Name: Live Webinar: New Jersey Municipal Budget Seminar
Uploaded: 2026-03-04T01:45:07.332Z
Duration: 2 h 15 min
Description: Live Webinar: New Jersey Municipal Budget Seminar

Transcript for "Live Webinar: New Jersey Municipal Budget Seminar": Good evening and welcome to our New Jersey Municipal Budget Seminar hosted by PCF O'Connor Davies. Before we get started I'd like to go over a few housekeeping items so you know how to participate in today's call. We're pleased to offer live closed captioning throughout the webinar. To access the captions, please use the StreamText link located in the chat section of your attendee panel. You will have an opportunity to submit text questions to today's presenters by clicking on the Q and A tab on the right hand panel. You may send in your questions at any time during the webcast. We have a lot of material to cover and if time permits, we will make an effort to respond. If we cannot get to your questions, a response will be sent post event. A recording of today's webinar will be made available to you via email four business days post event. And as we near the end of the webinar, we do have a very short survey which will be prompted, and your response is greatly appreciated. And at this time, I'll turn the turn the room over to Michael Sicera, partner with PKM O'Connor Davies. Michael? Good evening, everyone. Welcome. So we just want to welcome our folks that are online, and we have a number of people in person here. We're broadcasting from Voorhees, New Jersey. Those of you who have had the pleasure of visiting us before, this is sort of our first PKF budget seminar, but in essence, it would be the thirty sixth as our former firm. Some of you may remember, this program was developed by Jack Daley, rest in peace, and Joe Hoffman, a retired partner, who had put together the concept of let's get together. Let's try to provide a foundation for those that are newly elected or are part of the governing body stream who need to have an understanding of the budget process. We welcome those members of the governing body. We welcome our friends who are CFOs, acting CFOs, clerks, etcetera, etcetera. If I missed anyone, I apologize. But that is why we're here tonight. I am Mike Susserow, as I was introduced online, is a partner of PKF. And Evan Palmer, another partner of PKF, is my technical assistant this evening, and will speak occasionally if I permit him to when I need to get Doesn't happen very often. We keep him, you know, locked up. I'm very busy here. We actually have a record number of people online because we already have opened this up to people from New Jersey. So we have about 25 people online in addition to those in attendance tonight. So thank you for coming. The refreshments will remain open. There's no formal break that we're going to have. The restrooms right around the corner. If they're fully occupied, we have the same set of restrooms upstairs, same location in the building. If you need to exit for any reason, this is a secured building. Please see one of the individuals in the back. They will help escort you out of the building safely so you don't have any problems. We don't have CEUs set up this year, but we're gonna get that rolling for next year. We just needed a little bit more time to to talk to our folks in Trenton. They've had some transitions down there, so we're working on getting that set up. Any point in time you need coffee or tea, please let the individuals in the back know. They will take care of that for you. Cell phones, I hopefully don't have any public safety individuals here. You know? We had one or two individuals in the past that needed to leave their radios on. So, yes, Judd, as a fire person, please, silence or as a courtesy, please keep your cell phone. If you need to step outside or step right out the back if you need to make a call, please please, respect the others in the room. Interaction is encouraged. As a reminder to my folks here locally, we are being recorded, not video. So we just ask if your situation is specific to you. Be very careful, and and we'll probably direct you to your PKF representative. Once again, this is a foundation. We're gonna go through some slides here. The individuals in the room have a book. You probably flip through it. There's no way we're getting through 90 slides. I talk fast. I talk slow. I will do my best to to go through what I believe is the core information that you need to know, and there are changes this year. So if you happen to be one of my many repeat guests here, we thank you for coming back. We've had some changes. Here's the most important thing I should say. The opinions expressed are mine and mine alone. I won't speak for Evan. But in that case, they do not represent BKF management or the specifically, the division local government services or the state of New Jersey. So this is me. I'll do my best to to give you the factual information, but every once in a while, we have some editorialization involved. So moving right along. Yes. Michael, Kevin. Thank you. Introduction to municipal budgets. So one of the things that we have to focus on are a number of the documents that need to be filed, and we start off each year with our annual debt statement. That had to be filed by 01/31. So January 31, we went through. We captured all this information. It generally would tell us all of our bonds, notes, loans, etcetera, that we have out there. In essence, kind of a detailed credit card statement of what the town has in terms of debt. The, governor had signed some legislation the December, and that was public law 2025, chapter one eighty five, that extended a number of the filing deadlines. It did not extend the filing deadline for the annual debt statement. Unfortunately, it means you have to get this document uploaded. It's an Excel file. They went back to that. The FAST system has changed. So now it's a form, an actual Excel spreadsheet that would be uploaded, and the CFO needs to click and actually upload the file for it to be registered as being filed. Now remarkably, a CFO can go in and simply click even though there's no file attached, and they're marked as being filed. Okay. So that I learned firsthand experience. One of my favorite clients that I work with mistakenly has gone and done that. Conversely, I also had a client, they had a situation where we didn't file it by 01:31. Just circumstances that have occurred, trying to gather some of the information. They had some major loans being paid off. We had to get verification that they were paid off. So I think it was probably maybe within two days, the division I think the thirty first, I can't remember, was probably a weekend, but the division was emailing CFOs immediately that it was not filed. Because as part of this legislation that was passed by the governor, it included an increase in terms of fines, fines to the CFO, maybe fines to the governing body if things are not done on a timely basis. In the past, maybe it was a $5 a day, some little jokey thing, but now they've upped it to roughly a $100. So you have to be on top of some of these filing deadlines. In terms of that, do I have any county people sitting in the room? I may online, but so most of you are a municipal, group of individuals. So the key aspect when you're looking at the annual debt statement is how much can I borrow? Because capital programs are extraordinarily important to each community. You need it to fund for roads, public safety equipment, etcetera. And in that case, I'm able to borrow three and a half percent, up to three and a half percent of the value of my town, which in some cases is great. In other cases, when you have smaller enterprises, the value of that community kinda puts a little bit of a handcuff on you, and maybe you have a major program. You wanna build a new public safety building or a public works garage or something like that. You realize at that point in time when you go through and do these calculations, it may exceed three and a half percent. And that's when you have to take a step back, look at some of your other options. I think, there are a number of, opportunities that we've seen. There was one local community that was, referenced, and they happen to be a client of ours. I won't name them specifically, but they wanted to have a new municipal building. But they also had their township library associated with their building. So they were able to go and apply for this great grant through the State Library Association, and that helped fund part of it. So when they went to do their borrowing and their debt and their ordinance for it, they didn't end up exceeding three and a half percent. So that worked out for them. Others don't necessarily face that. They had a little bit of an issue. And so then they're gonna go knocking on the door of the local finance board and say, look. We feel that this is an emergency situation. We had public safety needs, the health and and welfare of the community are involved. Please let us succeed it, and you would go through an application process. That's all built around this annual debt statement that you have to file. If for some reason you have an carryover borough council or government, whatever it happens to be, and they wanna introduce an ordinance on January 7 because they're ready to rock and roll on some projects, it's a carryover group, The debt statement has to be filed by January 7, and then a supplemental debt statement would be filed with that ordinance. So when I say it's not due to the January, that's not always the case. I think Todd was telling me an example where two of his clients wanted to do ordinances well before January 31, and he had to go in and file those ADSs. Well, the client had to go he assisted them getting that done. So in that case, very important, 01/31. So, hopefully, everyone has that taken care of. Now normally, would ask Evan to jump out to the FAES system, but we'll wait Okay. On on that. If if we have any questions online, we'll we'll try to address that later. I know sometimes I end up getting caught and not having enough time, but we'll we'll look into that if you need to. The next major document is the annual financial statement. This gives us a picture in time at the end of our fiscal year. For most of you sitting in the room, probably January oh, sorry. December 31. I don't think we have any June 30. Right? Yep. And I think we were down to maybe six in the state that, might still be fiscal years. This is one of the documents that previously would have to have been filed by February 10. And then for the last, I don't know, ten years probably since the pandemic or maybe even before that, the local finance board would go through. They would issue us a local finance notice and say, hey. You know what? We're gonna give you a little bit more time, and they would move it to the March. And, you know, hey. You know what? We we recognize that people can't get these, things done on a timely basis. As part of the legislation, the governor passed, it extended the deadline for filing the annual financial statement permanently to March 10. Okay? Now this is also an Excel document that has a number of tabs. And, Evan, if you are able to, bring one of those up, I don't think I have any for you to show as filed. As filed? Yeah. But if you jumped out to mine and this is a little bit of a little jump back and forth. But in this case also, previously, the county, if you had a county, would also be on on February 10. That too was moved to to March 10. Where do they wanna see specifically? You wanna go to the last year one or what? Yeah. We'll just bring up one of the go to Allentown for my Allentown guests won't be here until the the March 11 meeting. So we'll sort of just mention them. So we can do the '24. Okay. So that is the document there. I can't see that. I had to open it. Oh, that's why it's your document, but I yeah. It's okay. That's fine. Yeah. Because the '25 is not in. Yeah. Right. So just open that up for a