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10/31/2011 - Director Shares Facts Regarding Budget Issues

Freeholder Director Bill Whelan Shares Factual Information Regarding Budget Issues

The questions raised concerning The Manor deserve answers. I do not believe all of the information being provided by the media and others is correct and I want to offer my thoughts and answer some questions.

·         Cumberland County has a nursing home known as the Manor that has operated in a manner that has provided the highest standard of care to the patients for many years. I know that from families who have had loved ones there and from patients themselves.

·         The care given at the Manor is unique because we have had very dedicated staff in many positions who get to know their patients and families. They truly care about them and their future well-being. I know this from the families and patients who have experienced the care level; rendered by those employees.

·         Many of our Manor employees have served for years and even decades because it is not a job but a commitment to the patients and families they get to know and genuinely care about in a way that is rare in many nursing homes today.

 

How do we get from statements like that about a jewel of this County to a suggestion of selling that jewel? The simple answer is that our county budget, like many government, business and household budgets, is stressed to the max and the tax levy provided about $2.5 million to cover the operating loss at the Manor in 2010.

 

·         The difficulty of balancing a county budget today is no less difficult than the argument about societal responsibility to those who need our help and who should pay for it. That is the reason we have public hearings.

·         The Manor efficiencies are providing a decrease in the operating deficit although it is likely The Manor will lose over $1 million in 2011. The operating loss is close to that figure as of mid September based on information provided to us recently.

·         We all need to understand some of the fundamentals of the County budget process because it is a part of the argument as to what services can be offered by the county in the future including the Manor.

  • Each year, County budget planning begins with an estimated deficit. If memory serves, it was about $8-9 million in 2010, about $11 million in 2011 and is projected to be $8-10 million in 2012. Politicians present budgets in numerous ways but the fact is,
    government budget planning never begins with an assumption of an operating surplus.
  • Budget deficits are not legally permitted. Deficits are funded by a decrease in appropriations, (reduced expense often done by layoffs and reduced services); increased taxes; increased fees; or use of surplus.
  •  In the past and before any current Freeholder was on the Board, our County increased taxes and used surplus to fund budget increases. Certain departments and expense appropriations cannot be eliminated because they are statutorily required of us at the Federal or State level.

Today we have changed needs and changed circumstances with regard to our budget. I have been told by County professional staff that under new rules from Trenton in 2010, if we chose to raise taxes, the maximum levy increase would have been $600,000.

 

At the same time, real estate values are dropping all over the country and Cumberland County is no exception.  Decreased market value and a slow economy are causing our ratables to decrease. That places pressure on the apportionment rate. As a result, when the levy is constant and values are declining, the tax rate goes up. Because of equalization directed by the State, every municipality is impacted differently and some towns can go down while others go up.

 

Through budgeting, the County has decreased staffing from about 1100 in January 2009 to 1006 today. The surplus has declined as expected because the philosophy of the Freeholders has been avoidance of a tax increase.

 

With all of that said, and with budget assumptions from our professional staff, the following is what we will be faced with for 2012 budget planning:

 

·         Assume a deficit of $10 million in the 2012 budget plan. This deficit is a result of known and assumed increased costs and decreased revenues.

·         Assume a 12/31/11 surplus of $7 million.

·         Maximum levy increase of $600,000 although it is likely there would not be support for an increase.

 

If we use the entire surplus to reduce the deficit to $3 million, 2013 budget planning will be a nightmare unlike any other. If we use $5 million, we still have a deficit of $5 million in 2012. Now you may agree, this is a tough situation. If we use a little more surplus or increase taxes by the $600,000, we are not providing consideration for our future budgetary needs because surplus will only grow by $1-3 million in the most optimistic circumstance. Any way that you look at this picture, the math and the law dictate cuts. The question for all of us is where. We likely need $5 million or so.

 

There are options to find the $5 million but it will require eliminating or significantly reducing services. Also remember many are statutorily mandated and must be provided. Several years ago, we were sued by a former Prosecutor’s Office and lost. The courts determined we did not provide enough resources for fighting crime. That may or may not be correct but our costs have more than tripled as a result.

 

Last year, we talked about the Library and 4-H. We used more surplus to avoid a major negative impact on them. This year we are talking about The Manor. The Manor should not be the tool to resolve future deficits with surplus it generates from a sale but we must evaluate whether it is something we can afford to continue given continued operating losses.

 

People will speak out for those services they deem to be most important. If we keep them all, they will be offered with less availability to the public. Are we all willing to be put on hold if we call 911, have a Library three days a week, or wait a couple or a few days for the snow to be plowed? Are we okay with offices open 3-4 days or a planning board that meets every other month? These are questions we must ask ourselves and as a County of good people. Let’s realize we are all in this together and must make the best decisions we can for our future. We have worked together to overcome the weather and we can certainly find a way for a majority to agree on future budgets.