In wake of financial crisis, N.J. towns, counties brace for losses
By Carly Rothman/The Star-Ledger
September 30, 2008, 6:07PM
Watching and worrying. That’s what county and local government officials in New Jersey are doing this week as they monitor the bleak national economic condition, bracing for the worst when it comes to the impact the financial crisis will have on their 2009 budgets.
A host of officials said today they already were anticipating tough times next year, with likely decreases in revenue, and have already enacted plans to cut spending – cuts that could lead to reduced services and employee layoffs.
Officials are also paying close attention to possible cuts in state aid to towns and counties after comments this week by Gov. Jon Corzine who said he is reviewing contingency plans he asked state department heads to craft in August that would trim their costs by 5 percent.
“We have a hiring freeze in effect and we are not filling job vacancies unless they are critical positions, such as staffing our nursing home or having enough officers at the county corrections center or juvenile,” Morris County Administrator John Bonanni said. “But what is happening with the economy this week is problematic. It is of great concern.”
Essex County Executive Joseph DiVincenzo said his county expects to lose at least $2.5 million in property taxes due to the downturn of the economy. He does not think there will be a significant impact on the current budget but has asked county departments to tighten their belts next year, starting with a 5 percent cut across the board.
“We’ve been expecting the worst, so we’re a little prepared for this, but I didn’t expect it would be this bad,” DiVincenzo said. “This year, we’ll be fine. What we do next year is going to have to be less.”
The financial woes prompted Union County to postpone a plan to refinance some of its debt, a move that could have saved the county $2 million.
“Recent situations have made that opportunity deteriorate,” said county finance director Larry Caroselli. “Thankfully, we issued (bonds) earlier this year, in February, when market conditions were a lot stronger. If we had to (issue bonds now) because of a need of cash, we’d really be biting our nails.”
Many officials across the state expect a decline in money collected from taxes, due to foreclosures, a decrease in new development and new ratables, plus what could be a large number of tax appeals.
Marvin Joss, administrator in Clinton Township, Hunterdon County, said a credit crisis inevitably leads to a drop in tax collection due to foreclosure and instability in the personal finances of residents. Tax collection can drop between 2 and 5 percent in a township like Clinton when the economy is ailing, Joss said, and that means the money that wasn’t collected has to be raised in additional taxes the next year.
That possibility has sparked interest in shared services between towns and counties, plus a host of cost-saving initiatives.
Madison has begun sharing a municipal court with neighboring Florham Park and is in talks to share senior transport services as well, said Mayor Mary-Anna Holden. In Morristown, town officials approved a plan to install solar panels at the wastewater treatment plant to save between $100,000 to $150,000 annually in energy costs.
Morristown Mayor Donald Cresitello said towns and cities are working to cut their budgets and urged Corzine not to balance the state budget by cutting aid to already cash-strapped towns and school districts.
“He needs to look inside first,” Cresitello said, suggesting cuts within the state bureaucracy.
Meanwhile, towns and counties are anxiously eyeing the impact of the economic downturn and stock market on employee pension funds, said Jack Mozloom, spokesman for the New Jersey Association of Counties.
“There is a lot of concern out there, a lot of people who could be affected,” said Mozloom. “It’s too early to know right now what the impact of what’s happening this week will have on those funds. But we’re all watching and worrying.”