second just so we can see. Just wanna show you that it's the Excel document. It has a number of tabs that we go through. There we go. And did you find the just through sheet 21. Sheet 21. So sheet 21 is probably the most important page of the financial statement because this tells you what your surplus balance is. And if you take a step back and ask yourself, why are we here? We're here to talk about the budget process. The budget really cannot get moving until we actually have a good feel for what the sheet represents Because our fund balance is one of the major revenues that we have in many of our towns that helps balance the budget, keeps the tax levy stable. So when we go through this process of, the CFO, the finance team, the treasury department that you may have, working with their external, consultants such as ourselves at PKF, we're gonna try and get you this information so you know at the end of the year how much surplus you have available to use in this budget that we're dealing with. That's why this document is very important. The document needs to be done by March 10 because it has to be available before you introduce your budget. And, of course, when I say it has to be available, it should be available because I've had clients in the past that have introduced their budget and haven't had the financial statement officially completed yet because they were still working on it, waiting for some documents and information. But they had a good feel for what their fund balance number was. They took a chance, went ahead, and introduced the budget. So that's why March 10 is very important relative to that. Now if, Evan, you can jump back, hopefully To the slides. To the slides. Sure. Hopefully, we can do that. This is where we're trying to practice to see if I can actually advance the slide. Yes. We can. Okay. I had it ready. So now the next most important document that we're here to talk about is the annual budget, and it's relative to the calendar for the budget. In the past, you had to introduce introduce the budget by February 10 because that was the deadline for filing the annual financial statement. K? We had some legislation that changed. And if you've been around for a while, you always remember the local finance board sends out a notice. Okay. We're gonna give you to the March to introduce or the next available meeting in April. Okay? They sent the local finance notice out and gave us these dates that were extended, and then they passed the legislation that made it a permanent change. Okay? So when we go through here, our introduction, they originally notified us in LFN twenty twenty five dash eighteen. LFN stands for local finance notice. Okay? And that's our, I guess, our communication stream from our oversight agency, which is Department of Community Affairs, the Division of Local Government Services. And the local finance board approved this, the LFN, to go out, and then, of course, the legislation was passed. So now I've got my financial statement, March 10. Right? I have it in my hand. Jim, I hope it'll be March 10, but, you know, give me a day or two, and we'll we'll we'll we'll hopefully work everything out. Colleen, so I have a client who had a flood at their municipal building, and we tried to ask the division of local government services for an extension. And the response, as, heartwelming and as, as much as they were concerned for the wealthy welfare and the well-being of the employees said no. It's a statutory deadline. But I'm hoping that us having it on the record, and probably we should be sending the video of of the flood and the fact that all the desks are moved and everything's out, the the file cabinets are all messed up, that there won't be a fine. Because, obviously, we're not gonna make the March 10 deadline. The municipal building itself is really you know? So we say it's a hazard, but we won't go into it saying it's a hazard. But no running water. There's no restrooms. The public can't come in, but yet employees are expected to to try to be there. So they're not going to be working with us as a priority. Their priority is to get the operations flowing again, literally. And from that standpoint flush flush, but okay. I should hit the mute button on that one, but, anyway, that's okay. So from that standpoint, there is no extension that they will grant even in such an extraordinary situation as this. So it is very important to, one, if you feel that there's an issue, especially one that's of significance, let the division be notified, and at least we can go back later and say, look. We had a problem. Help us out. Don't find us. Look. We were we were doing our best. But absent that, it does have to be ready so that we can introduce the budget by March 31 or the first regularly scheduled meeting in April. So I think you've kind of been on that, you know, train of thought. It's it's not that big of a deal. Had a client call me today. They have a meeting March 16. I said, well, yeah, it's probably a little too quick to turn it around from the financial statement and actually have a good feel for what the numbers are gonna look like. So their next meeting is April 20. There's no problem with that because it's their next regularly scheduled meeting. And I said, well, look. If you feel uncomfortable, you know, you'll still be adopting in May. It's not a problem. It's not gonna impact tax bills. We can always have a special meeting, and and that will be something that they would look into if they needed to. So remember, March 31. By March 31 so, hopefully, you have on your calendars your meeting dates, and you're ready to rock and roll. So from that standpoint, we've got introduction and approval. Now once the document is ready and the document how many of you have utilities? Just raise your hand. You got utilities. So if you I work on several. Evan, the comedian here has several guests. So in that case, you'll see a document that has so many tabs, and that information is very important no matter what. Current fund budget, a a water utility, a sewer utility, a parking garage, whatever it happens to be golf course, you have to make sure that it's balanced. We operate in New Jersey with a balanced budget requirement. So that is why we have to focus and make sure that we don't go the way of other entities above us. The federal government, for instance, does not operate on a balanced budget. They have the ability to do that. We in New Jersey do not. And it's very important. It starts at the local level that you focus and you say to yourselves, what do we really wanna spend our money on? That's critical. That's the document that you're putting together. That's the document that's gonna be uploaded and certified in the FAST system. And now we move into the whole public advertisement aspect of it. How many clerks do I have in the room? Okay. So this is the beauty of efficiency and transparency in New Jersey. I'm a strong believer of newspapers, probably one of the few that still has a subscription down here where we are. It's the Philadelphia Inquirer, and they they gave me a heart attack when they gave me my renewal price. It was almost $500. The South Jersey Times, a little bit less. And let's see. I also for those of you in the Camden County area, there's a weekly called the retrospect, and they live. A lot of their livelihood came from public notices. And the gentleman who runs that newspaper, I'll just say Brent because I don't wanna give away his last name, but he was a key person in trying to fight the legislation. The move was to make things easier for folks to see. You can make an argument. Somebody older like me who's reading a newspaper is, you know, you know, a couple steps away from moving to South Carolina or Florida, and it's now just the young generation. And look. The next thing you'll be doing is public advertising on TikTok and Instagram and Snapchat because that'll be the way of the future. Right? So we're going to I'm surprised you're that many. Yeah. Cheers. Oh, okay. It's Facebook for people like me. It's Facebook. Okay. We're the older older crowd here. Or I didn't even have a Myspace account, I guess. Yeah. I I kinda missed out on on that. So for those of you who are in my bracket of time frame, yeah, Myspace was what it was back then. But here, the seriousness of this is the public advertisement, and things have shifted. So we're now March 1. Now normally, we have our little celebration of this public event that we do with you in the January, the February, kinda looked at, you know, how we were doing our transition. And we went through and we said, okay. I picked a couple of dates. The first date I picked was February 23. We had a blizzard, people. Okay? For for those of you who recall, my ability to pick a date for our seminar has always been tied to a natural disaster. Okay? We've always had snowstorms. I saw the forecast. They were saying, oh, we're gonna have snow again this morning, and I'm like, here we go. But but luckily, we survived. And now our next choice is March 11. I think we're gonna be in the sixties. Right? Same. So I'm betting it'll be the first time a hurricane comes up the East Coast with my luck. But anyway, from that standpoint, the the advertisement is now going to be mostly, I'm assuming, all of you have selected to do the website approach, which is, okay, understandable because you know you're gonna be at a meeting and the concerned citizen is like, the agenda wasn't posted out there and I came to this meeting. Why wasn't the agenda posted? They're going to say that to you. Ask the same person that we're trying to defend saying they're gonna be looking at the newspaper. Well, if you knew the agenda wasn't posted, then you know you're gonna be able to see the public notices out here. There's pros and cons. I I I support, you know, my newspapers. I I would prefer that the public notice be in the newspaper, but I recognize that technology pretty much has made that kind of a bygone error just like RadioShack. So from that standpoint, yes, I went to RadioShack in my youth. I shopped at Sears. You know? Anybody remember Sears Roebuck? Yeah. Okay. So so from that standpoint yeah. I'm old. I went to Kmart, and I love the blue light special. So from from our attempt to make sure that the public sees this information, our clerks are now responsible until the December to have a little notice in the public notice section twice a month, I think it is. Correct? Yeah. Twice a month that says, see the website for the public notices. So it's it's a way to gear it up and provide at least some transition of revenue for for some of the smaller newspapers that are out there. Now absent all of that, we get into then, okay, how are we gonna certify when we have a bond ordinance? Did we actually have a public advertisement out there? So there's a series of questions that the associations are working on. They've gone through and say, oh, grab a screenshot, maybe put a stamp on. You know? There's those things are to be worked out. But for us from a budget perspective, my personal recommendation would be once we get the PDF back from FAST. And we we do an introduction, we upload it, the CFO starts the signing ceremony, and then once the signing ceremony is done, a PDF is generated. Not exactly the most friendly looking document. So some of us like to provide our own PDF. So it's an option that, talk to your PKF representative about. But from that standpoint, as soon as that comes back, I would upload it. I wouldn't wait until ten days before the public hearing. Okay? Because you literally can wait. The advertisement has to be posted for those ten days before the advertisement. Now here's the kicker. The law did not change the twenty eight day period between introduction and adoption, okay, or public hearing, I should say, which normally would then have an adoption after that. And if you joined me last year or the year before, I always kind of was saying, well, why was there twenty eight days? And no