Fiscal Year 2011 Budget Message
Presented by Mayor Eldridge Hawkins, Jr
to the Orange City Council, January 18th, 2011

This budget is the plan of my administration to cut spending to cope with the crisis caused by a budget gap of more than six million dollars. It incorporates our strategy to protect the public safety, health and quality of life of Orange residents while spending less money and using fewer city employees. It is a budget that reduces spending on operations by approximately $3.2 million dollars compared to last year but still requires a tax increase to make up for reduced revenues and higher mandated costs.

Why is there a budget crisis?
Virtually every city in America faces a financial crisis caused by the worst economy since the great depression. Across our nation, cities are losing revenues due to cutbacks in state aid and reduced tax collections. They are spending more for mandated pensions and health benefits. Orange is not alone.  Cities are reducing services, laying off employees, renegotiating labor agreements, increasing taxes, sharing services, and scrambling to find new revenues.

With fewer dollars, we must spend less. We are all in this together: taxpayers, public employees, and businesses; seniors and school children; the middle class, the poor and the rich. If we are to survive as a community, as a state, and as a nation, we must share the sacrifices fairly and justly.

Every family needs to stretch every dollar, and every government must find ways to do more with less. We must take a fresh look at our priorities, make hard decisions about what we can afford, and find better less expensive ways to deliver essential services.  All of us must give up something so that our brothers and sisters in the family of Orange can survive and live to the day when things get better.

Years of fiscal mismanagement in Trenton created soaring debt and a persistent gap between what New Jersey collects and what it spends. This year, Governor Christie balanced his budget by slashing what the state pays to local governments and school districts.

As a result of the Christie cuts, Newark, Trenton, Hoboken, Jersey City, Camden, Hillside, Atlantic City, North Brunswick, Irvington, Morris Township, Maplewood, East Orange and many other cities have been forced to increase taxes and lay off employees.

State cuts contributed to a $6.4 million dollar gap in Orange between revenues for Fiscal Year 2011 and the money we need to run our city. Nearly half of the gap is Governor Christie’s $3 million dollar cut in State Aid and Urban Enterprise Zone (UEZ) funds.  Just to make up that $3 million dollars would require a 10% increase in our property taxes. And that would close less than half of the gap. The rest of our budget gap is caused by $1.4 million in higher costs and $2.1 million in reduced revenues.

The higher costs include a 11.6% rise in health insurance costs, a 22% increase in pensions, plus raises, overtime and longevity pay. Most of this is beyond our immediate control and is required by union contracts and state mandates. The $2.1 million dollars in lost revenues includes $375,000 dollars from tax appeals. Lost revenues from tax appeals are projected to increase substantially unless the City Council agrees to allow a reassessment.

Making up the higher costs and reduced revenues would require an 11% increase in our property tax levy in addition to the 10% caused by Governor Christie. That’s a 21% tax increase.

Shared Sacrifices
A 21% property tax increase is not acceptable now or any other time. It would shift virtually all the pain onto taxpayers.  It would balance our budget entirely on the backs of homeowners and businesses already paying more taxes than they can afford, while facing foreclosures and unemployment.  Instead, we must share the sacrifices fairly.

This budget asks everyone to pitch in and do their part to help cut spending, increase productivity, increase revenues, and accept reduced services.  It shares the pain among employees, taxpayers, businesses, and all who depend on our city. In preparing this budget, my administration has worked hard to cut spending without endangering the lives and health of Orange residents

Cutting Back
To significantly cut spending, we must reduce the cost of city employees. Salaries, benefits, personnel-related items and other mandated costs are 95% of our spending. The only way to avoid a huge tax increase is to reduce the cost of personnel. And since police, fire and public works are 83% of Orange’s personnel costs, those departments must suffer the largest reductions.

However, reducing personnel costs does not necessarily mean layoffs.

Give-backs can avert the need for layoffs. Give-backs can include salary and benefit reductions as well as changes in overtime pay and other work rules.  We asked our employees to do their share by making up the $3 million loss of state funding. This would still have left us with an approximately 10% tax increase. Not good, but much better than 21%.

Before July, we invited the unions to meet with us to discuss give-backs. They agreed to meet only after layoffs were announced in November. We were prepared to accept any proposals that saved $3 million dollars: for example, cutting base pay by only 3.5%; increasing the medical premium payments from 1.5% to 5% and earning overtime at base pay, rather than time and a half, and converting overtime to comp time.  At a time when private sector employees are paying more for health benefits and many have no benefits at all, requiring municipal employees to pay 5% is not unreasonable.

Until layoffs were implemented on January 11th, 2011, the City continued to negotiate in good faith, but the unions did not offer savings of $3 million. We knew that give-backs are painful. We knew that employees sacrificed last year to help balance the budget. Yet we continued to hope that the unions would accept the give-backs needed to save jobs.

