Berkeley Heights Budget Part 2
On to part 2 of my multi-part series on taxes and Berkeley Heights. I would like to discuss tightening of our budget. I believe it to be very important to run a tight budget. Doing so provides more control to the Council and can cut back on spending.
There are 2 ways to add fluff to the municipal budget. 1) Overstating appropriations and 2) understating revenues.
Having fluff in a budget leads to unnecessary spending. Governments tend to spend what has been budgeted as there is little incentive for them not to spend the entire amount that has been collected. Fluffing the budget can be used to ratchet the budget up, by showing need from previous budget plus a new need. Zero based budgeting should be used but in practice it is not. It is more often the case where the previous year is looked at and used as an estimate for the next year’s budget.
I have been through the Berkeley Heights 2016 budget and I believe that both of overstating the budget and understating the revenues have been done. It appears that our budget appropriations have been overstated by about $660,000 and our revenues have been understated by about $220,000. This totals just short of $900,000 or about 5% of the total tax levy.
The new budget process which was put into place in 2015 takes a few shortcuts. The town has reduced the transparency of the budget process and has removed steps that allow line by line analysis of the budget be done in a public meeting. Currently the departments meet with the CFO, and the CFO makes budget recommendations to the Council. The CFO’s recommendations are not made public. The CFO presents the budget to the council and the council decides to pass it or not. Since we do not know the CFO’s recommendations of the budget, there is no way of knowing what level of scrutiny has been done by the council on a line by line basis or is it really just the CFO creating the budget and getting it rubber stamped by the Council. Did the Council notice the $660,000 overstatement of budget or $220,000 understatement of revenues? Perhaps. However it is unlikely since they did not go over the budget line by line in any budget meeting.
This is not how it used to be done nor how it should be done. I would propose that we follow this procedure :
Departments present their suggestions to the council on what they “need”:
CFO presents to the council what he feels the Department should get.
Public Council Discussion takes place. Council agrees on final amount.
This would allow full transparency of the process and allow much greater scrutiny of the budget on a line by line basis. Tightening the budget will force departments to spend less.