Borough, Township debate consolidation cost in emails

Borough resident Alexi Assmus of the anti-consolidation group Preserve Our Historic Borough predicts much higher transition costs, while the New Jersey Department of Community Affairs predicts significantly lower costs.

Quick Turnaround

Emails acquired under the Open Public Records Act indicate that commission members requested transition estimates from department heads with only a day’s notice.

On May 24 Anton Lahnston, chair of the consolidation commission, sent Bob McQueen, chief information officer of the Township’s Department of Information Technology, an email asking for an estimate of the technology costs associated with the transition and requesting it by the next morning.

The commission had just learned of the June 1 deadline for filing its application for state transition aid and was moving quickly to assemble the data in time.

“Toward the end of the effort, we realized that we had a new deadline to respond to. And the effort to bring around a quick turnaround resulted in some requests for really fast estimates,” Lahnston said.

The next morning McQueen sent back an estimate placing the total for technology costs over $2 million. It included over $300,000 in software license fees and many police technology items.

In an email from 10:34 a.m. on May 25, Township Mayor Chad Goerner wrote to McQueen, “I heard from Anton that you came up with a 2.5M estimate?!?!?!?!!?!?!?” At 10:57 Goerner sent another email explaining detailed steps he proposed to cut the technology estimate down to $255,000.

His list proposed $50,000 in moving costs for the technology, $80,000 to reconcile the computer systems and $125,000 to reconcile the phone systems.

“The numbers seemed high to me based on the numbers that I had seen” from individual departments predicting their IT costs, Goerner explained in a recent interview. “We found out there was actually some double-counting.” Most of the software licensing and police technology costs were already accounted for in the municipalities’ operating budgets.

After speaking to Lahnston and Goerner over the phone later that day, McQueen agreed with all of the proposed cuts, as he wrote in an email later that morning and as he confirmed in a recent interview. In addition, they agreed to lower the phone reconciliation cost to $75,000.

“Obviously there’s a lot of things that play into it that I didn’t have answers for, so I couldn’t come up with an actual cost without spending more time and knowing some unknowns,” McQueen explained. “It’s very difficult to try to get numbers a year and a half ahead of time. Obviously, the quotes are going to change, numbers are going to change.”

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Most of the software license costs and police technology items McQueen included in his estimate are already accounted for in the two municipal operating budgets.

“This is not his fault at all, but it’s part of the kind of process that you go through,” Lahnston said, adding that he asked McQueen to cover all possible costs.

In the May 25 email, McQueen wrote that “further review of the technology and phone system will need to take place to ensure accurate numbers are achieved.” Both McQueen and Lahnston stated that this refers to a detailed review that would take place after the consolidation referendum were passed.

“It’s not a bid. It’s an estimate based on the best information available to him that he could provide at the time,” Lahnston said. “If consolidation passes, then we’re going to have to go back and look at the estimates with more of a fine-toothed comb.”

Other emails show that Lahnston also requested estimates for legal costs from Borough administrator Robert Bruschi and Township administrator Jim Pascale within less than one day.

Employee time costs

The estimate for transition costs prepared by the commission did not include estimates for the wages of municipal staff carrying out the transition, Assmus pointed out.

Commission members and both municipal administrators believe that municipal staff will be able to accomplish the transition in the course of working their day-to-day jobs over the year of 2012.

“We’ve spoken to both administrators about this, and they feel that they can easily handle an administrative transition,” Goerner explained.

Supervisors, who receive a salary not based on hourly work, do not receive overtime, he explained. All employee costs, including any overtime work should there be any, would be covered by the two still-separate municipal budgets in their regular course of paying employee wages and overtime instead of being incorporated into the joint transition cost data.

Assmus, who works as a management consultant, saw this as a serious omission. “This is ridiculous. Nobody who runs a business would think that this is even the beginning of a reasonable estimate,” Assmus said.

Assmus’ own estimate of transition costs, which includes McQueen’s original $2 million estimate along with estimated wages for employees, is over $5 million.

Other communities that have applied for DCA consolidation aid did not include estimates for employee time costs towns, Lahnston said. If the municipalities included employee labor costs, Lahnston said, “I think the state would say ‘what are you trying to do to us?’”

