This year has presented the worst financial conditions imaginable. The global economic recession created its own problems for us locally, while the State's economic and political changes set in motion a change in State aid and changes in accounting rules that have had an even more devastating effect. We've reexamined every operation, reconsidered every expenditure and done our most creative restructuring on all fronts to complete this budget. And we are continuing the process as we look ahead to 2011. We may be undergoing even more drastic changes in operations as we move through the remainder of this year.

     But what we are facing is no different than what every household has faced. These difficult, uncertain financial times have caused every one of us to re-examine how we do everything. Do we really need to buy this? Can it wait? Can we do the job in a different way, with less labor cost and other cost? So the crisis has had its good aspects in our belt tightening review of borough operations. But its costs in jobs has been painful.

     Be assured, as we have worked through this process, we remain steadfast in ensuring Collingswood is a safe and secure place to raise a family within a nurturing community. It is the number one priority; it always will be. But we do have to pay those folks who patrol the streets, pick up our trash, and respond to emergencies.

     So here is the summary of the 2010 budget. We will continue the PRIDE grant. This will be the last year of the 4 year program providing $150 to every Collingswood property owner ($600 total). Taxes will increase on the average property $287. The average property is assessed at $232,000. This increase, offset by the PRIDE grant, results in an average increase to taxpayers of $137 for the year.

          The PRIDE Grant      

     The PRIDE Grant is funded from the $4 million profit realized from the sale of the redeveloped Parkview Apartments.

     Just as a reminder on the process, we could have included the money we use to fund the PRIDE grant in the 2010 budget and reduced the tax rate, but we have not done this during the prior 3 years of the program because it would provide an unintended benefit to the Heights (formerly The Parkview). The PRIDE grant is funded from the profit realized by the borough from the 2006 sale of the Parkview apartments. The reason for providing the separate payment is the apartment complex continues under a payment-in-lieu of taxes agreement (PILOT) from the 1996 redevelopment of the site. One of the formulas used for that agreement is tied to the tax rate. So if we reduced the overall tax rate with the profit from the Parkview redevelopment, it would provide a benefit to the Parkview in the calculation of its PILOT payments and that would not be fair to all the other taxpayers in town. So we provide the separate payment as our local rebate to, in some small way, help soften the blow of property taxes.

             Pension Cost          

     In 2005, the Borough's State pension contribution was $175,000; in 2010, our State pension contribution is $1,195,117. That's right, an increase of 600% in 5 years. The increase from last year is $625,789. This is a bill we cannot control - we just get told by the State what we have to pay. The system is more than broke and the reform efforts will not provide any relief for 20 years. Local governments will be out of business by then.

     The State Pension Programs are, to me, the system that is threatening to bankrupt us. It is a defined-benefit plan, meaning every retiree has their benefits defined and guaranteed. It is the pension program from the 1950s. Every private company in this country has ended their defined-benefit pension program for one reason - it is too expensive.            

     Most private companies have defined-contribution plans, like a 401k. In those plans, the retiree is not guaranteed a level of benefits. Companies match contributions at different levels and employees control their investments. Retirement benefits are based on what is available in your fund and what you want to draw from it. 

     The State should simply end the current system today, with all current employees frozen at their current benefits. Nobody loses what they have but the bleeding begins to stop. Without immediate, startling change, we are headed for financial horrors.

          State Aid Cuts and the New Accounting Rules 

     Collingswood was cut $307,000 in State aid. While this had a serious impact on the budget, some changes in rules for budget accounting hurt even more. By now most of you have heard of the 4% cap on property tax increases. While this has always made for a great speech from Trenton, budget rules have been more reflective of the realities of running the business of government.

     As an example, imagine operating any business today - say, a shoe store. And imagine you had all the increases in expenses of today's world - utility increases (20%), health and liability insurance increases (30%), pension contribution increases (120%) and other typical expense increases that every business has encountered over these last few years. Then tell the shoe store they are forbidden by law to increase their revenues by more than 4%. It is clear the shoe store could not stay in business.

     So the State, while giving speeches telling everyone they were limiting property tax increases to 4%, allowed rules for towns to exclude the highest increases in spending (like pension and insurance) from the "cap calculations." This allowed every town to operate; it also helps explains why property taxes have generally gone up more than 4% even with the "cap" law.

     But rules changes with the new Administration have made the cap calculation much more restrictive. One change in March cost the Borough $200,000. No cut in aid, just a rule change.The Governor is advancing a 2.5% "hard" cap on property tax increases. This would mean all expenses in the Borough's budget would be subject to this cap. As I advised all of our Borough employees in a full staff meeting, this rule would mean the elimination of fully half of the Borough's work staff. As Trenton debates these issues during the summer, we will do our best to ensure we are able to maintain our services at an affordable price.

          Personnel           

     With so many of the Borough's costs mandated by State law, like pension contributions, and so many others out of our control but necessary to operate the business, like utilities and health care, there is, unfortunately, only one area where the Borough can realize substantial savings - personnel costs. Last year, the Borough laid off 6 employees. This year, the Borough will lay off 9 employees. An additional 7 positions have been vacated by retirements and are not being replaced.           

     Two public works employees and three firemen/EMTs were laid off in April. Three police officers will be laid off at the end of the Woodlynne police agreement on July 2. One additional police officer was laid off in March, at his request, so he could take advantage of some other job openings.           

     We take these actions with great regret and with a mindful eye to continuing to provide quality service to our residents. We will be continuing a restructuring of our Departments through the remainder of 2010 because we expect the State's financial woes in 2011 may hurt us even more.           

     We have negotiated extensively with the unions and they have not been willing to provide concessions to save a single job. We have tried, offered various possible alternatives and met no success.

      There will be three furlough days for the non-union personnel only because State law prevents us from furloughing the unions without their consent. The Commissioners have, again this year, cut their salary in half, contributing $3,500 each to help the budget. Every Department's operating budget has been substantially cut. We have tightened every belt we can uncover.

          Chin Up           

     When I was first opening my own business over 20 years ago, a friend told me, "It's never as good as it seems, and it's never as bad as it seems." It's all a balancing act.           

     And while the financial issues have certainly dominated the Borough's work lately, there continues to be great signs for our Borough. The Farmers’ Market - America's Favorite - has just reopened. Just last month, Men's Journal, a national magazine, named Collingswood as the most pedestrian-friendly place to live - in the U.S. The fact remains true today - most towns would trade for our strengths and our woes any day. Collingswood remains the envy of the State as a winning municipal trifecta: a great place to visit, a great place to live and work, and a great place to raise a family. 

            Enjoy the Summer!