Hemant Marathe: Respect the Benefits Of Capital Reserve
The most telling part of Mr. Walsh’s presentation to the Republican club on March 8 was his unwillingness to let me respond to his claims by distributing information showing an analysis of his own numbers. Mr. Walsh’s uneasiness can be understood when you realize that his entire argument is intended to force the incorrect perception that school taxes are out of control.
For example, during the question and answer period that followed, a gentleman from the Village Grande senior community in West Windsor asked “Why can’t we pass a law to freeze property taxes for all seniors?” What that person may not realize is that during the past five years every senior in Village Grande would have the lost benefit of lower taxes under such a freeze. Although the school property tax rate went up, due to reassessment, a typical home in Village Grande paid less in property taxes in 2011 than in 2007. For example, a friend from the community paid $4,360 in the school portion of property taxes in 2007. His property taxes decreased by $503 to $3,857 in 2011.
This is a reduction in school property tax of 12 percent over a four-year period. I admit everyone in West Windsor has not fared that well. However, West Windsor taxpayers as a whole paid $77,558,977 in taxes for the 2007-08 school budget year while they will pay $84,269,035 in taxes for the upcoming 2012-13 school year, an increase of 8.6 percent over a five-year period for an annual increase in taxes of only 1.67 percent, less than the rate of inflation. The numbers I quote are not some obscure accounting concept but actual dollars paid.
How receptive will the audience be to Mr. Walsh’s message if people know the truth about their own school property taxes?
At the meeting Mr. Walsh continued his attack on the school district’s use of the capital reserve. Once the school budget is voted, the district truly has to stay within its means. The district can’t overspend by a penny. They don’t have a line of credit nor can they borrow for an emergency. If an emergency such as the one experienced by West Windsor Township on Wallace Road occurs; the school district has to depend on its reserve or cut programs somewhere else in the budget to compensate. Given these constraints it’s only wise to budget conservatively.
The taxpayers own more than $200 million in property through the school district. Assuming a replacement cycle of 40 years and no inflation, one would conservatively budget approximately $5 million dollars per year for maintenance. However, the district has consistently managed by budgeting only $1.5 million dollars or less through annual budgets. The district has managed to fund the rest through the capital reserve account, still keeping the expenses well under $5 million. To accept Mr. Walsh’s suggestion is to guarantee that taxpayers would pay an additional $3.5 million for capital projects every year.
Mr. Walsh also ignores another major benefit of the capital reserve account. Maintaining a capital reserve has allowed the district to apply for and receive state grants at the rate of $.40 per dollar on the projects in the district’s long-range capital plan. During the last round of such grants the WW-P district managed to get the most bang for taxpayer dollars because we had the reserves to fund our 60 percent share of the cost.
Finally, only those projects that are on the district’s five-year facilities plan can be funded through the capital reserve account. The entire school board has voted unanimously for the facilities plan because these projects are identified as “need to have” not “nice to have.” As Mr. Walsh admitted at the meeting, if the projects need to be done, the money is going to come from taxpayers in one form or the other.
The capital reserve account supports necessary projects that need to be funded. Therefore, Mr. Walsh’s suggestion to deplete our reserves for a one time gain is imprudent. It is a penny wise pound foolish strategy that will cause serious long term damage to district’s finances and ultimately burden taxpayers in future years.
Clarendon Court, West Windsor
Note: The opinions expressed are the writer’s own and do not necessarily reflect the opinions of the WW-P school board.
Quentin Walsh: Tax Relief: Fact or Fiction?
During the West Windsor-Plainsboro school budget discussion, we frequently hear about tax relief. Since no one ever gets a refund check, let me explain.
Each year the district collects taxes and spends money to run our schools. If there is money left over it goes into fund balance, similar to retained earnings for a business. The district has some leeway to designate reserve accounts for maintenance, capital, and other purposes. The state also allows the district to keep a 2 percent general reserve balance for unanticipated expenses. For the 2010-2011 budget year, the district carried $13,173,153 of reserves and were favorable in their revenue and expenses by another $11,926,165. So the total fund balance was $25,099,318 at June 30, 2011.
The district was able to put names against $13,614,058, which represented about 8.5 percent of next year’s expenditures. That left $3,190,377 which was already committed to tax relief for the 2011-2012 budget year and $8,294,883 of “Excess Surplus.” Per the state regulations the excess surplus must be used for tax relief in the 2012-’13 budget year.
The district has proposed a 2012-’13 budget that offers only $5,664,951 of tax relief, rather than following the state rules. Somehow, they have found a way to scam $2,629,932 of our tax relief and keep it in the district hands. In addition, in July, 2011, the state awarded additional state aid of $1,514,468 to WW-P above the amount in the budget. The state suggested that this money be used for immediate tax relief. The Plainsboro Township Committee recommended that these funds be used for immediate tax relief. The school district did not act on those recommendations, claiming the short time frame did not allow adequate discussion.
Now almost nine months later, the district has conveniently forgotten this tax relief opportunity. Also within the current 2011-’12 budget is $950,728 for the charter school. During the heated discussion of that topic, the board president pledged that if the charter school did not open this year, that budget line would be refunded to the taxpayers in the next year (WW-P News, July 22, 2011). That seems to be another promise that has not been fulfilled.
Please demand that the school board increase the 2012-’13 tax relief to the full amount that we deserve. Give us the $8,294,883 of excess surplus, the $1,514,468 of state aid and the $950,728 of unused charter school budget for a total tax relief of $10,760,079.
Petty Road, Plainsboro
The writer, a Plainsboro resident, is a candidate for a seat on the WW-P Board of Education.