one really gave me an official answer. And I just you know, I'm sitting back, got nothing better to do. I love accounting so much. I realized that the Pony Express took that long to deliver the news back in the nineteen twenties and thirties. You needed that much time for the news to get out to the people that are on the farms. They're not in town. There had to be a stretch of period. So therefore, the mail didn't deliver. You know, you get mail like this instantaneously. You get an email. You get the websites. That didn't exist. So you look at that and you realize that that's probably why we had a four week period. And now now that we have instantaneous information, maybe the introduction is going to be one week, and maybe the the public hearing is the next week. Maybe that's the next step that we have to go through if there's this concern that it's taking too long to get a budget adoption. Maybe we get that rolling with some of our legislation. Not that I'm a proponent of that, but I'm just saying no longer waiting for the Pony Express. We have the Internet. It's out there. The information is there. Let's get our meeting done. Now you can hold the public hearing. And I tell you, if you set the date, you hold the public hearing. So even if the hurricane, whatever is happening, have the public hearing. So if you have the ability to go to a web meeting, in any event, you wanna try to do that because if you don't have the public hearing, then you're gonna start this process all over again, and that means you're waiting another twenty eight days. So if we're waiting to have our public hearing in May and we we miss that opportunity, maybe we don't have enough members of the governing body there, make sure you're finger counting, make sure that everyone's there to make sure you're gonna have a quorum and ability to vote. Everyone's gonna be voting in favor of it because we do have to have a majority of the full membership. So that's very important. So a majority of who's at the meeting, it's a majority of the full membership. So you have to remember that. Make sure you do your live count and make sure you have bodies there. Otherwise, we're starting all over again. And we don't wanna start all over again as a a member of the what am I? GenX? Gen X, are we? I don't know. I have almost track of what that is. But, x, we gotta make sure that we get that taken care of. K. So that's our public advertisement. Whoo. Okay. Now the the clerks in the room will probably find this hilarious. Most the rest of you won't care, but the font size. Okay? Don't mess with the font size. What we used to have, what you used to put in the newspaper, don't change that. It has to be as it's described in the statue. They weren't giving you carte blanche to use a little script or whatever it is, and I don't know if they nailed it down to actually saying aerial, but it's definitely a a it's at the bottom of the size. Yeah. Yeah. I can't remember if it's 10 or 12, but but whatever it is. So please follow the rules on that and and make sure you get that posted. So this will actually help out because occasionally, maybe a clerk will forget to send the advertisement to the newspaper. Woah. Okay. And so what you do in that case, you do your best, make sure it's out on the website. Now you got no problem. You don't have to worry about it going to the newspaper as long as it's out there on the website. So then the next question is, how do I prove it was out there for at least ten days? K? So that means screenshots or whatever you have to do. Did they tell you how you should do that? Yeah. My my guess is to protect yourself, just do a screenshot or have your web designer or whoever's posting it for you. If it happens to be another a third party, just make sure you get a screenshot so that you know that it was out there. Just just back yourselves up to support yourselves. So here we sat for twenty eight days in between introduction, and now it's time to hold a public hearing. Whoo. Okay. So if we introduced on March 31 and every year I say this to Evan. What's March 31? And I should bring a calendar, I and don't have a calendar, but I guess when I looked at my phone, it's probably on there. It's a Tuesday. Okay. Tuesday. So what is April 30 this year? That is a Thursday. So by Thursday, April 30, we have to make sure that we have at least had our public hearing, fingers crossed, that we're gonna go through the adoption process. So we've seen a lot of this change already with these dates. That's very critical. The document itself, okay, has changed slightly, but, not significantly, but we will go over that. We've had the public hearing. The public came out. They applauded you for your great efforts in keeping the tax levy stable, and they support you a 100%. They thank you for the great job that you're doing. It's all the auditor's fault. Yeah. But I'm sitting there in the front row, I'm sitting next to the police chief, and the police chief's budget got cut. Yeah. It's my car that's being ticketed on the way out. So this is all humor. Remember that? At least they got a couple of laughs. Thank you. The sympathy laughs. I certainly do appreciate that. But I have seen occasionally very confrontational public hearings. I don't think yeah. There's no one here from the one town that I was in. I was actually I wanna say I was physically threatened, but I was helping out. The CFO didn't wanna be the one doing the presentation. And I don't remember anything dramatic about the the budget itself, but I'm up there. And, boy, it's you know, if they they record them on YouTube videos, I'm not giving any names or anything. So we're up there. I'm I'm talking away. And, of course, then, you know, it's my fault. It's my budget. It's my you know, it's my tax increase. So let's make it clear. This is not my budget. Okay? This is the budget of the town. This is the budget of the governing body. It's it's for you. It's not Mike's budget. It's not Evan's budget until you say afterwards. Yeah. It was his fault. But, no. From that standpoint, I did have a citizen come up and was very confrontational about it. And thankfully, at least, there were police at the meeting, and they interceded, and I was able to to leave. And no no there was no escalation of it. But that kinda represents where we are today, and we we see it. I'm I'm proud to to represent any government in in New Jersey because I believe it's important to that we're serving the citizens, and that's who really were here to help. And we get all the drama comes into it. We remember that this budget is the most important thing for us to focus on because anything as a governing man member body, a governing body member that you want to do, any project, any I have a goal. I wanna do this. I wanna increase, senior citizen transportation. I wanna do more for recreation. It all comes down to what can flow through the budget. So you may not be on finance. Okay? Well, that's fine, but you need to know how the budget operates, and you need to have a, at least an understanding of why I can or cannot do this, and that's important. So coming here, coming to these meetings, coming to the divisions training sessions, the leads training sessions, very important, especially for new people who ran on a platform to say, I want change. I don't want this. I want that. Well, this is the reason why maybe you couldn't have that. And now maybe they'll have a better appreciation for it, and they're willing to to listen or to work together, to solve all of our community's problems. So when we were at the public hearing, I'm sure there was a clerk or two who felt that they wanted to read the budget in in total. Yes. As a used smirk, I'm not gonna read it. So if we don't advertise it correctly, you're required to sit there and read the budget in totality. And in my almost 37, I have not had to have that situation where they had to read everything, thankfully. That was one that was very close, but we we we took care of that, and we made that, situation go away. So if we if we meet our public advertisement requirement, and we used to have to send it out to the library and we had to get oh, yeah. Well, that's all. It's all on the website now. Remember that. So that gives us the opportunity. That's why I was saying take the screenshot because at the public hearing, you don't wanna have to read everything. Boom. Boom. Boom. Boom. Boom. Okay? So I think that moves us to the next slide where it's talking about maybe, reading it by title only. And then we have the director with the the approval of the local finance board may extend the calendar. So once again, that's referencing back to the twenty five eighteen LFN, which is a moot point because the legislation changed it. So you don't have to worry about that. You may have read local finance, twenty five eighteen. Don't worry about that. Resolutions to introduce and adopt, we've covered this, the majority, the full membership. So please, I I know the spring break and the the the Easter holidays, the Jewish holidays, they all intermix in the March, April time frame. So you have to pay attention to what the calendar is to make sure that you have governing body members available and that they're, hopefully, you have a situation. I think we had at least one town that had one of our committee members call in. They were in, I think, Arizona for a a meeting, and we needed that person to call in for the vote. And the attorney said that was okay, so they were able to do that. Okay? So the final item on there, I probably should have asked, do we have any brand new governing body members? Be brave. Oh, congratulations. Condolences, obviously, but no. Congratulations. One of the first things that yeah. That's my terrible sense of humor, but, you know, you'll get used to it when you keep coming back. March 11. Perfect. Set up again next week. I already got a commercial. Yeah. Hey. He's coming back March 11. It's because he liked the refreshments. But, anyway so from that standpoint, the first thing one of the first things that you probably did at the reorganization meeting was voting on a temporary budget. And for most of you sitting in the room who have experience, you realize that that used to be this 26.25% of our prior budget. The legislation changed that percentage, and it increased it to 35% of the prior year budget. You may not have actually had that. The CFO may have prepared it, didn't even realize it, and just shot through a 26.25% budget. Not a big deal. But the reason is, well, I've officially moved the calendar. So, therefore, I need a little bit more room to spend money. So that's why it's now 35%, assuming you did that. You don't have to hopefully go through and do an emergency appropriation or temporary appropriation resolutions, which I'm sure all of you are doing. Obviously, you could not see my eyes rolling for those of you online, and maybe the people in the back couldn't see that either. But, yeah, my eyes were rolling. You know, in the past, that was very significant because you would have to file paper copies paper copies paper copies with the division. Okay? Anyone remember? Used to send up budget copies, all kinds of things. If you dare send them anything, they're gonna put your name on a list and come after you because they don't want anything mailed to them. Everything needs to go through the FAST system. Okay? They don't want paper. Tina has now retired. I hope many of you may know Tina. She was a budget examiner. She did a wonderful job. But like me, she loved paper. Okay? So she's now retired. They have everything. Fast has improved, and now we want everything. Tina did a wonderful job. So when you listen to this online again, she was wonderful, and she was always willing to work with our clients and with all of the New Jersey municipalities, and we thank her for her service. Unfortunately, she will be missed. Definitely be missed. Okay. Now Mike's talked for so long. Let's get into the meat of the budget itself. So I