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NEW BRUNSWICK, NJ—On January 21, the Middlesex County Board of Chosen Freeholders unanimously introduced a proposed $439.5 million operating budget for 2016, which represents a 2% increase over the previous year's budget.
Prior to the budget presentation, Freeholder Director Ronald G. Rios commended the staff and department heads for their work creating the proposal.
"It's been a hardworking effort by all our department heads, employees, and finance department," Rios said. "Impeccable job by everyone, I can't stress that enough; everyone understands the complexity of putting the budget together."
The county's proposed budget, if approved, will be comprised of a $368,963,000 tax levy, an increase of $11,458,000 from 2015, and an additional $70,581,000 in anticipated revenues.
Both Freeholder Charles Kenny, the finance committee chair, and Chief Financial Officer and County Treasurer Giuseppe "Joe" Pruiti said the tax levy's growth would result in a roughly one-cent-per-household tax increase throughout the county.
Kenny praised the modest increase as the result of sound financial planning prior to Pruiti's presentation on the 2016 proposed budget.
"This does not come about … because of a one-year plan," Kenny said. "Before me, the board members that were up here made the hard decisions to set the course so we can be here today and have a budget such as this being introduced. Through implementing fiscally responsible budgetary policies – debt service, surplus policy, and our cash management policies – have helped to save tens of millions of dollars for our county taxpayers and county residents."
Pruiti noted during his budget presentation that the main drivers for the budget increase are salaries and wages, which are up more than $2 million over 2015, as well as more than a $3 million in increase in capital down payments.
Increased costs for health insurance plans also contributed to heightened expenses, though Pruiti said the $2.5 million increase was manageable when compared to the average increases at the state level and within private industry.
Other factors boosting expenses included county contributions toward state mental health hospitals, employee pension payments, investments in technological upgrades, liability insurance, contractual obligations, and half a million dollars more towards county vocational schools to help cover salaries and wages.
According to Pruiti, the county is attempting to balance some of those cost increases by cutting spending in other areas.
Among the reductions was nearly $1.5 million in cuts toward the Board of Social Services, which the state and federal government also fund. Pruiti attributed the reduction to "favorable economic conditons" resulting in less welfare recipients, stating the county contributes to the board based on a preset formula.
Other savings included a reduction in the amount of space the county rents, the elimination of the central distribution center for supplies and absorption of that space into the county administration building, and nearly $3.5 million in savings on annual debt service payments.
"These [debt service] savings are directly related to our cash management and debt service strategies, along with a concentrated effort to lower our debt service over the years," Pruiti said. "The implementation of these strategies is essential to not only lower the costs, but also maintain an AAA bond rating from the ratings agencies."
The county's AAA bond rating signals to creditors that it is trusted to pay back its debts regularly and makes it cheaper for the government to borrow money to finance its projects.
In addition, utilities costs also fell by $1 million due to falling gasoline costs, the construction of solar energy farms, and county investments in energy efficiency, according to Pruiti. Another $1 million in savings came from shifting adult correctional facility hospital stays from the county to Medicare.
Pruiti also presented the county's proposed capital budget, which totals $45 million that would be allocated toward bridges, roads, parks, technology, and public safety if adopted. He also credited the debt service policy laid out in the capital budget with reducing county debt by $172,833,736 over the past two years.
The total outstanding debt now lingers just over $500 million dollars, while it was pushing $700 million at its peak in 2013.
"All this enables the county to keep funding critical projects that are needed," Pruiti said. "These are specific results of our debt strategy for 2016. As we spoke about, we reduced our debt service by $3.4 million and, just as important, we reduced the total debt by $47 million last year.
"This was done mainly by canceling old ordinances for completed projects and reappropriating old projects for new purposes as well," he added. "We also refinanced; we went out to the bond market aggressively over the last five years and … we're introducing an ordinance tonight for an additional $30 million of refunding."
Pruiti estimated that refinancing saved the county $12.2 million in debt service payments, as well as maintaining its AAA bond rating, which he further estimates has saved the county $35 million. Surpluses, he added, would continue to be pledged directly to the surplus fund and not used as one-time revenues within the county budget.
The surplus fund now stands at $42,187,164, according to Pruiti, a drastic increase since the mid-aughts. At the same time, Pruiti said, no money from the surplus fund has been used to balance the budget for the past five years.
Pruiti added that the capital budget is not yet finalized, but would be prior to the upcoming budget hearing. That meeting is scheduled for March 3 at 7 p.m. in the Freeholders Meeting Room at 75 Bayard Street in New Brunswick.
At the budget hearing, the public will be able to speak on the budget and raise any questions or concerns to the Freeholder Board prior to their final vote. The budget will either be adopted or rejected by the Freeholders at that meeting.
MIDDLESEX COUNTY PROPOSED 2016 BUDGET SNAPSHOT
Total Operating Budget: $439,544,000 ($8,773,000 increase over 2015)
Salary/Wages: $119,000,000 (up $2,285,000 from 2015)
Other Expenses: $301,988,948 (up $6,483,133 from 2015)
Total Other Expense Grants: $12,091,919 (up $4,867 from 2015)
Total Revenues: $70,581,000 ($2,685,000 decrease over 2015)
Operating Revenues: $19,417,484 (down $1,595,222 from 2015)
Special Items of Revenue: $41,271,595 (down $1,502,682 from 2015)
Grants: $9,891,921 (up $412,904 from 2015)
Net Amount Raised by Taxes: $368,963,000 (up $11,458,000 from 2015)