For the past six months I have repeatedly raised the alarm that 2011 will be a very difficult year for balancing municipal budgets throughout New Jersey. As we near the end of 2010, a perfect storm of events has made the outlook even bleaker.
In July of this year Governor Christie signed a law that limits property tax increases to 2% a year beginning in 2011. Also promised, but never adopted, was a “tool kit” of reforms to restrain the cost drivers in local budgets, such as pension and health insurance costs and the binding arbitration process for police and fire personnel. With no reforms enacted, costs continue to leap upward. In Kearny, the health insurance bill is going up by 12%, pension payments by 13% and garbage disposal by 19%. Municipal salaries are continuing apace with an arbitrator’s five-year award that would make a Kearny firefighter’s salary on July 1, 2011 a stunning 17.25% higher than it was in 2010.
Town revenues have gone in the opposite direction. In 2010, property tax relief from the State was slashed by $2 million and interest earned on deposits fell sharply. The deep economic crisis also took its toll on property owners, with more delays in the payment of property taxes, more tax appeals filed and tax assessments reduced, resulting in less tax revenue. This downward trend is expected to continue in 2011 since a turnaround in the economy is unlikely.
This storm of cost and revenue events depleted most of the $9 million in surplus that Kearny enjoyed at the end of 2009. It also means that, in order to balance the local budget in 2011 and comply with the new 2% tax cap, we must cut about $5 million. Since two-thirds of the budget is for salaries and benefits of town employees, our options are limited and difficult. We can no longer afford to kick the can down the road to the following year and leave it to future taxpayers and employees who will be working for the town at that time to bear the cost.
One way to get to the necessary savings is through layoffs, demotions and furloughs of town employees. I have a responsibility to the taxpaying public and am prepared to make cuts. However, my preferred outcome is an agreement with all the town’s labor unions that contains real concessions on salaries and benefits while preserving jobs. In today’s labor market, public employee salaries and benefits far outstrip those of private sector employees who live in town. This is especially the case for our police and fire departments. The median police salary in Kearny is $100,760, an amount that does not include overtime and benefit costs. The median fire salary is $83,385, which does not include overtime and the recent arbitration award.
My respect for those who serve in public safety positions is tremendous and I have often said that Kearny residents are protected by outstanding police and fire personnel. I also understand the job of the police and fire unions and their responsibility to their members. But years of economic crisis and now State policy are giving rise to dramatic changes that will limit public sector salaries and benefits. It is time for all to recognize that fact.
We also need to keep in mind that many of our town residents know what sacrifice means firsthand. There are record numbers of residents out of work, home foreclosures, distressed real estate sales and a high inventory of apartments for rent and empty storefronts. Instead of asking that property taxes be raised yet again, town employees should acknowledge the public’s sacrifice by making necessary labor concessions.
Alberto G. Santos
Mayor of Kearny