We even delayed introducing the budget in hope of negotiating the give-backs. Prior to the layoff deadline, we had two options: (1) a 21% tax increase or (2) a budget with layoffs. By delaying the budget, we hoped to create a third option: negotiated give-backs. If we had introduced the budget before the scheduled layoffs, there would have been NO real terms to negotiate.

After the layoffs, we continued negotiating. Since Friday, January 14th, the fire unions have gotten closer to an agreement. If this comes to fruition, Fire Department layoffs and service reductions will be rolled back. If we can come to an agreement with the other unions before the budget passes, the final budget could re-hire those who lost their jobs, and the property tax increase could be 10% or less.

Comparing FY 2011 to FY 2010
Property taxes in Irvington are up by 17%, Newark by 16%, and East Orange by 14%. The estimated municipal tax levy increase of 14.1% in Orange translates into an increase from last year of $701 for the average tax bill. Under this budget, municipal property taxes in Orange will increase by 14.1%.

Under this budget, the total municipal tax levy increases by $4.6 million of which $3 million is directly attributable to the cuts by Governor Christie. This means that $470.00 of the increase in the average tax bill is caused by the Christie cuts. Without those cuts, the average taxpayer would pay only $231.00 more in FY11.

The amount that Orange must raise from property taxes to support our budget in FY2011 is $37.4 million compared to $32.8 million in our FY2010 budget. However, the city is actually budgeted to spend $3.2 million less to operate this year compared to last year. The FY2010 budget totaled $57.3 million. The FY2011 budget is $54.1 million. This year’s budget spends $3.2 million less than last year.

The Plan
With or without layoffs my administration has planned for months how to reduce spending while increasing productivity and revenues. After Governor Christie announced his cuts, we stepped up our efforts to reduce spending through staff reductions. Since July 1, 2010, 20 employees have left and only 5 have been hired. The salaries of the 20 who left totaled $1.7 million compared to the cost of $230,000 for the five hired since July 1. This represents a net savings on a yearly basis of $1.5 million.

At the same time we made these reductions, we reorganized the use of existing personnel to increase their productivity. Some employees were moved from one department to another to fill gaps in essential staffing. Other employees were cross-trained to do more than one job. They were assigned additional responsibilities without increasing their salaries.

We brought in over $4 million dollars in new ratables translating into a $92,000 increase in revenue. We created a quarter of a million dollars in new revenues with a landlord fee to pay for the inspection of apartments. We created a task force to derive more revenue from our Municipal Court. We shared services with our neighboring towns such as the agreement we with East Orange to service our vehicles.  We are exploring productivity increasing technologies such as spraying our streets with brine to make the snow melt when it hits the ground.

To reduce the property tax burden, we have tried to obtain every available dollar of federal, state, and county grants.   Since taking office, my administration has carefully researched what funds are available and aggressively brought those dollars home to Orange capitalizing on our very strong relationships with federal, state, and county legislators.

Priorities:
Budgets are more than cold numbers.  They are policy documents that should reflect the priorities of what is essential and what a community can afford.  When I became Mayor, I promised to restore pride and progress to our city; make our streets and homes safer; and improve our quality of life. This budget reflects those priorities and how Orange can remain true to them while spending less.

Public Safety

Our first priority is to protect the safety and security of residents. In two years, we have transformed the Orange Police Department from top to bottom, making community policing our guiding principle.  We have carried out an unprecedented crackdown on crime, gang violence, drug sales and quality of life crimes and built a strong partnership with state and county law enforcement agencies.

Although we have been forced to layoff police, our staff reductions are designed to maintain the present level of police protection. We demoted supervisors to prevent the layoff of more officers and to ensure that there will be police on our streets.  Under this budget, there will be just as many police patrolling our neighborhoods as there were under the FY2010 budget. Residents will experience the reduction in police staffing as longer times to process insurance reports and other paperwork and slower responses to non-emergency requests. I remain hopeful that continued negotiations will rollback the police layoffs.

The Orange Fire Department responds to over 2,800 alarms each year.  Their mission has always been to save lives and safeguard property.  Over the past two years we have enabled our firefighters to better respond to on-scene medical emergencies through medical first response training, and we entered a shared services agreement to provide central fire dispatching services at a cost savings of $150,000 a year. If the agreement with the fire unions comes to fruition, staffing of the Fire Department will continue at present levels. If not, the Department will take one engine out of service while continuing to rely on the mutual aid agreements we have with our neighboring towns.

