Union adopts $89.9 million budget; 1.5 percent increase

UNION – The township adopted its 2014 municipal budget in late April and it appears the average homeowner with a house assessed at $46,500 will see a $56.56 increase. This is down from last year when the average homeowner saw an increase of $74.71.

Property owners have continued to see a decline in the annual tax increase since 2008 when the approximate increase for the average homeowner with a house assessed at $46,500 saw an increase of $168.

In 2009 that number dropped to $128 and it continued to drop until this year when it came in at a $56.56 for the average homeowner.
The overall municipal spending plan came to $89,944,709.30, an increase of more than $1.3 million, or 1.5 percent more than last year.

However, the amount to be raised by taxes, which directly affects taxpayers, came to more than $64.8 million, which is below the mandated state cap of 2 percent growth at 1.96 percent with no exclusions.

This means the township did not have to move budget items out from the cap and put them in another area allowable outside the cap in order to stay under the 2-percent mandated cap.

“We are truly under the cap,” said township business Administrator Ron Manzella, explaining the governing body and department heads worked to reduce costs and as a result services were not reduced and no township employees were laid off.

The township portion of the tax bill, though, is just one part of a property owners’ three-part tax bill that also includes school and county tax portions. The school tax is often more than 50 percent of the taxpayer’s overall bill.

Manzella noted that despite hits in the past that resulted in higher increases, 2014 turned out to be a better year financially for the township.

“All departmental operating budgets were cut by 10 percent and all vacant non-essential positions have been removed,” said Manzella, adding that police and fire uniformed personnel levels remain at agreed upon staffing levels.
Elected officials were also pleased with the spending plan, explaining why this particular budget showed the financial outlook for the township was brightening.

The mayor pointed out that because of the township’s stellar financial effort, Union realized a reward that is priceless for municipalities.

“I am very pleased with the budget that we have adopted and the fact that the township’s bond rating has been upgraded from AA to AA+ at a time when many governmental units’ ratings are being downgraded,” Mayor Clifton People said.

Deputy Mayor Manuel Figueiredo also commented on the 2014 budget, bringing up the state-imposed cap which is often a stumbling block for many towns when trying to put together the annual municipal spending plan.

“In addition to the fact that we stayed under the 2-percent cap, it is important to note that there is no reliance on one time revenues in this budget and the revenue projections are conservative making for a very financially sound budget,” said the deputy mayor.
Manzella and Assistant Administrator Tammie Kopin explained how this was accomplished, bringing up that while the township did use $5 million in surplus to offset taxes this year, or 61 percent of savings available, this still left $3.1 million in reserve.
“This will go a long way in building up surplus for 2015,” said Kopin.

Using surplus to offset taxes is nothing new for municipalities. Most tap into surplus in order to offset taxes and keep increases to a minimum. Looking back to 2008, the township used as much as $8 million in surplus to offset taxes, but in the last five years has kept the amount less than $6 million.

Still, like most municipalities, the major impacts on the budget were contractual obligations which increased $1.2 million and health insurance and Medicare, which increased by $265,000.

Manzella explained that township employees are on the second year of a four-year state-mandated plan to contribute a percentage of their salary toward health benefits.

“By 2016 we should be into this fully and it will help with the health benefit cost,” said the township business administrator, adding that it is important to note that the state law requires every employee to contribute a percentage of their salary, “so the more you make, the more you pay.”

The expense areas which saw a decrease were operating expenses, down $321,526; interest on bond repayment, down $72,413; and library costs, which fell by $328,791.

This year the township also saw an increase in ratables for the first time in three years.

“Our ratable base went up $450,000,” Manzella said, explaining that the township lost $15 million over two years.
“We took a hit when Merck appealed their taxes and we went down from $12 million to $3 million,” the business administrator added, but quickly added 2014 was the year when things started looking up.

“We are a very financially stable community and if we can continue to bring in ratables, that trend will continue to grow,” he added.

Kobin noted that when ratables go down, taxes go up, so this is an important component of the townships financial picture.
Looking ahead, Manzella said the township’s budget goals for 2015 and beyond include minimal use of one time revenues, reduced dependency on surplus, keeping the tax levy below a hard 2-percent cap, continuing to look for alternative revenues and ensuring there is no reduction in services to residents.