had to professionalize the slides. I I had to take out my ball cap that I used to have because, you know, my cap, you know, baseball cap. It never worked. So the crowd here out. We could be to a Yankees and a Mets fans online here. We are die hard Phillies fans down here in in in person. And if anyone else isn't, it's e x I t. So two caps. Alright? This is where you just take a deep breath, and we kinda refresh ourselves as to what these are all about. And the first one is the 1977 cap. Now there are a couple people in the room who weren't born in 1977. Evan's one of them. Yeah. You're lucky. Wait. Did you raise your hand? Come on. He raised a finger. I don't know which one it was. Okay. Well, I'll be honest. I was 10 at the time. But this 1977 law came about during our bicentennial, 1976. So here we are. We were 200 back then. We're now gonna be 250. America. God bless America. Happy birthday, America. And here we are. That was the first time the state of New Jersey said to local government, listen. We're gonna put a break on your spending. You're spending too much. And that was really the onus of what this was back in 1976. It was referred to as the '77 cap because that's when it first took effect. And that limited the growth and the spending that we could have in certain categories. And just to to refresh your memory, back then, there were just a couple of exceptions, and then we started to see in the statue book a b c d e f. Come on. Let's do it. No. I'm just kidding. Whatever the old Look. Your daughter is young enough. She's been doubled. Yes. I don't remember the alphabet. But from that standpoint, we went through a a. We're up to a z, b z. I mean, so it's just the the number of exceptions that grew and grew and grew made it, I don't wanna say meaningless, but there was a realization, like, we've come too far. And this cap, unfortunately, we we've gone through, and it's kinda rolled back. And every year now, we have a limit total of three and a half percent. Yeah. Okay. Yeah. Alright. So that doesn't sound too bad. I mean, gas is only $2.99 now. $3.15. Yeah. Okay. So I wasn't watching the news today. I get to see what happened. But as a shareholder of certain petroleum stocks, I'm just smiling away. For those of you who own cruise ship stocks or airplane stocks, I apologize. They took a nosedive literally. So from that standpoint, it's like, well, what costs impact us at local government levels? And certainly, police vehicles driving around. Gasoline is one of the critical aspects of it. Public works vehicles, diesel fuels, items like that are very important. If you've been a member of a governing body now, probably for at least ten years, the maximum amount was two and a half percent, the COLA cost of living adjustment, COLA. I used to have Pepsi Cola and Coca Cola cans out there, shareholder of both, full disclosure, so I gave them both credit. We had to take them out too, so professionals that we are. That was telling us two and a half percent. Alright? The division in their local finance notice 02/2014 said it's 2%. So you're sitting there as an administrator, a CFO, a member of the governing body, and you realize that you negotiated a police contract or a public safety contract, we'll use that phrase, with a three, three and a half, 4% increase, and you signed that last year or the year before, and all of a sudden, you're now into a 4% increase here. And now you're at 2%. That's the COLA. So how you work your budget now becomes an issue. But every year, regardless of where the division sets the COLA, whether it's 2%, 1%, one and a half percent, you have the opportunity to go to three and a half percent, which is the maximum. Now three and a half percent really sounds good compared to 2%, but it's really hard pressed to sit here and say, how am I gonna squeeze in a 40% increase in health care? Okay? So the division and the local finance board working together recognize that there are certain expenditures such as insurance that will fall outside of this cap. Now I think that sounds familiar. We used to have exception a, exception b, exception c. Remember we went through all that? So as costs over the last number of years, we've seen gasoline, garbage and trash. There were certain exemptions that were permitted, and we shot them over to sheet 20. And you're saying, what is sheet 20? Well, sheet 20 is the tab in the budget document that starts our outside the cap operations. We had, what, 12 through 19, I would suppose. That's our inside the cap appropriations, your attorney, your clerk salaries, your public safety budget, paying the accountants, paying most of your insurances, etcetera. Those operational costs fall all within this, we'll call it, three and a half percent cap. That's what this 1977 cap is. Well, what do I do when I need to spend a little bit more? That's a challenge. It really is a challenge. So take a deep breath and you say, alright. Do I have to do layoffs? Do I have to seriously consider laying off, man, whether it's public safety or or some of your higher priced or higher ended or maybe it's the last person who was hired? Maybe it's the lowest paid person, which will have no impact on what the budget is, but maybe cripple the operations of the inside administration. There are challenges that you have that you have to go through. And, unfortunately, even by going to three and a half percent with the COLA, you may not have enough. So many of you may have introduced the COLA ordinance already. Some of you may wait until it's actually the introduction of the budget. So the introduction of the COLA ordinance needs to be done right before or, you know, a month before the budget is introduced. Okay? So don't introduce the budget and then think you're gonna introduce the COLA ordinance because it doesn't work that way. The COLA has to be introduced first. One of my clients in the back of the room insists on doing the COLA ordinance, I think, on reorganization. They just I've always done that. Hi, Lorraine, if you're out there. Lorraine, god bless her. She's retiring, middle of the year. We loved working with her. But she is somebody who insisted on doing, the COLA ordinance, get it done right away. And that's great. That's fine. It's it's not a problem. But most folks will kinda wait until it's on the agenda right before the introduction of the budget. You can do it either way that you want. Alright? So, hopefully, you went through that process and the COLA is adopted, and maybe you have enough cushion. Maybe there was room to breathe. Okay? Now the last couple of budgets, it's been pretty tight, very tight for for many folks. And if I have the opportunity that I have some excess, I can bank it, and therefore, I can use that in my '27 or my '28 budget. And I use the term bank it. It is not cash. It's not to say it's not real, I don't wanna give that yeah. I don't wanna call it that, but it's not cash. It's not sitting in the bank. It's a paper number that we can use in a future budget, and you should be very grateful if you actually have some of this unused and can carry it forward. Now for our friends who can do that, the options are very, very tough. Okay? You can go and ask the public with a public referendum to exceed the three and a half percent. So you're literally asking taxpayers to approve spending beyond the limit. Well, why do you need that? Well, what's wrong? You can't get this budget done? You have all these people at, city hall that are sitting there. They're doing nothing, and, you know, they're I apologize. I this is not me saying this. There there are individuals out there. They're just at Dunkin' Donuts. Yeah. Why do we have to keep paying for all that? Why do you need more? And there's there's a a realization that sometimes people don't understand the operations of government. And that's where it's incumbent upon all of you to try to educate the individuals that are out there, and that's very difficult. And it causes probably the the biggest contention that occurs between a governing body and the public. So when that does happen and we're gonna sit here and we're gonna go out to the public, maybe it's because, yes, you need a a public works garage. Maybe it was obliterated. Maybe something blew up, and then the insurance doesn't cover the proceeds of that. Or or it's public safety equipment. You've had such growth in the community that you need to expand the the the hook and ladder. You know, now you have warehouses in your community, and now you need larger public safety vehicles to help cover and be able to put out fires if something occurs. Or maybe you're in an industrial community and the refinery has gone through and built, a new con you know, concept of something out there that their own fire safety unit can't cover, but we need the local unit to try and help us in case of an emergency. There are times where people will come out and vote yes and say, look. We need this for the community. We're gonna do what's best for the community, and bam, they're gonna go through and approve that. Unfortunately, if it fails, you don't even get three and a half percent. You're rolling back to the 2% that the division first started with. That's the roll of the dice. So for those of us in Atlantic City down here, we're gonna take a chance and roll the dice. That's why the public referendum should probably be the last choice unless you're dealing with an elected that you know is gonna come out and support it. Because not only then you have the cost of the election itself. It's all gonna be inside the cap. And now if you cut it down and the three and a half percent wasn't enough, just imagine what 2% is gonna be for you. That's that is the major issue that we face. Now recently, there were some exceptions that were kind of invoked by a number of our clients, which it was a good thing. A number of our clients have entered into long term exemptions, these pilots that are out there. Maybe you've got the warehouse. I've got a couple that are right outside my development now. I think one's up and running, and they're building three more. They're all long term exemptions. I'm hoping to see a rebate on my local taxes. I did get laughs for that. Thank you. Thank you. But I believe the governing body when they tell me that I'm gonna get a rebate, from that. But the whole point is it it provides a lower impact ratable because it doesn't bring schoolchildren. And, you know, we love schoolchildren, but, obviously, the impact on a school budget could be massive if if that four warehouse unit turned into 5,000 homes or 5,000 condos and how many children that would bring the impact. So you take the good with the bad. Thankfully, I'm on a route that goes right out to Interstate 295, and the traffic of the warehouse is on my way to 295. So they're not coming by my development, but I pass them in the morning and then come back in the evening. So so far, the traffic impact hasn't been bad. I know that there are other communities that face these issues. But once again, it's a challenge to find the right rateable for our community. We need ratables to help fund our budget operations. That's how New Jersey is structured. So good or bad, we we have all kinds of ratables that are out there. If you feel that you need to have a public referendum immediately or you should have been a month ago or two months ago on the phone with your PKF representative and had that conversation. Right, Colleen? Yes. Okay. No names are being mentioned here to protect the innocent. Okay. Or the guilty in this case. No. Okay. We're not doing a public referendum. No. We're not. No. Be careful back there. I was gonna turn your microphone on specifically so we can hear later what the comments were. But to to avoid to avoid that, we're not going to do that. Alright. So moving into some of the exceptions that survived. Alright. These are exceptions that survived the slash and dash later as we move from the 1977 cap. This is still the cap on appropriations. So