Upper Resident Questions Budget, Salary Increases

PETERSBURG – At the Upper Township Committee meeting Aug. 22, one resident rose to question elected officials on the tax increase, the heavy use of surplus funds, and a series of what she documented as double-digit salary increases for 14 employees. She argued that township “costs are out of control.”
In an article reporting on all 16 municipal 2022 budgets, the Herald noted that the highest tax rate increase was in Upper Township, where the rate per $100 of assessed value rose by just over 15%. The Herald’s reporting also noted that while energy tax receipts from the B. L. England plant covered over 50% of the township’s general fund budget in 2015, they now cover just 40%. This puts greater pressure on the tax base.
Looking at some of the points the resident raised in public comment illuminates some of the challenges facing the township in this and future budgets. 
Upper Township has no separate utilities. It funds all municipal activities from a single general fund budget. That general fund budget in 2022 did not go up over the previous year; it actually dropped by about $54,000. Part of the change from year to year was a drop in grant activity, common at the start of a budget year. The grant activity in 2021 obscured the fact that without the grants dedicated to specific purposes, the budget actually did rise in 2022. 
What also changed was the percentage of the budget that relied on taxpayer funds. This is what caused the increase of 15% in the local tax rate. 
The issue comes down to controlling costs, the focus of the resident’s public comment. The township’s appropriations in the period since 2015 have grown by 29% while the energy receipts have remained static at $6 million per annum. 
Where did expenses climb this year? The largest increase was in debt service. In 2021, the township budgeted $764,000 in debt service. In 2022, that number was $1.2 million, a 59% increase. A comparison of the user-friendly budget for 2019, the year before the pandemic, and the same document for 2022 shows an increase in net debt of about $2 million. 
The resident who questioned the council on Aug. 22 focused on salary increases paid to a group of 14 individuals. Again, a look at the total personnel costs in the user-friendly budgets of 2019 and 2022 shows a movement from $5.9 million to $6.5 million in three years. 
One unusual statistic is the ratio of managers and supervisors to total full-time staff. In Upper Township 23% of full-time employees are classified at a supervisory level. In Middle Township, by contrast, even without the inclusion of Middle’s police department positions, that ratio is 1 in 5 or 18%
One challenge awaiting Upper Township in 2023 will be the loss of federal Covid relief dollars. In 2022, the township was able to include nearly a half-million in American Rescue Plan dollars in its revenue. Those dollars will not be available in 2023. 
One other point made by the resident during the Aug. 22 public comment concerned the use of surplus to balance the budget. 
Every municipality in the county makes use of some surplus in the annual budget. It is a way of dealing with the fact that all budgets contain funding that will not be fully used. Most budgeted positions, for example, are funded as though they will be filled for the entire year, when some of them will not be. 
State regulations prevent the use of many forms of anticipated revenues in excess of what was actual revenue in the previous year. Yet many municipalities are seeing growing visitor volume and can reasonably expect increases in certain revenue categories like parking or beach tag sales.
For most towns, the problem is not the use of surplus dollars to balance a budget. It is a way of holding the tax rate down. The problem comes when the assumptions are wrong and the revenue is not there to repay the surplus, or augment it, at the end of the budget year.
That is what has happened to Upper Township. The surplus balance at the start of the budget year peaked in the township in 2018 and has been declining each year since. Revenue savings from budgets have not been able to repay the surplus used in the budget year with the resulting decrease in the surplus balance each year. The surplus balance has lost $1.4 million since 2018, a decrease of 43%.  With the balance at the start of 2022 standing at $1.8 million, using $1.65 million as revenue in the 2022 budget leaves the balance at less than $150,000 unless the $1.65 million used can be repaid from unexpended budget funds at the end of the 2022 year. 
Coming out of the pandemic, even with the aid of federal relief funds, Upper Township has had some budget challenges that have put pressure on the tax levy. 
On the good side, Upper Township taxpayers have a local tax levy that is low by county municipal standards. The local tax levy covers 31% of general fund revenue needs. That is the second lowest level in the county. That may be small solace when the tax rate is increasing.
Have any thoughts and/or information on this story? Email vconti@cmcherald.com.