Sales tax revenues came in under projections for the first three months of the year, an indication of a weakening economy and a worrisome sign for the community, Borough Manager Mason Villarma said last week.
“We’re at that point we’re going to have to trim things down,” he told the assembly at a budget work session Wednesday, June 5.
Mayor Patty Gilbert called the manager’s draft spending plan “the leanest budget” she has seen.
In addition to proposing laying off two of the police department’s seven-member force of certified officers, Villarma’s draft budget would affect the parks and recreation department.
“People are going to see a reduction in hours, a reduction in swims” as a result of reduced staff hours, Lucy Robinson, Parks and Recreation director, told the assembly. “We’re just going to have to bite the bullet. … We’re definitely going to see a reduction in services.”
The reduced staff availability also would result in “less overall facility hours” at the community center, she said.
The Parks and Recreation budget is heavily subsidized by the borough general fund, and Villarma has proposed cutting that appropriation for the fiscal year that starts July 1. This year’s subsidy is estimated at $640,000, with $555,000 in the manager’s draft budget for the next fiscal year.
The borough contribution covers about three-quarters of the Parks and Recreation budget. User fees cover about 10%.
The four employees at Parks and Recreation manage and maintain the community center, swimming pool, several parks and other programs.
The Nolan Center is the other municipally operated facility largely dependent on the borough to cover much of its spending. The proposed budget would provide almost $250,000 in borough funding for the Nolan Center and museum next year, just over half of the facility’s operating budget.
About one-third of the money to run the building and its programs comes from admission fees to the museum, rentals of the building for special events, museum gift shop sales and concession sales at movies.
In addition to tight revenues, the borough is trying to manage a large and costly backlog of deferred maintenance projects, Villarma said. “We need to take care of what we have.”
The borough has to start paying off debt on the millions of dollars it borrowed to build a new water treatment plant, and it could need to borrow more money to replace the roof and siding on the water- and rot-damaged Public Safety Building.
Repairing or replacing everything that is needed at the building could cost as much as $15 million, but the borough plans to start with just the roof and siding to reduce the cost.
The draft budget also includes about $1.5 million in borough funds in total for new underground utilities and a new road surface on McKinnon Street, to supplement a federal grant for a new roof at the middle school, expand the cemetery and replace the underground fuel tank at the Public Safety Building.
Even with a pared-down projects list, the borough needs to draw about $1 million out of its reserves, Villarma told the assembly.
“We just didn’t do the maintenance” that was needed over the years, he said, which merely postponed paying the bills.
The school district also is drawing down its reserves to balance its budget, with Villarma commenting that pulling out of savings is not sustainable for either the borough or the schools.
The assembly can consider amendments to the budget before it votes on the spending plan at its June 25 meeting.
Sales tax and property tax revenues provide about 70% of the general fund operating budget, with service fees, grants, earnings on the borough’s savings and state payments for the jail covering the rest.
Sales tax receipts were down for the first three months of this year “in a pretty significant way,” Villarma said. The draft budget projects that sales tax revenues for the next fiscal year will be $175,000 less than this year.
Borough staff plans to look through the numbers to determine where the drop in sales is occurring.
One area of concern among Front Street businesses, the manager said, is the erosion of cruise ship passengers this summer due to canceled sailings and the bankruptcy of one operator that shut down.
Instead of as many as 30,000 cruise visitors, the latest schedule from the Economic Development Department shows a maximum of 25,000 passengers this summer.
“There’s certainly some concern” about how the lower number will cut into sales taxes, Villarma said.
There was a lot of talk at the June 5 assembly work session about going after more state and federal grants for projects and programs, lessening the burden on borough funds. However, the mayor said, “we can’t operate a city on grants” which are uncertain and fluctuate.
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