the number one exception there is very important to remember is capital expenditures. The investment in the infrastructure of our community is so important. The division recognizes the need for this to be an exception here. We have to be able to invest in road improvements, the vehicles for public safety, etcetera. Open space can kinda fall into this as well if you don't have a separate open space tax. This is something that is extremely important. Capital expenditures, number one item on the limitation, okay, that you get an exception for. The next one, it's twin sister, debt service. Okay? You have to be able to pay for these capital projects. So, therefore, if you're lucky enough to be a community that has put money aside every year and build up these reserves in your capital fund and you have a massive capital improvement fund or reserve for fire, appurtenances, and equipment, whatever it may be, that's great. You've been able to do that. But let's face it, like many households, there's a need to put some things temporarily on a credit card. We have to to pay for these things. And for us, it's not actually a credit card. So let me be careful when I say this. Credit cards are a no no. Just reemphasizing a few audit points here as we go through our budget process. Okay. Man, we're gonna invite this crowd back on March 3. I don't know. I don't think they're coming back. Group did. I know. They thought I retired. Isn't that the case? I'm sure you thought I yeah. Okay. Yeah. Sure. Yes. I'm sure you thought at my age, I'm low. I just saw teachers retiring after thirty years of service, man. I've done well beyond that, so I think it's time. Right? Okay. Yeah. Joe tells me it's time for me to go. Okay. So debt service, very important. Our rating agencies, Moody's, Standards and Poor, whoever you may have, Fitch, they come in and they look to make sure that they're gonna give you a rating. They wanna know we have the ability to raise taxes for our capital expenditures and our debt service. Mike, you just said this is final appropriations on the 1977 cap. These two exceptions will be part of our tax levy cap. Remember, we were talking there are two caps, spending cap and then raising the tax cap. Okay? So those two very important to remember. Debt service. We need to be able to fund these capital projects. You can't do everything in one year. Capital items are items of a useful life beyond five years or more. So open space is a great example of this. It doesn't really have a useful life. It just goes in perpetuity. Now on the books and the statue, and I'm sure there's somebody online who's gonna correct me, I think it's up to forty years. Okay? So if I'm borrowing money for an open space project, I could sorta go that long. I certainly wouldn't recommend that. Your financial advisers aren't gonna recommend that, but maybe you spread that over ten, fifteen years because you want future individuals who are moving in to your community to pay for those costs because they're going to enjoy the benefit of that. That's why capital expenditures and debt service work together. You're buying an asset today, and Mike moved out to South Carolina. He is gone. But you know what? The person who bought his home is now going to be enjoying that open space. He's gonna they're gonna be enjoying the recreational items. So you know what? They should be paying for that in their tax bill when Mike's sunning himself in South Carolina. All of that is fiction. I'm not going to South Carolina. And I'm not a beach person, but, you know, maybe I'll go up north. Find me a tax free state up north, please, somewhere. Okay? I'm not Florida. It's too hot, too humid. India. India. So we we have one of our our comedians, I'll use that term very loosely, refer to the fact that we have a we have, PKF, I'm glad to say this, has a wonderful presence in India. I have not traveled there. They have joked that, okay, I should be flying out there. Relocated. Relocated out there. I will say I have traveled a lot. I've been to all 50 states. I've only been to three continents. Unfortunately, the a continents, have not been to, so that falls under Asia, I believe. Yeah. Asia. I have not flown out there. Too far for me. Australia is too far. Antarctica, I would never survive the boat ride. No. No. No. No. And Africa is probably the the closest I came to Africa was probably trying to do a trip to Egypt because I did wanna try to see, the Sphinx and all that before it kinda disrupted. But, unfortunately, world events kind of, prevented that that travel. So as a person who's well traveled, I don't know if I'll I'll ever get there, but I have plenty of neighbors who who travel there all the time, and and their families are from there. And it's it's a beautiful area. Not not my cup of tea. I think it is on the warmer side. I could be wrong. I don't know if they actually had too much of a winter that I would probably feel comfortable with, even Australia. Australia is the exact opposite of us. So when you if anyone's an Australian tennis fan, they'll watch it. I'm sitting here in January and February. You're like, who watches tennis? But I like it. You know? I'm a big William sister fan. I always watch them. Serena was the greatest. And you're sitting there, and they're dying. It's a 100 degrees. It's like, why don't they have a dome? And then finally, they've invested in a dome. Even I think even Wimbledon. You're like, who? Why is the guy talking about tennis? Well, anyway, it's like, thought I figured I'd pick a neutral sport. You know? We don't have a, you know, Philly, New York, difference there from that standpoint. So capital expenditures, debt service, very important. Reserve for uncollected taxes. Always going to be an item that is considered outside the cap. This is our insurance policy. How many of you have a 100% collections on your taxes? Who collects a 100%? Raise your hand. Taxes. Liar. No. Okay. We did have somebody raise their hand, but they're not from Tavistock. Tavistock has a very there was an article in innj.com. It talked about the the amount of taxes. I don't know if anyone had seen that article. Unfortunately, Tatasdoc was, like, the highest. Yeah. Well, they have such a small representation of homes, but they have, cost. And it's not there's I think the tax, the largest taxpayer they have is the golf course. But, from that standpoint, you have a handful of towns that have a 100% collection, and that's great. The majority of the rest of us live in the real world and recognize the fact that the collection rate might be 95, 96, 97, 98. Maybe we're getting close to 99. But because of that, we have to have this reserve for uncollected taxes because even though you've only collected 95 or 96%, you're paying the school and the county 100%. Now the first person you have to pay if you have cash flow issues is the county because they can tax you well, fine you, I guess, is a better word, if you're late. The school, they have no power to challenge you. Obviously, for cash flow purposes for them. You wanna be as respectful as possible, try to stay on your payment schedule. You don't wanna have a payable at the end. But, ultimately, you're paying over a 100% to them even though you've only collected, let's say, 95%. So where do you get the extra cash to help pay that? And this is an appropriation that we raise in the budget. It's actual money that's gonna come in to help give us the float to pay that. So I call it the insurance policy to reserve for uncollected taxes. Federal and state grants, I was just having a conversation, before our our session today. Oh, our grants are way down this year. That that happens. There's ebbs and flows. And generally speaking, the revenue side of our federal and state grant is gonna be our offsetting appropriation side. So they're considered outside the cap for that purpose. The library appropriation up to the minimum. So for all of us sitting in the room who are part of a library, you may have if you're not in the county library system. So if you're not in the county library system, my friends in the back row, both of those towns have contributions that they have to make. So they aren't part of the Gloucester County Gloucester County Library System. They have their own own levy that they have to raise, and there is a minimum amount that is a calculation, and it's based on the value of our town. So when I was at a public hearing last year, I was giving them an explanation because you're sitting there looking at this and you're saying, well, what happened? The town's value, the net valuation taxable didn't increase dramatically. But when you look at the document that is the annual debt statement, there are three numbers that are part of the calculation to tell us if we've met that three and a half percent, if we've exceeded it, and that's the equalized valuation. So when you looked at this client's change from the one year to the new year, it was a massive increase. So that top number, that most current number is the number that's used to calculate the minimum library tax because it was down here and then it went up here. And everyone's saying, well, why did it increase? Because when you look at the equalized valuation, there's a presumption that, well, this is what we're truly worth. It's not what your net valuation taxable is, but that calculation can come back to haunt you. If you are so committed to this library system that you wanna give them more, that amount has to go inside the cap. Okay? And I did have a town in the past that liked to give more, but they themselves then faced a library. They faced the library board. They said to them, look. We're having our own financial problems. We can't give you that excess. So the library board knew about that in advance. They did what they could. They tried to raise their extra money for themselves. It did work out. The library has remained open. It's still very operational and serves the community. So you have to pay attention to what that is. You can talk to your PKF representative because that'll be on the municipal information sheet. That's another Excel document that I would ask Evan to probably bring up, but we won't. Okay. LOSAP. Anybody? Anybody? Bueller? Bueller? Close. Yes. Length of service award program. So this is our program that we help fund to reward volunteers. Okay? So this is something that if you have the volunteer fire group, annually, they're going to turn over a spreadsheet that tells me how many credits this individual has earned. And so, therefore, I'm gonna make a contribution. Is it credential still for the most part? Or Like, Valak. Valak? Okay. So maybe it's different ones. Okay. Lincoln. Lincoln? Okay. That is what we call the low set. Now sometimes you may see no charge against the line item only because the calculation hasn't been done yet, and maybe it'll be charged against the appropriation reserves line. Maybe the chief hasn't sent the information over yet. Maybe you're still vetting it, whatever the case may be, but that falls there. Shared service agreements, very big with the division. Okay? This is hey. Maybe I have a shared CFO. Maybe I have a shared QPA, any number of services. Shared fire services. I have a number of communities that have shared fire services. So those are considered outside the cap as well. The last category are deferred charges, which we call our emergencies and special emergencies. For instance, the client that I have coming in here on the eleventh, they did a revaluation. Okay? They were forced. They are so down here in our area, Gloucester County has a countywide assessment program, and they systematically go through and do a reassessment every couple of years. And they warn those communities when that's going to occur. And that's absorbed at the county level. In theory, there's no direct cost to a local town. When I'm a town that has to do it on their own, it's a significant cost because generally speaking, I'm bringing in experts. They're gonna come in. They're gonna walk around. They're gonna go inside your homes. They're gonna take pictures. They're gonna do this. They're gonna do that. That cost is so significant, it becomes what we call a special emergency, and we have the ability to raise that in the budget over five years. So that is something that is considered outside the cap, but it's a five year item. So if I spend a $100,000, which is pretty low, but I just needed to do the math easy. A 100,000 divided by five, so I'm gonna raise 20,000. Right? Yeah. Okay. I was just checking to see if anyone's gonna Google me to make sure I did the math right. But in that case yes. I did. Okay. Alright. Thank you. So that's what we call our our emergency. So we're gonna move on to the property tax gap. You remember back in 1976 when the state said you were spending too much? No. So we had a a few people who looked like they were born before 1976 say no, but I know I was born for this one. Yes. You were. You were born for this one. You started in 2008, though. Right? Was it '7? Yes. Did. 2007. Good. You did start in 2007. Okay. Yeah. So Evan was born the year I graduated high school. 