AVALON – An audit report on the borough’s finances presented at the Aug. 28 council meeting found the borough to be in a strong and enviable position.
One indication of that strength is the borough’s AAA rating by Standard and Poor’s, one of only 26 such ratings given by S&P in the state and the only one in Cape May County.
According to the S&P website, the agency rates 279 New Jersey municipalities. In Cape May County, S&P rates all but one of the 16 municipalities, the exception being Wildwood Crest, whose last rating was by Moody’s.
External auditor Michael Garcia of Ford-Scott & Associates began his audit presentation by explaining that there were no negative findings that would require a formal response and action plan. The audit, covering 2023, represents the last year in which James Craft was chief financial officer of the borough. Craft retired after 26 years of service.
Avalon’s 2024 general fund budget of $30.5 million is supported by $20.5 million in local tax levy. Local taxes represent about 67% of total revenue. The Avalon general fund budget also contains another $5.3 million in revenue for a separate library tax, but that is largely a pass-through on the budget and was not included in Garcia’s calculations of operating costs. Avalon, like Ocean City, maintains and operates its own library separate from the county library system.
Garcia noted the borough’s $8.3 million general fund surplus, which he said is one of the factors the rating agencies like to see as proof of strong financial performance.
Regarding the two state caps, one on the annual tax levy increase and the other on increases in spending, he said the borough was $7.2 million below the tax levy cap, meaning the municipality is taxing at a rate below what it otherwise could. The spending cap, which has been a major obstacle for neighboring Stone Harbor, shows the borough $1.3 million below the state limit for annual appropriation increases.
In addition to the general fund budget, Avalon makes use of two self-financing utilities, one for management of its water and sewer system, budgeted at $8.5 million, and the other for financing the maintenance and operation of the borough’s beaches, budgeted at $2.2 million. Both were also reported to be in a strong position, with added revenue expected by the beach utility due to an increase in beach tag fees.
Turning to debt levels, Garcia noted the continued success of the borough in implementing its policy of no long-term general obligation debt. Avalon does make use of bond anticipation notes as it pays down any new debt through budget yearly appropriations.
Garcia said that the 2024 budget asked for no increase in the local purpose tax rate. It is the eighth time in nine years that the borough has adopted a budget without a tax rate increase.
This level of financial performance “doesn’t happen by accident,” Garcia said. It is the result of ongoing attention to the financial health of the borough by the council along with the mayor and administration.