The town of Princeton will announce its 2013 operating budget at a council meeting on April 22. This will enable Princeton officials to calculate the actual savings realized by the consolidation of the Township and the Borough that took place Jan. 1, 2013. Previous estimates of consolidation savings have ranged from $2.5 million to $3 million.
In a meeting on April 1, town officials announced that the consolidation of the former Princeton Borough and Township was expected to produce about $3 million in savings for 2013. Mayor Liz Lempert and Joint Shared Services and Consolidation Commission chairman Anton Lahnston confirmed this figure in interviews with The Daily Princetonian.
According to Lempert, the expenditures of consolidated Princeton’s projected 2013 budget will be $3 million less than the expenditures of the Township and Borough’s 2012 budgets combined. The combined 2012 budgets amounted to about $63.9 million, and the new municipality’s 2013 budget is approximately $61 million.
She explained, however, that this figure does not account for the duplication of some previously shared services. When the then-separate Township and Borough collaborated on certain “shared services,” each service would have one of the municipalities designated as the “banker.” That municipality would include the entire cost of the shared service in its budget. The other municipality would reimburse the “banker” municipality for its share of the service, and would include the cost of its reimbursement payment in its budget.
Because these costs were duplicated in the two budgets, Lempert explained, the figure for the combined budgets duplicates these. Therefore, a comparison of the combined budgets gives a slight overestimate of the savings achieved by consolidation.
Lempert also noted that the figure citing $3 million in savings does not represent the net gains of consolidation, as it does not account for transition costs of the merger.
Lempert denied reports in an Apr. 3 article by Planet Princeton that the total savings of consolidation, when the duplicated costs were accounted for, were only $700,000.
“When we added up the Township and Borough budgets, the reason why it was accounted for twice was because that’s the only way it could have been done when we were two separate municipalities,” she said. “It wasn’t like anything nefarious was going on. It kind of shows that there are inefficiencies in sharing services, and one of them is that there is a lot of extra paperwork.”
According to the Transition Task Force’s final report released in January, which accounted for the duplicated costs, consolidation savings could range from $2.6 million to $2.9 million. Of those savings, $350,000 to $400,000 would come from savings in the operating budget and the rest would come from staff reductions. The report was prepared in conjunction with the Center for Government Research, a government consulting firm.
“Neither CGR or I were involved with calculating the $3 million figure,” CGR President and Chief Executive Officer Joseph Stefko said.
The figure provided by CGR is between $100,000 and $400,000 lower than the $3.1 million estimated by the Joint Consolidation and Shared Services Study Commission in its 2011 analysis of the prospective savings of consolidation.
However, Lempert said the $3 million savings estimate was correct and that it had been calculated carefully.
“I think that the Consolidation Commission did an excellent job in dealing with a lot of numbers and a lot of figures and tried to explain them,” she said.
When asked about the breakdown of the 2013 budget, Lempert explained that staff reductions would provide $1.2 million in savings. Ceasing payments for the health care of departing staff and a switch of the Township’s health care plan would account for another $600,000. She did not describe any other sources of savings.
Lahnston said he did not know the actual amount that would be saved by consolidation.
“The question is, and I don’t know how to answer this question, how was the exchange that was built into the previous Township and Borough budget, which leaned toward the payment of shared services — how’s that being accounted for in the new budget?” Lahnston said. “I don’t know the answer to that.”
Lempert and Lahnston said they did not know the amount of net savings from consolidation, but the CGR report estimated that total transition costs will amount to a one-time cost of around $2.5 million, which the municipality will spread over several years.
However, the CGR report did not include the most recent costs incurred by the consolidated town, which included an increase in the county tax and the cost of expanding trash collection services to the Township, where residents were formerly required to pay private haulers.
According to Lempert, the cost of the transition may be paid back over a maximum of five years, and the schedule for transition cost payments and staff reductions is yet to be finalized.
She added that the consolidated town government has made efforts to limit costs, such as opting for buying new patches instead of entirely new uniforms for the unified police force.
“We’ve done a lot of work in trying to keep those transition costs as low as possible,” Lempert said.
When asked if voters were fully informed that the $3 million in projected savings did not represent the net savings of consolidation, Lempert said, “I think people did realize that.”
“I think that was clearly presented to the voters for those who were interested, at least prior to the voting on the referendum,” Lahnston agreed.
The final 2013 budget will be presented in a town meeting on Monday.
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