On Friday, January 14th, Essex County Executive Joseph N. DiVincenzo, Jr. presented a balanced and responsible 2011 budget of $762 million that addresses the financial challenges facing the County due to the ongoing national economic conditions. DiVincenzo noted that the budget proposal includes no layoffs or furloughs of employees. This is the eighth consecutive year that the County Executive has presented the County budget by the State’s statutory deadline of January 15th.
“2011 will be a very difficult budget year for Essex County and local governments throughout the State, not only because of the difficult economic conditions we are facing but the new 2 percent property tax levy cap adopted by the State. Despite these challenges, the budget we are presenting today does not include any layoffs or furloughs. This is important because it is essential that we keep people working throughout these dire economic times,” DiVincenzo said. “I could not be prouder of the job being done by our Department and Division Directors and Constitutional Officers to control the County budget. They have done an extraordinary job streamlining operations, downsizing the workforce, reducing expenditures and finding new recurring sources of revenue. Our proactive approach has stabilized our financial position and helped address our continuing budget concerns,” he added.
In November 2010, the County Executive announced Essex County was facing a $56 million gap in its projected 2011 budget. He attributed the gap to rising costs for health insurance, which increased from $63.6 million in 2010 to $71.1 million in 2011, and rising pension costs, which increased from $32.3 million in 2010 to $41.2 million in 2011. The health benefits cost represented a 12 percent increase and the pension cost represented 27.55 percent increase.
“These costs are astronomical. It is hard to comprehend that such a large portion of our budget is paying for health care, prescription drugs and employee pensions,” DiVincenzo said. “We can’t afford to spend this kind of money anymore. We don’t have it. That is why we will continue to lobby our representatives in Trenton for legislation to reform health benefits, public employee pensions, civil service and binding arbitration,” he noted.
Other challenges in the budget were related to difficult economic conditions. Revenue from the Register’s Office that reached a high of $14.5 million in 2007 has fallen to a projected $7.3 million for 2011 and interest on investments that was at $4.1 million in 2007 is projected to just $175,000 in 2011.
The Executive has pursued several initiatives to generate additional recurring revenue. The Essex County Correctional Facility began housing immigration detainees and Federal prisoners in 2008 and raised $8.6 million that first year. Revenue from the partnership has increased tremendously from $17 million in 2009 (the first full year of the program) to a projected $27.5 million in 2011. The Hospital Center has been accepting admissions of patients from the State, Passaic County and Middlesex County to generate about $10 million in additional revenue. The Juvenile Detention Center has entered into a shared services agreement with Passaic County to house juvenile detainees from Passaic. The partnership started in 2009 and is anticipated to generate about $4.2 million in revenue in 2011. The revitalization of Turtle Back Zoo and other recreation facilities operated by the Parks Department has resulted in dramatic revenue increases. In 2007, the Parks Department generated about $6.5 million in revenue from admission and user fees. This is anticipated to increase to about $9.5 million in 2011. Another $1.7 million in new revenue and savings is anticipated by consolidating Essex County offices and bringing new tenants into the Essex County LeRoy F. Smith, Jr. Public Safety Building that has been renovated into office space.
To help bridge the gap, Department and Division Directors made further reductions in their operating budgets, leaving open positions unfilled, unless they are essential to public safety and public health operations. This includes positions such as nurses at the Hospital Center or Corrections Officers at the Correctional Facility. In addition, about $23 million from the Fund Balance will be used as revenue and the property tax levy will be increased 2.75 percent, which is approximately $10.3 million. Under DiVincenzo’s leadership, over the last nine years, Essex County has the third lowest average percentage tax increase of the 21 counties in New Jersey. The 3.16 percent increase for Essex County is third only to Hunterdon County and Somerset County. Monmouth County also has the third lowest average percentage tax increase of 3.16 percent.
Several initiatives the County Executive is continuing to pursue include lobbying the Governor and State Legislator to require public employees to pay a portion of the health insurance premium instead of contributing 1.5 percent of their salary, to reform the State Pension System so it can be stabilized and to require public employees to contribute more toward their retirement, to reform the Civil Service System to allow local governments more flexibility in managing public employees and to reform the Binding Arbitration Process used when local governments and public safety employee unions reach an impasse in contract negotiations. DiVincenzo is seeking changes to have more emphasis placed on a local government’s ability to pay instead of arbitrators relying trends in public safety contracts.
The DiVincenzo administration has worked hard in the past eight years to eliminate the structural budget deficit and ensure that Essex does not spend more than the revenue it collects. Austere budgeting, downsizing the workforce, eliminating unnecessary contracts and conservative spending practices have strengthened Essex County’s financial position, raised its bond rating and restored the County’s fiscal health. Essex’s bond rating has improved six times and is now an AA3 rating, the highest level in a generation. The County workforce has been streamlined through layoffs and attrition, and there are now fewer than 3,500 full-time employees, down from 4,200 when DiVincenzo first took office in 2003.
The 2011 budget proposal has been forwarded to the Essex County Board of Chosen Freeholders for review.
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