Town Council Candidates Question 4: The Budget

John Fio Rito
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Question 4: Verona has just passed its budget for 2019. If you could shift spending around in
this budget, which aspects would you give more funding to and which lines would you reduce to do so? Please don’t increase the town’s spending–or our taxes.

Verona’s total tax levy is nearly $73MM with $37MM going to the Board of Education, $13MM to Essex County and $22.7MM to the Municipality. Of the $22.7MM municipal tax levy about $7.5MM is offset by various revenue sources from parking meters to building permit fees; recreation fees and tax abatement income. This leaves about $16.8MM to be raised through taxation (all budget info is available here https://www.veronanj.org/budgetinfo).

In looking at the municipal budget, it seems pretty lean; although, the township was able to generate a budget surplus of about $700,000 in 2018. Be mindful however, that surplus is the net savings over many line items in multiple department budgets and doesn’t represent a single lump sum; it’s literally saving a few hundred or a couple thousand dollars here and there across the entire budget. I believe the first step in the budget analysis is to add more specificity to the line items, to better identify where the surplus and deficits are – specifically. So for example, a line item like “Repairs & Maintenance” should have sub-line items identifying the main components of repairs and maintenance. Fixing a broken window wouldn’t qualify for a line item, but the annual maintenance on all the town’s HVAC would. This would better assist department heads in accounting for and identifying their specific expenses.

In my job as a builder and developer, I constantly review construction and operational budgets to identify surplus and deficits to reallocate funds where they need to be. In the case of an operational budget surplus, meaning you spend less money on a reoccurring cost item than anticipated, the following year I would fund that surplus line item to 90% of the previous year’s budget and sweep the remaining 10% to a reserve allocation. In the case of Verona that reserve allocation would be for technology.

Several departments have technology as budget line items, but I would advocate to create a technology line item at the municipal level under the office of economic development to focus on universal technology solutions that would benefit all departments and move Verona in the direction of becoming a “smart” city. Many of us have added smart devices to our homes to make them more efficient, controlling our heating and air conditioning from our mobile device or installing Nest cameras or the Ring doorbell for surveillance. The same technology can be applied at the municipal level to increase efficiencies. Imagine a traffic light system that uses artificial intelligence to learn the daily traffic patterns and adjust the signals accordingly. Sounds like Star Trek, but so did video telephone calls on a handheld device 20 years ago.

Speaking of the Nest camera or Ring door bell, I believe an immediate use for this type of funding would be surveillance cameras on public spaces such as our fields. We spent millions and millions of dollars on our fields, but we don’t have a single camera monitoring them for use, vandalism or emergency response.

I believe we should also put more focus on the revenue side of the equation and not just the expense side. Currently, we generate about $7.5MM in revenue, we could probably do better since every dollar we generate is a dollar that is not added to the tax levy. Our town swimming pool for example is an incredible asset. Currently, it is revenue neutral meaning it takes in membership fees equal to its operating expense; the pool could become a profit center that offsets other municipal costs. I’d look to each department that generates revenue – the building department, recreation and all departments that issue permits and fees to see what more we could generate.

I’m also a huge advocate of the economic development of our downtown for the primary reason that a commercial tax levy is more efficient because businesses rarely use all the municipal services that residences use. Unfortunately, we are losing more businesses then we are gaining and we’re adding residential in its place which adds more service need and proportionally less revenue to pay for those services. Using Annin Lofts as an example (I know I pick on Annin, but it’s a great illustration); Annin made flags here for 100 years and during that time paid its property tax. That tax went to pay for all the municipal services and school funding that Annin Flags didn’t use because it was a business and didn’t need them. Today, Annin Lofts consists of over 100 residential apartments each of which is using all the municipal services Verona has to offer and therefore, the township’s proportional net revenue gain is less.

The same thing is about to happen with Cameco on Pine Street. Cameco processed meat for the last 60 years and closed its doors last August. It used to be a major employer and with regard to tax, a net gain because again, as a business it didn’t use the municipal services to the extent a residence would. The Township now plans to build 100 low income, affordable housing units on the site to meet the municipality’s affordable housing quota. Besides being an absolutely horrible idea with regard to the social ramifications, we are once again losing a business and adding residential; residential that by its very nature will generate very little, if any tax revenue yet demand significant municipal services.

I recently became a local business owner and am quite literally invested in downtown economic growth. I recently converted the former piano warehouse at 776 Bloomfield Avenue into self-storage. The new business has virtually zero impact on the township – no water or sewage, little traffic, no municipal garbage or school burden – yet it pays its full tax assessment and provides economic growth to a once vacant structure.

We need to make Verona more business friendly because that – not the cutting of services or people, will offset the residential tax burden. The annual budget for Verona’s office of economic development is $27,600; I find that astonishing. Out of $22.7 million dollars we spend one tenth of one percent on economic development. In comparison, the annual budget for the library is $914,000. I’m not picking on the library, we have a great brand new library that many volunteers worked very hard on for a long time, but I certainly didn’t know we spend nearly a million dollars a year on it and only $27,000 on economic development. We should be inviting and encouraging business development. The economics of a strong business community in the town center would allow the current level of municipal services to remain the same or even increase without increasing the residential tax assessment.