1985. Okay. We didn't have a broadcast app. So everyone everyone I hope could do the math. So for those of you who are attempting to steal Evan's identity, you now know when he was born. True. Just saying, we we didn't mean to give out that personal identifiable information. As a CPA firm, we would like to redact that. Gonna wanna recall that email, but that's not gonna work. But the state said to everyone once again, look. We recognize that property taxes are out of control. And is that really the case, or was it that our ability to really spread the cost is unfair? We have very wealthy communities who can afford. Are are we doing this properly? And there was such debate going back and forth because I think it was originally 4%, when it came out in 2007, and then we amended it in 2010. And that's where we came down to this 2%. And everyone kept saying, oh, is it a 2% hard cap? Is it just I'm gonna take last year's levy? I'm gonna multiply it by 2%, and this is what it's gonna be. Well, come on. This is New Jersey. We obviously have to have some exceptions. And, class, we know what two of those exceptions are. Right, class? Debt service and capital expenditures. Okay. Yes. Yeah. Alright. They're passing. Mark, this class has all passed. Alright? So we we can we can move on. Normally, would say we can move on to watch the Super Bowl, but with oh, March Madness. Okay. College basketball. Okay. We'll get something around here. No no one wants to watch tennis with me. Nobody's gonna watch the, you know, the Super Bowl. Alright. So, yeah, this year, I don't know. Who was in the Super Bowl? The Seahawks and the Patriots. Oh, yeah. The Eagles weren't in it. So what it meant. Yeah. I wasn't paying attention. Casey, I wouldn't mind watching, but I you know, for some reason, I'm not I'm not a for some reason, I hate to say this. Sorry for all you Nillion Patriot fans, but I'm just not a fan of them. They cheated me out of my Super Bowl in 2005. Yes. They did. Yes. Mhmm. Yeah. God rest her soul. My mother was, she passed away that year, and we were we finally got to the Super Bowl, and they lost it. Well, I still think it was stolen from us, but that's a whole another story. Alright. So we imposed a 2% levy cap, and there are certain modifications. We've talked about two of them, very critical. In this case, this is where you're like, Mike, you're going too fast or, Mike, you're not going fast enough. But here, we have a situation where if it's unused, if we if it's saying we can raise $5,000,000 in taxes and we're only using 4,000,000 in our budget for taxes, we have a million left unused. Okay? That million dollars, not cash that I'm holding, it's a paper number that will be banked and available in a future budget. So as we talked about in the 1977 cap, if we didn't use all of that in the budget, we had this a little bit cushion amount that we could hold and use in two subsequent budgets. The tax levy amount is, if it's unused, can be carried over for three years. I don't know why. Right? You know? They just chose those numbers. They figured they'd make it a little bit more palatable for folks, and they went with, hey. You know what? We're going to do this, and we're gonna raise it over three years. Okay? So some of our modifications, we already talked about this. We we had our exclusions, And, you know, remarkably, I guess we we've always talked about our our friends in, you know, municipal versus county. And one of the things that I think it's important to to recognize even though there's no county folk here, they, a county, when they go through the process of doing their budget, they have to take the cap that's smaller to them. You are unique. You have a appropriation cap. You have a tax levy cap. They have to sit there and structure their budget, do these calculations. And if the levy tax levy cap says, I can only raise $10,000,000 and I do an appropriation cap, which will eventually tell us how much we can raise taxes, their budget's a little different than yours, And that says it's 9,000,000 that I can raise in taxes. They have to use the $19.77 cap to determine their calculation. I'm sure I confused you, but there may be somebody online who has a county. Now they have to do this every year, this calculation. And I just sat here and talked about the fact that the $19.77 cap, you can bank it, and it's two years. Right? You remember that conversation. And we were talking just a minute ago about the levy cap, the tax levy cap, the unused bank we can have and carry it over for three years. Imagine you're accounting. This year, I calculated the $19.77 cap. I have to use that. But last year, I had to use the 2% levy cap, the tax levy cap, so I don't have a bank. Alright? And for a number of years, this was a problem. The the the legislature came through. They changed it, and I think it was, jeez, public law 2024 chapter eight where they gave counties some flexibility. So that happened. And I think Evan had one of his clients was impacted by that. Mine was not. They were fortunate. I think in the last number of, let's say, over ten years now, they only had to use the 2,010 cap once, and it was not an issue for them. So they pretty much have been using the $19.77 cap, which is telling us that that's lower. They always have to use the lower one. They don't have a choice. Now if it works out to be the same number, I guess he and I will just flip a coin and see what the tax levy workbook chooses for us because if it's the same number, it's the same number. So I just wanted to to reemphasize that even though we don't have any county folks, in front of us. But we were talking about the exclusions. We mentioned capital expenditures. We mentioned debt service. Shared services, everyone remembers that. Pension increases. And here's our kicker. Right? Health insurance. How many are in the state health benefit plan? Oh, I'm sorry. Yeah. Very few. So for those of you who are online, of our guests in person, I would say about 1% indicated they're still in the state health benefit plan. And as we know, their increase was 36 to 40%. It was it was pretty extraordinary, this year. So when we go through and do our calculations for the rest of us that are out there, maybe our increase is only 25%. Woo hoo. We're celebrating. 25% is remarkable from that standpoint. But you have relief. You have the ability to move this cost to sheet 20. You still have to pay for it, which means it it you'll have a little bit of a break. I'm sorry to the taxpayer, but it will be one of the items that you can increase the tax levy for. Not the easiest thing to have to stand up and say, okay. Well, because the benefit package is $40,000 that we're paying for this individual, I have to raise my taxes at my house to pay for that. And that's how health insurance is really flowing. If we we I think we lost so many people from the the state health benefit plan that those that couldn't leave are still there, and they couldn't find savings, and they couldn't get coverage perhaps, Or it just worked out that way, the timing. Maybe they were stuck. They couldn't do that. But, ultimately, that cost is being passed on to our local taxpayers. As a governing body member, you're kind of in between here. You wanna make sure that your employees have good benefits. I mean, that's critical. Because generally speaking, government kinda pays less monetarily on a salary basis, but has always been there to help have solid health benefits. And that's kind of the mix that's been out there. Is the world changing as we go through this? Salaries are perhaps catching up with with private industry, But, ultimately, you know, I pay for my health insurance. Evan and his family pay for health insurance, and there was a a call for local government to pay. And they pay a portion, but it's still a significant increase that has to be borne. And you're gonna sit there and say, well, how do I lower that, Mike? Well, you know how you lower it. You reduce the number of people you have on the payroll, and that's the toughest decisions that you have to make. And nobody wants to make those decisions because maybe you're already understaffed. You know? Maybe your fire personnel aren't significant enough or your public safety, you need more police on the streets, whatever it may be. Maybe you have one person in city hall to answer the phone and and take care of the window. Well, you know, ten years ago, fifteen years ago, people weren't on Edmonds paying their taxes. They were all coming to city hall to pay taxes or the mail would be coming through. A lot has changed. Technology has helped with that. Maybe it's gonna be AI that's gonna make things improve. But, ultimately, you still need human bodies taking care of things. So Elon Musk, we'll see. I don't know. So at the end of the day, you do have relief. Now you also have, when it comes to this, waivers being eliminated. And in the past, I could go as a town to the local finance board and say, look. Here's my situation, x y z. Please sign off and let me raise taxes. Yeah. That kinda went with the dodo bird. Anybody know the dodo bird? No? Okay. That was all part of my trip to Australia that got canceled. No. I'm kidding. Just Alright. So from that standpoint thanks, Colleen. She'll ask me now for a discount on the bill because she laughed at one of my jokes. She already talked about it. Yes. Judd, you just take care of that on Evan's team. Okay. Alright. We'll pass that on. Yeah. Evan's gonna take over the account. That's okay. So once again, waivers are are not going to be something that the division is going to sit there and approve for you. They will consider if you have surplus and you need to do something to the budget, you have the ability to go there and get a waiver if you're already funding it with money you have. They're not going to be approving a waiver where you need to raise taxes. They're going to say to you, go to the local referendum. If you recall, we were talking about the local referendum. I needed a new public works building. I wanted the the voters to come out to vote for that. Well, I'm sure if I need the money on that side of the budget to be able to spend it, I'm gonna need to raise taxes. So it can be a combo item out there. So from that standpoint, we need to make sure that you do that. Very very read the the bottom line there. That requires an affirmative vote in excess of 50%. Can be tough to get that. So 42, 47. No. No. You need more than 50% to to pass that. Okay. I know that was a lot to absorb. And now we move on to the easy peasy, the budget message. Okay. Woo hoo. So now you gotta tell them how you calculated the two caps. Alright? So there's tabs in the budget. Three three a The threes. Tax levy cap. You know? So so there are all these little tabs in the budget that will show how the cap was calculated. There is