implementing the layoff plan – will be to adopt one of the other two alternatives Krawczun presented to council on Feb. 7.

Under those two scenarios, the township could save money – and, in turn, balance its 2012 budget – by removing the cost of trash collection from its operational expenses. But such a move would cost the average Lawrence Township taxpayer more than the referendum option.

Currently, trash collection and trash disposal “tipping” fees are paid by the township through its municipal budget, with the costs being shared equally – through the collection of municipal taxes – by both homeowners and commercial property owners, even though commercial properties do not benefit from the trash collection services.

Under the first of those scenarios, the “solid waste utility” option, residential trash collection in Lawrence Township would continue to operate as it currently does – with the services provided by a contracted trash company – but the funding for trash collection and disposal would come not from taxes but from a separate fee assessed against homeowners; homeowners would receive a separate bill from the township for trash service, much like they currently receive a bill for sewer service. 

The other option would see township homeowners shopping around for their own trash vendor – similar to how they would choose a cable television provider – and entering into individual contracts for trash service with that vendor.

In both of those cases, commercial property owners would not share the cost of trash collection, as they currently do through their payment of municipal taxes.

“While it is not an easy $11 to add onto your bill every month, I think that it is significantly less painful than $30 a month." - Councilwoman Cathleen Lewis.

If voters pass the referendum option, the average homeowner would pay about $144 more per year or $12 more per month as a result of the added 9-cent tax rate increase. Under the “solid waste utility” option, the average homeowner would pay about $336 more per year or $28 more per month, and under the individual trash subscription option the average homeowner would pay $360-plus more per year or $30-plus more per month.

Another advantage of the referendum option, Krawczun and council members have noted, is that municipal taxes are deductible on individual income tax returns, representing further savings, whereas trash user fees are not deductible. That $12 in taxes extra per month resulting from the referendum being approved would drop to $11 or less per month through income tax deduction, depending on the individual taxpayer’s tax bracket.

During Tuesday evening’s meeting, Krawczun also briefly discussed another potential budget-balancing option – holding an accelerated tax sale – but he explained why the negatives outweighed the positives and told council that he would not recommend such a move.

“It is clear to me that this township has taken steps to try to mitigate these problems over the last few years and it’s also clear that there’s not a one-size-fits-all magic solution to this problem other than asking township residents for additional money,” Councilwoman Cathleen Lewis said toward the conclusion of Tuesday’s meeting.

“While it is not an easy $11 to add onto your bill every month, I think that it is significantly less painful than $30 a month. I think that we need to continue to look for other ways to use the monies that the township gives us wisely, and I think we’ve done that, but I do not think there are other small cuts that are going to make up that windfall,” she said.

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