BRIGANTINE — City Council faced grim realities Thursday as officials continued to discuss the budget amid concern over lost revenue from tax appeals and the continuing impacts of Hurricane Sandy.
None of the four current scenarios being considered include layoffs, but discussions centered on whether layoffs are necessary for the city’s future fiscal solvency. Staffing costs account for about two-thirds of the city’s current $21.7 million budget.
“It seems there’s going to have to be layoffs and we’re going to have to know the impact of that because it affects people very deeply,” said City Councilman Joseph Picardi, more than an hour into the three-hour meeting.
City Manager Jennifer Blumenthal said layoffs wouldn’t balance this year’s budget and could even result in more money spent on terminal pay, such as unemployment and sick pay. Instead, layoffs could increase the $985,000 the city’s auditing firm suggested to cover six anticipated retirements in 2013.
“I think what council is telling me is we’re going to have to look at a multi-year budget,” she said. “(That) means there very possibly could be layoffs this year, but it would not affect this year’s budget.”
In prior years, Blumenthal said, the council had relied on reducing staff by attrition due to retirements. But not enough people have retired, she said.
“It’s not helping us reduce expenses to the point where we’re meeting our revenue,” she said.
Blumenthal said she and the city’s finance staff would work on a simulation of how layoffs would impact future budgets to present to the council.
The city is currently enforcing a hiring freeze for full-time, permanent positions; and the current budget scenarios include cuts to summer staffing — such as tag inspectors at several beaches — and no raises for employees whose contracts don’t require them, she said. Various scenarios also include cuts to capital improvement, operational spending and services, such as recycling pick-up.
Brigantine’s 2013 budget was previously expected to be introduced Thursday. Instead, City Council scheduled a second budget meeting next Tuesday ahead of Wednesday’s anticipated introduction.
The existing budget scenarios, which don’t include layoffs, call for tax-rate increases ranging from 2.1 cents to 6.2 cents. The highest increase would translate to a municipal tax rate of 55 cents per $100 dollars of assessed property value.
If the highest rate stands, it would mean properties valued at the average residential assessment of $499,316 would pay $2,746 in city property taxes, up about 13 percent from $2,436 paid last year.
City Councilman Tony Pullella brought up the possibility of entering into a long-term lease with a private party to run the city’s golf course and absorb more of the operating costs.
“Our golf course is in bad shape financially and physically,” he said. “It needs a tremendous amount of capital improvement.”
The city also needs to create a fund to save for its unfunded liabilities, such as terminal pay, Pullella said.
Brigantine’s current budget woes are the result of tax appeals that resulted in the loss of an estimated $192 million in property value between 2012 and 2013. The city has also had expenses related to Hurricane Sandy, including $370,000 in emergency funding that needs to be paid down.
Councilman Rick DeLucry said the council — which saw a shift from Republican to Democratic majorities after November’s election — has been “foolish” in the past.
“Our budgets were predicated on the assumption that our property (and) ratable base would go up,” he said. “I don’t see how we’re not facing disastrous conditions next year and the year after.”
Now, DeLucry said, the city is in the difficult position where it faces deep cuts and tax increases for residents who’ve already been hit hard by the recession and Sandy.
Brigantine is currently undergoing a revaluation, its first since the height of the real estate market, which should be completed later this year. But officials say that won’t necessary fix the hemorrhaging due to tax appeals.
Councilman Frank Kern said he’s worried that Sandy could result in the city’s home values continuing to plummet, even after the revaluation is completed. Houses in new flood map velocity zones will eventually sell for lower values, he said, and neighbors will in turn seek appeals.
“I fear we might be revaluing Brigantine at the, quote, ‘height of the market’ because of Sandy,” he said.
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