By Allison Perrine
RED BANK – It’s a tight fiscal year for the Borough of Red Bank, as officials report “catastrophic losses of revenue” from major income sources during the pandemic. In parking fees alone, the borough anticipates close to a $1 million loss, officials reported July 22.
During last Wednesday’s council meeting, borough administrator Ziad Andrew Shehady reviewed the $23,142,109 budget that has salary and wage expenses cut by almost $487,000, discretionary spending down by 4 percent and the municipal tax rate up by 2.98 percent over last year. It will be up for a public hearing and potential adoption at the Aug. 19 meeting.
“We made major cuts to the budget this year, but unfortunately when you’re dealing with such major revenue losses it’s hard to compensate for that in spending unless you make major reductions in service to the taxpayers,” Shehady told The Two River Times. “I don’t think that, in the middle of a pandemic, taxpayers want to see their municipal building shut, their services eliminated, so that’s the choice we have.”
The borough first introduced its municipal budget in June but made minor adjustments July 22 that bring $53,000 in savings to the municipal tax rate. As it stands, the amount to be raised by taxes totals $14,171,736, with the average Red Bank homeowner with a 2018-19 assessed valuation of $383,981 to see $2,392 in municipal tax per household. According to Shehady, that’s about a $130 increase for the year.
“We could say to the residents that this amount raised by taxes stays flat, but that means that we’re going to have to dip into our surplus even more, which is dangerous,” said Shehady. “It puts the borough on a wrong and irresponsible track for future years. It will negatively affect our debt, our bond ratings.”
The borough predicts losses in 11 major revenue source categories, including licenses, fees and permits, construction and development, court fines and costs, interest, off-duty police administrative fees, and more. But the largest loss is from the parking utility, with a total budget of $1,132,166 – a decrease of $850,874, or 42.91 percent, from 2019. Additionally, the water and utility budget for 2020 is set for $6,795,706 – a decrease of $376,191, or 5.25 percent, from last year.
“We couldn’t make up for this major loss of revenue without some serious, serious revisiting of our surplus and rainy-day funds,” said Shehady.
But overall, the administrator said this is “100 percent, absolutely” a good budget, though it is not perfect as the town and world are facing a pandemic, he said. “I would not present a budget to the mayor and council for their consideration if I didn’t think it was a good budget.”
At the July 22 meeting, the council also unanimously approved an ordinance to exceed the municipal budget appropriation limits and establish a cap bank, which Mayor Pasquale Menna described as “standard municipal accounting.” Its purpose is to allow municipalities to exceed the state caps for cost of living adjustments up to 3.5 percent if necessary. The difference can be banked for up to two years for emergency purposes. If it is not used in that time, it goes away and gets reset with the next cap bank ordinance.
According to Shehady, a local news outlet published incorrect information conflating the cap bank ordinance with the budget itself and announcing that the borough council would be voting on increasing the budget by $628,000. Shehady later told The Two River Times he “knows” the misprint was political.
“There’s a few people here that are using it for politics and they took the ordinance pertaining to the cap bank to use that as a statement about what the municipality is doing with the budget, which is not correct,” he said. An open letter from Shehady about the situation with clarifications is posted on the borough website at redbanknj.org.
While the vote to approve the cap bank ordinance was ultimately unanimous, councilman Michael Ballard, the chair of the finance committee, was at first hesitant to proceed and suggested it be tabled, questioning its necessity. He also said the July 22 meeting was the first time he’d seen the presentation Shehady put together about the budget. Toward the end of the nearly three-hour virtual meeting, Ballard read a prepared statement expressing his frustrations with the proposed budget that raises municipal taxes by 2.9 percent, “inflicting even more of a financial burden on Red Bank residents during an economy-wrecking pandemic.”
Ballard said he met with the administrator and chief financial officer in January when the finance committee’s goal was to have a maximum tax levy increase of 1.5 percent. Then COVID-19 changed the course and prevented the borough from conducting “business as usual,” he said. Expecting a significant loss of revenue, Ballard said he pledged and expected the borough to not burden the taxpayers with the loss.
“I urge the council to reject this budget and move to adopt the amendments the finance committee has offered. I honestly believe there is a better budget to be had for Red Bank in 2020 and we have the power to make it happen,” he said.
Several residents spoke during the July 22 meeting with questions and concerns about the budget plans, including Red Bank resident Memone Crystian. She noted there seemed to be a “heaviness” among the council when it comes to this budget. Directing her comments at Shehady, Crystian said, “For you to have such a beautiful presentation that was never shared with the chair of the finance committee is a little problematic to me,” she said, adding that she feels the taxpayers will be the ones who suffer in the end.
The article originally appeared in the July 30 – August 5, 2020 print edition of The Two River Times.
