At its February 7 special meeting, the Hopewell Township Committee continued the 2022 Municipal Budget discussion it began last week. At this meeting, the Committee focused on the general operating budget specifically, revenues.
Finance liaison Committee member Kevin Kuchinski explained that he and Township treasurer Julie Troutman would start the process of budgeting with the general operating budget as they still had work to do on the capital budget. He said they are still working to see how much in prior year ordinances are needed and able to be repurposed. He explained: “This will give us the final say of where we need to go to introduce the Capital Budget at our next meeting.”
Regarding the Operating Budget, there are multiple sources that the Township has to help fund municipal operations, he said. “When we went through this process last year, we talked about all the negative ways COVID-19 had impacted the Township budget, so I thought it might be helpful to start with some good news. We have seen a nice rebound in our tax collection rate.”
Kuchinski reminded the Committee that while the Township keeps only 14 percent of every tax dollar collected, they collect taxes on behalf of the County and the schools; thus the total of the money due to the County and schools has to be paid to them by the Township whether it has been 100% collected from taxpayers or not.
“When there is a short-fall on collections, we may be able to get that money back longer-term. But in the short-term, we need to directly fund all of the short-falls for the County and the schools— that certainly affected us in 2021,” explained Kuchinski.
“In the 2021 budget, the actual collection in 2020 was 98.18, so we were able to use a three year average in 2021 to come up with a collection rate,” said Troutman. She explained that, this year, they are looking at a collection rate close to 99.1.
“We have a host of revenues that we’re going to look at including base years, most recent actuals and start to talk about each of the revenue lines,” added Kuchinski.
Before sharing the revenue lines, Troutman made sure to point out that when doing revenue budgeting you cannot budget more than you realized the year before, and when you realize more revenue than budgeted, the excess funds become an immediate boost to the surplus. Troutman shared her screen to show a multi-year breakdown of revenues. She started with tax settlements and agreements. These are properties where the Township receives revenues that are not tax-based.
In beverage licensing, 2021 realized $31,000 after budgeting $30,000. The extra $1,000 immediately went to surplus.
The next category was fees and permits. “This group of revenues go on to our budget in a lump sum so while we can look at these independently, we budget it as a group,” explained Troutman.
From 2017 to 2021 there was a growth in fees and permits due to increased recreational programs.
The Township saw an increase in birth certificate fees and also in real estate, which added to the health department revenue line and environmental inspections.
Troutman also pointed out that the bulky waste program came back in 2021 after being suspended in 2020 from COVID-19.
In 2021, all of the departments together realized a revenue of $443,000, but the anticipated budget was $367,00, which was based upon prior year realizations.
Looking at the realized number, the Committee had to determine what drove that total— which is believed to be real estate.
After going through all the items, Kuchinski said they have remained well above the $8 million plus target despite all the negative revenue impacts from COVID-19.
“Since 2017, we have been on a multi-year plan to reduce the amount of surplus we use each year in the budget, I anticipate we will do that again this year,” said Kuchinski.
The surplus in 2021 is just under $1.5 million.
“As we move forward with this year’s budget, we will seek to utilize less than $1.5 million and stay close to 1$ million. The actual surplus figure finished at just under $8.8 million so we continue to be in compliance with our fund-balance policy.”