going to be a tab that's gonna show us the summary of appropriations that are spread among more than one line item. And and something like that might be, okay. Well, you know what? Maybe I have a police line item, and I have a grant that's funding some of my salary. So maybe I'm going to display that information. But it's very important that the bottom one there, this health insurance appropriation recap, that is critical because that is asking you to disclose how much your health insurance costs are, how much your employees are contributing, and how it's identified in the budget. And you may have it in the current fund. For those lucky enough to have a utility, you may have money in the utility, but the only thing that I would recommend highly is to make sure that the utility appropriations correspond to the employees that are charged to the utility. You don't want to abuse that privilege because the division, they will sniff some of that out. And if you're under examination, you will be asked to explain. And that's that's a hard one. And I I've been through that, so that's very important to to remember that. Okay? Alright. Now, the explanation of all property tax rate cap waiver requests, that's generally that's in the statute. They didn't take it out, but you're really not gonna be working with that one. So you kinda can, like, triple x, quadruple x that out of there. You don't need that one, but it's still part of the, quote, unquote, mandatory message. Optional. Tab three d this year has now opened itself up, and it's a one massive sheet that you can put all kinds of lovely messages in there. How great you're doing. I cut the tax rate. Whatever you wanna do, the state of the economy. That all fits on there. In the past, last year, three d had part of the tax levy carryover. They kinda moved that over to the sheet right before it. So they have two things on that page now as opposed to a lot of blank space. So now this three d three d dog, it is a a issue, where you can put the state of economy, expected accomplishments, maybe some changes in revenues or appropriations. You have a new warehouse coming in. Maybe there's a pilot agreement. Maybe you wanna blab about that. You can put that in the message. I will say this. Most people kinda just ignore it, leave it blank, and move on. Not that it's a recommendation, but you have the opportunity. If there is something you wanna pat yourself on the back for, please obviously, do that. Okay? And we say that space is limited. General revenues. Very important going back to that philosophy that we have a balanced budget. So if we have appropriations, we know that we have revenues that have to fund that. And our revenues are going to be in New Jersey, amounts that are anticipated based on what we collected the prior year. We cannot anticipate in our budget more than we collected in the prior year. Little asterisk, little red alert there. Yeah. There's always gonna be some kind of exception. Alright? So we we know let's say, hey. I had my reserve sitting on the balance sheet of that financial statement that you filed by when? March 10. Thank you. And you you realized that you had this reserve for the sale of municipal assets. Maybe it's a $100,000. So you bring that in. You're bringing that in as a revenue in my 2026 budget. And okay. Well, you know what? I'm working on a deal. The mayor's on the phone. He's got he's he's he's working it. He's working the sale. He wants something sold, and we got a loose agreement going on that we know we got a $500,000 sale. So what we do there is we take a step back and we say to ourselves, well, we can introduce the budget with a kind of a sales agreement. But eventually, for adoption, we need to make sure that we actually have a check-in hand we actually have the agreement signed. And, hopefully, you don't use all 500,000 because you wanna use some for next year. You don't wanna use it all at once. But if we have something like that that is pending, even though we didn't have it last year, you have the ability to bring it in as a revenue. So keep an eye on that, but never, never use all of it. That's my personal advice. Once again, that's Michael Cessaro's personal professional advice as I give heaven the side eye. No. Just kidding. We occasionally will have a client who does not agree with us. Oh, you didn't yeah. We left it on mute. Okay. Sorry. So in this point, budget revenue is pretty much straightforward. The bottom one there being grants. So it's not too oh, you know what? One thing that chapter one fifty nines, for those of you who have been through this process, we go through, we introduce the budget, we may adopt the budget. We don't necessarily have all our grant information yet. So after May or June when I adopted the budget, the first thing you're gonna see is a resolution for, oh, this grant and that grant and this grant and that grant, And they're called chapter one fifty nine resolutions. Perfectly acceptable. And anytime a client says to me, Mike, well, we have this grant here. Yeah. Well, you're gonna wait until after, the budget's adopted because we don't wanna go through trying to get a budget amendment and jumping through hoops for that, and it causes a change in the budget. And then we have to have another public no. No. No. You wait. You just wait. You just please wait. Now that's only my recommendation. I just have to emphasize that I am not and nor is any PKF member a member of management. We can only advise, and I strongly advise that you not do that and you wait because that's very important. Alright. Types of revenues. We talked about surplus. That's our piggy bank that's been left over. Mean, it helps us balance the budget. One of the critical things that we like to say is use surplus sparingly if you can. Eyes are really rolling here, but the the goal is if you had an influx let's say you had a major revenue come in, maybe kinda target that to a onetime expenditure. Because using surplus to hire 17 new public safety workers is great in year one. Who's gonna pay for them in year two and year three and year four and the salary increases and the benefits? So you have to kind of marry up the surplus use with maybe some onetime expenditures. Not always the case. Maybe look. We've always used 400,000. We've always used 400,000. We've always used 400. We've been able to regenerate it. That's okay. But if all of a sudden you go from 400, '4 100, April oh, it's election year. We're going up to a million dollars of surplus. How am I gonna replenish it the following year? Well, if I get reelected, I don't care. I'm just gonna raise taxes. Too bad. This should be on video because my facial expressions are critical to performance. And I got Rick falling asleep on me. I'm sorry, Rick. Well, I'm I'm working. Rick had a long drive. He said he comes down from Atlantic County area, so we appreciate him coming up here. So in this case, we we have several items of miscellaneous revenues that could be your court fines. You may have a shared service agreement. It could be the construction code office. There are a number of items that fall, within these categories. State aid. Yeah. State aid. So that really hasn't really increased significantly for anyone. We had a couple nice little bump ups. And then, of course, our rating agencies have come back and said, well, maybe the past administration didn't okay. Well, so now we're, you know, pointing fingers and this and that. And, for us, it's let's go steady as we go. Okay? We know the number's gonna be there. Please don't decrease it. I mean, it'd be great if you increase it, but don't decrease it. And that's that's kinda critical because that's a revenue you're counting on. If if if anything, please, at least hold everyone harmless from that. So we have the uniform construction code fees. Occasionally, you'll have the shared services. Maybe I don't want a court in my town, and I'm I'm getting some of the revenue. I share it with another community and delinquent taxes. Remember? We didn't collect a 100%. So if we were 95, 96, 97% collection, they have to pay me the following year. And that's our delinquent tax amount that we're gonna collect and anticipate in the budget. And the final one under revenues there is our amount to be raised. That's really our balancing item. So you throw everything out. That's the critical number. Okay? That's what we have to focus on. Now this information, with all due apologies to our group online, even some of our folks here, we don't have a representation of all of the communities. But the division of local government services on their website has information about this, and I think this is a critical one to go out to that website and show everyone where this information is. And don't worry. I've been told that I only have about fifteen minutes to go, so I will do everything I can Keep it track. Color coded too. It's like a red alert. And we do recycle. They are last year's. That is true. So the website Yep. Go to oops. So what's So here's our website, and what we'll try to do is get this information out to everybody. But we want to go to which one did I use? Municipal? Yeah. Properties. It's the one I just had open. The one you had open? Properties. Yeah. We're doing our best to make sure. Yeah. So go to citizens tax summary. The new percentages? Go to go to actually tax viewer then. Here we are. This is what I wanted. Okay. So any volunteers? Any volunteer? Monroe Township, Gloucester County. The firm represents another of a number of Monroe Townships, not only in New Jersey, but in New York and Connecticut. So in this case, you will see that their share of property taxes is sort of in line with the state. So we have our county share as 18.4. So if I'm living in Monroe Township, when I pay my tax bill, $18 of every 100 is going for the county. 27.8% is going to local government services, Critical that they have public safety. They have a number of needs out there, growing community, so that's why they're at 27.8. They have a very extensive school system, and they're getting almost 54%. And that's sort of just under the statewide average. It's 63% for schools. So there was this article recently issued that kinda pointed out that school taxes were the highest. What? We got a request for Paul's Did I approve that? They're making eyes. I couldn't Little different. Okay. So Paulsboro, they asked to be identified. And the the one thing when you look at this graph, you can see that the municipal share is significant. And all kidding aside, I went to high school there. I I grew up in the the community right next door to it. I love the fact that I'm back serving the the community. Yes. Thank you. And and I replaced a long time individual who retired, from another firm and and did a wonderful job. The 38% public safety is a significant issue in the borough, and that's why there is a cost. The number of officers that are in Paulsboro is significantly high compared to some of their neighbors because of public safety issues. Now the one thing that we were kind of hoping is the Port Of Paulsboro was going to have a number of projects that were going to bring some significant revenues. And, unfortunately, the way the world blew apart, wind energy kinda was disbanded. And at the port, there was a vendor who was building the wind turbines, and it was going to be a significant influx into the community, and that has obviously gone by the wayside. So it's a struggle for this community to help fund 38%. And you sit there and you see, well, they have almost 48%, for the school system, which is less than the 63% for the state. And someone may say, well well, I don't wanna go to Paulsboro. I'm gonna go to to Kingsway or or a Haddonfield, and, you know, school choice is all involved. I am a proud graduate of Paulsboro High School, and I stand by that. And I would encourage anyone to to go to school there even though we did lose to Audubon. Any Audubon folks here? I they lost to Audubon in