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BY JOHN SNYDER
OF PASCACK PRESS
TOWNSHIP OF WASHINGTON, N.J.—New Jersey Gov. Thomas Kean had two more years in office before he would be succeeded by Jim Florio, and that was the year—1988—when the sale of a school building in Westwood would put more than $1 million in township coffers.
That money, as real as a birthday check from grandma, still sits idle, joined by approximately $100,000 from the late 1990s and more recent sums large and small floating around on the books without a job to do.
But not for much longer.
At a special meeting July 9, the governing body began to tame the town’s cash reserves and obligations going back decades, figuring out how much it should keep in surplus and what, hypothetically, it can spend.
Reconstructing the thinking of past mayors and councils on a wealth of ordinances in the life of the township—each one a potential story—it was the first session of what officials said would be a series aimed at tidying the books and delivering on a promise of transparency and efficiency.
That appealed to the two residents who spoke at the meeting’s public comment period: John Hannan, a resident of more than 40 years, and Joe D’Urso, a former township councilman. Both called for immediate action on town finances.
The current and immediate past town auditors—Gary J. Vinci of Lerch, Vinci, and Higgins, and Louis C. Mai, respectively—were on hand, as were township bonding attorney Robert H. Beinfield and township tax collector and part-time Chief Finance Officer Ashley Morrone.
Officials have long been aware of ordinances that have been approved but not funded, and others approved and funded but the monies were never spent (or spent with some left over, resulting in excess cash).
The town’s surplus at the end of 2017 was $5.2 million. The council used $2.1 million of it for the 2018 budget, leaving a balance of approximately $3.1 million.
There also are cash reserves of approximately $1.5 million, for a total of $4.6 million.
Moreover, there are trust fund balances that haven’t been used and other cash reserves sitting idle, according to Councilman Robert Bruno.
The town’s spending plan is $12 million.
“The problem is that no one has been tracking these things,” Bruno said.
For example, spending authorized in 1998 for equipment with a useful life of five years is still on the books, though the purchases have long since worn out or gone obsolete.
Money authorized for the 1998 removal of underground storage tanks is still in play. It was supposed that portions of that ordinance were untapped or authorized but not issued.
Bruno told Pascack Press that he sees the next steps as sitting down with the CFO and looking at the debt “and millions of dollars in pending capital projects going out for the next five years and then how the debt is to support it and how the long-term debt schedule is played out with the interest rates.”
Most important is to have a full-time CFO who can track projects and expenses “and get their hands dirty,” he said.
Mayor Peter Calamari said he is interviewing three candidates for CFO and will come out with a pick soon. A hire is expected in the next four to six weeks.
Meanwhile, the town’s 2017 financial audit is scheduled to be certified at the council’s July 16 meeting.
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Is reducing the surplus good for the township?
All this said, the town is in good shape—Councilman Michael Ullman credited previous mayor Janet Sobkowicz for much of that—and the governing body suggested there are worse problems to have though the town ought to raise only what it needs to operate and no more.
In January, Moody’s Investor Service said the township’s credit position is very good, and its Aa2 rating is slightly above the U.S. cities median of Aa3.
Notable credit factors include a robust financial position, a wealthy socioeconomic profile, and a solid tax base. The rating also reflects a negligible debt burden and a mid-ranged pension liability.
Moody’s lauded the township’s “very strong” financial position and said it found the town’s cash balance as a percent of operating revenues (56.8 percent) is “significantly above” the U.S. median and grew markedly between 2012 and 2016.
Moody’s said the fund balance as a percent of operating revenues (44.1 percent) exceeds other Moody’s-rated cities nationwide.
Councilmen wanted to know from the consultants whether reducing free cash would damage the town’s credit rating.
They were told it would not, and that the correct target for surplus here should be approximately $2.5 million, which Calamari edged up to $3 million and Ullman said he thought should settle in at approximately $3.5 million.
He said that remained a question of policy yet to be resolved.
In any event, emphasized Council President Michael DeSena, “We have no intention of using the full surplus.”
Reserves overstuffed
Members also learned that the unemployment reserve fund needs to hold $10,000 to $12,000, not the current $221,009. The council will stop feeding that line item in the budget and allow it to draw down.
Funds set aside for tax appeals that weren’t needed can go back into revenue.
Money collected for donations to the Police Department will be used to defray appropriate police expenses.
Tens of thousands idling with revenue from an insurance settlement and motor vehicle inspection fees can be reviewed and determined if the monies can be put into surplus.
Reserves dubbed “various improvements” can variously improve things.
Ullman, who had called for the special session July 2, concluded it was an excellent meeting, saying that although questions had been raised for years, “We never had the opportunity to put all the pieces together and I felt like this evening we had people who could answer the questions.”
With interest rates expected to turn less favorable and costly new projects on the horizon, council members said they want to figure out a more efficient and transparent debt strategy.
“Do we want to go long term or short term, BANS or bonds; do we want to cancel some of these ordinances? So we got questions answered but some of those answers generated more questions,” Ullman said.
In its concluding and sole official action of the 2 1/2-hour meeting, the governing body agreed to a first required vote to issue $6 million in bond anticipation notes, or BANS. (For details, see Resolution 18-253 on the town’s website.)
The session was televised by WCTV. Check it out at WCTVNJ’s Township Council Meetings channel on YouTube.
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