Planning and Economic Development

Economic development is the heart of our strategy to hold down property taxes by attracting new tax paying businesses and residents. Since July 2008, our Planning and Economic Development Department has secured almost $7.3 million dollars in federal stimulus funding for acquisition, rehabilitation and construction of housing, $5 million dollars in funding for rehabilitation and construction of affordable housing, and $2.3 million dollars in Community Development Block Grant funding for boarding up and demolishing abandoned properties and for roadway improvements.

Our current housing plans and construction will generate over 300 new housing units over the next 18 months including the Grand Central and Brass Company developments, and rehabilitation of the 248 unit Washington Dodd Apartments. Under this budget, we will also see the work start on the F. Berg Hat Factory. Together with the Orange Housing Authority, we secured $23.3M in tax credit funding for phase one of the Walter G. Alexander Redevelopment Project to create 66 units of family housing and 48 units for seniors.

Because we were designated as a Transit Village, we won $700,000 in grants for site improvements, way-finding signs and beautification at our train stations. Across from the Orange Train Station at Tony Galento Plaza, we are reviewing plans by developers for market rate housing, shopping and parking. To strengthen our retail businesses, we will improve the Central Avenue Streetscape using $1.1 million dollars of additional Urban Enterprise Zone and Community Development Block Grant funding as we continue to implement a successful strategy to attract shoppers downtown.

Orange is a leader in addressing vacant and abandoned properties.  Our Vacant Properties Registration Ordinance has generated additional revenue and held property owners accountable for their properties. Although our code enforcement staff has lost 3 employees due to retirements, the 2 remaining inspectors respond quickly and efficiently to complaints. We will supplement their work with a housing inspection contract to ensure quality rental housing while producing an estimated $125,000 to $200,000 each year in added revenue. 

Finally, with the reductions in staff, we will enforce rent control with one part-time employee and reduce the hours of our building and construction office.

Community Services

The community services staff is our front line to protect the health and welfare of residents. 
Our health staff provides flu shots, immunization clinics, mother and child health services, TB control and STD treatment. They make sure that restaurants, food stores and swimming pools are sanitary. They fight rat and insect infestation, and protect our children from lead paint poisoning.

In addition to youth basketball, football, soccer, baseball, swimming and tennis, our recreation division offers after school and summer programs. These programs helped put Orange on the map as the home of championship teams. We provided a summer food program as well as an After School program, and worked with Essex County to provide jobs for 25 students to clean up areas within Orange.

Our older adults division connects seniors with health and social services, coordinates volunteer visits to the homebound, sponsors social activities and events, and provides medical and other necessary transportation. This year we acquired a handicap-accessible vehicle through a Federal grant. Unfortunately, staff layoffs now require that our older adults division become more of a referral resource than direct service provider.

The cultural affairs division operates our cable tv station, Channel 35, broadcasting council meetings, school events, concerts and other community events.  They organize programs for holidays, family day in the park, and the summer concert series. With a reduced budget, we will offset the cost of concerts, festivals and special events with private sponsorships and donations.

 Public Works & Engineering

Our Public Works Department oversees garbage collection to almost 12,000 households, collects 11 million pounds of trash each year; recycles over 1,100 cubic yards of leaves and trash, fills over 1,650 potholes, plows the snow and controls ice on over 35 miles of city streets and maintain our four developed city parks every day.  They sweep our streets, plant new trees, remove dead and diseased trees, and maintain our city-owned buildings and parking lots.

In 2010, we finalized numerous projects including Tremont Ave, Stirling Ave, Stirling Dr, Stirling Dr. West, Stirling Dr. North, Hillyer St. and Hampton Terr.   This year’s resurfacing, sidewalk and curb improvement projects include Central Avenue Streetscape Phase I, Tony Galento Plaza Improvements, Chapman St, Ogden St, Fairview Ave, New England Terr. and Cleveland St.

This year, we will complete our Water Facility with rehabilitation to our mountain wells and a new pump station at Chestnut Street. Valley Street Memorial Park was completed last year as well as Bell Stadium improvements.  This year we will rehabilitate the pool at Central Playground and proceed with the final phase of Metcalf Park improvements.

As a result of the layoffs, the Department of Public works projects that street sweeping will be reduced to every other week. We will outsource the cleaning of privately owned lots directly billing the owners and outsource some snow plowing to supplement our employees. We have also begun implementing local service agreements with East Orange for salt, mechanic services and the washing of our trucks.

Those are our priorities and our plans to wring the most out of every dollar available. I am confident that there are better days ahead for Orange and for America. Every crisis presents an opportunity for growth and positive change. If we use this crisis to improve the productivity of our municipal government, to do more with every tax dollar, to force Trenton to let us control our financial destiny , and if we use this crisis to find new ways to help each other, then, when the economy improves, Orange will rebound with it, and all of us, taxpayers, employees and residents together will share a brighter future.