wrestling. Right? Yeah. Unfortunately. But right school, the red raiders. We appreciate that. But this information will be very helpful. It is the 2025 data from what I remember seeing. Yes. So so it has been updated. And this is where a resident can go to see where is my property tax. They're coming after the public hearing, and they're gonna complain. But look, we only control less than 40% of the budget, but my tax bill will will redirect them either to the school. I certainly can't tell them to go to the county. The county has had a pretty small number. But who's from Burlington County? Oh, woah. They almost blew me over with raising their hands. The county, for the seventh year in a row, Burlington County, has the lowest taxes. So they have the big star. That's how the article kinda started off with Burlington County being the lowest. And then you sit down and you look, well, why? You start asking questions, and it's like, okay. Where's Fred? Fred will answer that. So It's true. Judd Judd in the back works with Fred. Fred is our president our partner who handles, the Burlington County County. They do a great job. For full disclosure, I do Camden County, and Evan does Salem County. We do Gloucester County. Fred does Gloucester Burlington. Carol Cumberland. Cumberland. Any others? From the South Jersey office. Yeah. I was gonna say we have some North Jersey representation as well. So we do a number of the counties, and we like to work with them. So that's very important if you need to get that information out there. And, Evan, if we can flip back our slides. We're not going to go through the exercises. Thankfully, my my should be up and running. Okay. Yes. I am. Okay. So exercise, we're we're gonna they are very self explanatory, so I'm not going to to cause a problem for you. But the only thing, I refresh everyone's memory, the net valuation taxable. Okay? And, Evan, let's make a note to get rid of the decimals next year so it's easier for me to point this out. We wanna cover the last four numbers, 9000. We cover those numbers, and that leaves me what? Anybody? 162040. Right? $162,000 represents 1p. So remember, when you look at your net valuation taxable, the value of what the community is for, cover the last four digits, ignore the pennies. I'm sorry. A note on that. Yes. I have. Okay. And that will tell you what 1p is worth. So I wanna raise taxes by a penny. I gotta cut taxes by a penny. It's a $162,000. Okay? And the whole point of this exercise was to point out that in this case, it's a 129,000 for a penny. But, ultimately, even though the local tax rates are different, they're still paying the same tax based on the valuations. That was the point of that exercise. Appropriations, we had different classes of appropriations. Everyone should remember that operations, police, fire, legal, accounting, clerk's operations, elections, etcetera, etcetera, all follow the operations category. Deferred charges and statutory expenditures, one of my favorites. So we all have to pay Social Security. We all pay PERS, PFRS, the pension plans. They are considered the statutory expenditures. Anyone remember my example of the revaluation? We talked about that being raised over five years. That would be a deferred charge that's sitting there in this category. Okay? Capital improvements, I beat that one to death. You should remember what that is. Yeah. Okay. Didn't really get the transition. Slight transition. Okay. Whoo. Okay. Man, that was scary. I don't what that was. Municipal debt municipal debt service and the reserve for uncollected taxes. Yeah. I don't know what happened there. Okay. We actually have one of our communities had a problem with their collections. They didn't hit the number that they thought they were going to do, so they had the option of looking at the last three years' worth of collections and taking an average. Because if they didn't, the 2026 budget would be pretty tough on them in terms of the calculation that they would have to do. So if you run into that, please talk to your CKF representative. We'll do that. We have a couple of items that are dedications by Ryder. Animal lovers here. Y'all have to be animal lovers. Come on. So, unfortunately, dogs, cats, they move in and out of town. Get it and use the other one. Yeah. Okay. And they're born. Yeah. You have new ones. Yeah. Okay. So we're going to the shelter. We're bringing them in. You just don't know what that revenue is gonna be. That's why it's not in the budget. You can't sit there and say, okay. I collected $7,000 in animal control fees last year. I'm gonna collect $7,000 this year and put that in the budget. Animals come, animals go. So, therefore, it fluctuates. That's why it's considered a rider account. If I had more time, I would tell you it all had to do with the nineteen thirties and chickens because the wild dogs would kill the chickens, and we instituted the dog tax. No one remembers that. Right? Jim? No. Yeah. Jud obviously remembers that. Okay. So we also have NJUCC storm recovery. We had boo boo snow, so you might be using up the storm recovery. Open space also fluctuates. It's considered a dedication by rider. If we have our own separate budget for that, you may have a recreation trust. Deferred school taxes, I don't think we're gonna cover this. It's not as critical as it used to be. Dedicated utility budgets. The only thing that we wanna say about dedicated utility budgets is they have to be balanced as well. So it's very important to remember that if I have a $100,000 in revenues, I'm gonna have a $100,000 in expenditures. They should be self liquidating. Careful back there. Don't be throwing the fruit. Okay. Capital budget. So we we have a situation with our capital budgets that the only thing that I wanna touch base on for those of you who have a water utility, you had to file the WQAA, the water quality annual report. And if you're subject to the budget examiners, they really, really hammer this home. They wanna see the detail that's in the WQAA. That has to be uploaded to the FAST document. They wanna make sure that this is reconciled with the, quote, unquote, capital budget. So I am on sheet 36, I guess, it is in your in your booklet. So well, 36 is the slide number. Man, how is he gonna get this done in three minutes? Watch me. Okay? Alright. So the Excel version of the capital of the WQAA should be uploaded. Budget amendments. You can't do a budget amendment until after you've had the public hearing. So that's critical. It's a common issue that we have out there. And the critical one here is, look, you have an appropriation that's greater than 1%. It had to be advertised in a public hearing. You may increase taxes by greater than 5%. You're not doing that because you got a 2% tax levy. Changing any appropriation by plus or minus 10%. So this is the story that I always say that I'm dealing with a line item that has a $100. And now all of a sudden, somebody comes in and they said, oh, we need 15 more dollars. Do the math. That's 15%. So for that 15%, we're gonna go through and we're gonna change the budget, and we have to go through the process of having a separate public hearing for that. So now this is where I would have to go and mute the audience and say to those here, you obviously would just find another spot for that and do a transfer later on. That is Mike's opinion and Mike's opinion alone. Okay. Alright. So budget advertisement's not going to be as critical because you're gonna throw them up on the website, literally. Alright? Not too bad. Okay. Local budget examination. So here, this year, I think we are a group of one? Man. I don't know if I had that written down here. Oh, boy. Oh, yes. Group one. So the state of New Jersey divided everybody into three groups, one, two, and three. Remarkably, one, two, and three. If you're group one, automatically being examined by the state of New Jersey. But there are a number of hurdles. Let's say you overspent the budget. Let's say what else did we do? Okay. Well, anyway, we might be group two or we might be group three, but you better believe the state's examining us. Okay? There are certain things that you have to fill out in the financial statement document to say, look. Maybe my collection rate fell below a certain collection number, and I think it's 90? Yes. 90. Yeah. It's on here. We had that once. That did happen to us once we had a collection. Is that yeah. So the tax collection rate has to be at least 90. So if my collection rate was 89.8, the state's gonna examine us because what's going on? Why aren't you collecting it? So there's a number of things that we can show. We will definitely have the slides out there for everyone. I think the the key aspect we knew we weren't gonna get through all of the slides, but we've covered most of the changes that you're gonna face. The critical issue is obviously gonna be health insurance, trying to make sure that you have that to be able to fit into the budget. Starting the process early. I know we had one gentleman who is new to a governing body, so may not have been part of early conversations that started starting in September, starting in October, collecting these informations. We we've had conversations with my my friends in the back there, you know, perhaps spending freezes, stop spending. That was our conversation probably in July, and it may not it may not have helped enough. But the the reality is there are some towns that are worse off than some of you. So there you know, sympathy, it's not because anyone did anything wrong. There are structural imbalances that need to be addressed. And, unfortunately, the state of New Jersey, because of their structural imbalances, isn't really able to always help, our local communities. So having said all that, and we're gonna just like, if I flip through these slides, the the the important thing is knowing the process. So thank you for coming out. That's the first step really is to try to learn how this does affect everyone in your community. I've done this for thirty seven years. Probably shows that I've done this for thirty seven years, and it's time for me to stop. Well, that's probably true too. I've been sitting here waiting. Is it my turn? Oh, it's 08:15. Oh, is it? No. Okay. So we'll let him speak next you you know what? He's gonna speak on March 11. Thanks. Oh, wait a minute. He's not going to March 11. Mike made the day without checking with me first. Yeah. Uh-huh. Well, you know what? Bring your client. Bring your client to the meeting. Anyway, very critical. Start the process early. Don't wait till January, please. And, obviously, you wanna take the capital budget seriously. And, yes, involve the public. I know that's but you're here to serve them. We're here to help you serve them, and you wanna make sure that, look, if they want programs and they're willing to pay for it, let them do it. So that's important. So thank you. These are the local finance notices. For those of you that have a booklet, you can go through them. The critical one really was group one, the amount for the health insurance, which is very, very, very important, and public notices. So that were some of the they were some of the key critical changes. And for us, the extension of the filing deadline. So we appreciate that. With that, drive carefully. Come back on March 11 because the show won't be the same. Thank you. Thanks, John. And thank you for those attending online. I'm going to mute now and let the let our individuals take over. Thank you. I had Evan remind me that I was on mute. Thank you so much, Evan and Sandy. A reminder to our speakers, thank you everyone to for attending, and thank you to our speakers. Excuse me. If we if you've not completed it already online, we have launched our survey located in the survey tab of your panel. A copy of the PowerPoint slides and recording of today's webinar will be made available to attendees via email four business days post event. Thank you all, and have a great rest of the evening.