State DCA: Transition costs too high

Commission members felt the need to be modest in their statement of the transition costs because they would submit the costs to the New Jersey Department of Community Affairs as an application for transition aid, and DCA officials would be less likely to give aid if the requests seemed unreasonable, Lahnston said.

“We tried to look at it with a pretty conservative eye,” Lahnston explained. “You’re always trying to deal with an estimate that’s acceptable to the state.” He wanted to avoid the situation that another community seeking consolidation aid had had several years ago when the DCA said the costs they had submitted were “more of a wish list than actual transition costs.”

The commission’s estimate includes $300,000 for salary harmonization, $700,000 for supplies and equipment for the consolidated police department, $135,000 for legal costs, $125,000 for identity-merging costs including signage, and other incidental costs including moving.

At the end of September, Mayors Goerner and Trotman received a letter from the New Jersey Department of Community Affairs saying that the state predicted that transition costs “will be considerably less than the $1.7 million estimated by the municipalities.”

In the opinion of the DCA Division of Local Government Services, total transition costs are likely to be no more than $1 million, wrote Thomas Neff, director of the Division of Local Government Services.

The DCA letter describes the commission’s $125,000 budgeted for “identity” transition costs including new non-police uniforms and vehicle signage as “nonessential altogether.” It identifies the $713,000 for police supplies as costs that were unnecessary or would be necessary to be replaced in due course regardless of consolidation.

Neff wrote that he believed the municipalities would be able to procure the legal services required for transition for less than the $200 per hour requested by the commission. He also stated that the $300,000 needed to harmonize police salaries would be very quickly offset by the savings of consolidation.

Governor Chris Christie announced earlier this month that the DCA would provide financial assistance to cover 20 percent of the transition costs of municipalities undergoing consolidation.

If the consolidation referendum passes, the DCA will work with the governing body of the new municipality to determine an official figure for transition costs. While the $1 million total expectation in this letter suggests that this aid would not be more than $20,000, Goerner said the municipalities would still have an opportunity to prevail on the DCA to approve a higher figure for transition costs.

“They’ve been pretty open to this, and the governor’s office has been open to it as well,” Goerner said. “I don’t think that the DCA would be stretched financially to provide 20 percent of whatever the costs would be.”

Goerner pointed out that the commission originally made plans to endure the transition costs without any state aid, and the municipalities were capable of paying the one-time costs.

Tax Rates

The Borough and Township “are more alike than they have been before,” former Borough mayor Marvin Reed wrote in an editorial supporting consolidation that appeared on the website planetprinceton.com last month. “Tax rates in effect are practically identical.”

The municipal tax rate on property in the Borough is .431 percent. In the Township, it is .435 percent.

In 2009, the rates were 1.031 percent in the Borough and .894 percent in the Township. In 2010, rates in both municipalities fell as a result of the property tax revaluation—to .469 in the Borough and .471 in the Township.

To Assmus, the way the tax rates suddenly came close together in 2010 suggests that municipal officials who wanted to strengthen the case for consolidation may have deliberately manipulated the rates.

“My knowledge of statistics tell me that without the part of planning on municipal officials, there’s no way that these tax rates would come to exactly the same by two decimal places,” Assmus said, pointing out that the two rates had differed by differed by 15 percent in previous years.

“They have used their discretion over the budget to make the tax rate and the relative debt burden exactly equal to two decimal places right before this election so that those would not become issues in the election,” Assmus said. Since before the revaluation, the Borough had used its capital surplus account to keep the tax rate steady for the past few years, while the Township allowed its tax rate to rise.

“It’s a reason to suspect that public officials are not objective about this,” Assmus, adding that she did not know how they had done this.

Borough tax collector Sandra Webb said she believed that municipal officials do not have the power to manipulate the tax rates as Assmus described.

The tax rate is only partially in the hands of public officials, Webb explained. A tax assessor who works for both the Borough and the Township assesses the property values during a revaluation. Municipal administrators prepare a tax rate based on the amount required to levy the needed budget funds from the assessed property value. Public officials then have the power to fine-tune by allotting payment from the capital surplus fund, for example.

“I don’t know that that’s possible,” Webb said of municipal officials manipulating tax rates. “The assessor is the one who sets what the values are on a property, so I think that’s a real stretch ... They’d have to have direct control over the assessed value, and that’s what they don’t have any control over.”