Posts Tagged ‘Jackson’

The State of NJ has found that Trenton Water Works carries a $12M surplus but that it employs 1/3 of the staff needed to properly run the utility.   The Jackson administration’s own proposed but never passed budget for 2018 estimates a $3.15M surplus that they gleefully carry forward into the municipal budget as revenue.

So, what gives?

If you look at the proposed but not approved budget, you also find that in 2017, the city budgeted $9.3M for staff but spent only $6.3M in salaries.  Additionally, they underspent $221K on social security because they didn’t have the people for whom they budgeted.

So really, the $3.1M surplus is all because the city didn’t spend what even it thought it should on TWW.  And of course, we know how that turned out:  Brown water, pink water, low pressure, boiled water etc.

To figure out the rea situation we need to dig deeper.

The State says we have 1/3 the employees we need.  Let’s take that at face value because we really don’t have a more reliable source for needed staffing levels at this point.

In 2017 we spent $6.3M on salaries, ~$1.7M in statuary benefits expenditures (SSA, Pension, unemployment) and $1M in sick pay and vacation.  That’s a total of $9M in staffing costs.

If we need three times the workforce then we’ll spend three times the staffing costs, or $27M.

For 2018 the city proposes to budget a total of $13.5M (salary, statutory benefits + vacation/sick pay).   Therefore, if we had proper staffing levels we would need to spend $13.5M more ($27M – $13.5M = $13.5M).

That $3.1M surplus quickly turns into a $10.4M deficit.

But wait there’s more!

The FY 2018 proposed budget lists 38 projects that need to be done to make the water utility safe.  They total in value up to $98.9M.  I have no doubt that these are needed but included in the budget only after the State began to take a serious interest.   Nonetheless, this $98.9M represents a large capital exposure.

The city has $16.5M saved up towards the $98.9M, so that leaves an exposure of $82.4M.  That’s a lot of money that we don’t have.   The projects will have to be paid for with debt.   I don’t know the city’s borrowing rate, but let’s assume its 8%. If you work out the math, that comes to a debt service (interest + principal) on that $82.4M of $9.6 over the next 15 years.   That’s another $9.6M added to our deficit!

So now it’s not a $10.4M deficit, it’s a $20M deficit.

TWW isn’t a money maker for the city of Trenton.   It’s getting ready to be a big money loser.  And guess what, that means your rates are going up, a lot. Our current revenue for TWW is only $54M.   If we need to spend another $20M so our revenue will have to increase 40%.   That’s punishing.

To say we should sell the thing is a complex proposition.

The proposal on the table in 2007 was to sell off the distribution system in the suburbs for $100M.   That could have retired a lot of debt.  We’d have lost some revenue but would still be selling water to the buyer.   That was one option.

We could sell the whole thing.  Perhaps we’d get some money out of it but at least we wouldn’t be exposed to the predicted yearly deficits AND importantly we wouldn’t be exposed to the risk of things going wrong (i.e. a Flint situation).

There are lots of options to reduce our exposure to losses, bad service, contaminated water, bad management, corrupt employees and all the other things that have plagued us via TWW over the years.   But the first thing Trentonians need to put behind them is the notion that Trenton Water Works is a money maker and an asset worth having.

Running TWW well is NOT strategic for the city of Trenton.

A well-run water utility won’t attract new homeowners, it won’t improve school performance and it won’t stop crime.   Those are the activities on which our government needs to focus.

There are smart advisors who can work out a good deal for Trenton, but first voters need to at least entertain the notion that Trenton Water Works isn’t the key to Trenton’s future success.

I really dislike those books.  The titles are demeaning to people who just want to learn something at a basic level.   But who am I to say; it’s a wildly popular series.   I suppose the title has a little empathy for the person who wants to learn “How to use a computer”, “How to Garden” or “How to do Arithmetic”.
So here I am in year 17 of the Trenton Revitalization Doug Palmer told me was underway.   It’s not! Trenton has steadily slid backwards (based on objective metrics).

And yet the State of NJ, Mercer County and occasionally the Feds continue to throw millions and millions of dollars at Trenton.   We got a hotel, a ballpark, an arena, a Rt 29 conversion, a Light Rail, a Train Station redo, a nursing school, a new Housing Project or two and what do we have to show for it?   Nothing!  We’re still losing population; our tax base and per capita income are still losing ground against the rest of the State.

So maybe we do need some condescending help with the problem.   Maybe the Mayor and Governor need a copy of “How to Redevelop Trenton for Dummies”.

Over the years I’ve likely written enough essays to fill the book but perhaps I need a good outline.  Outlines help keep books simple and suitable for “Dummies”.    The book would have only four chapters and plenty of pictures and examples.  What it wouldn’t have are chapters on how to spend vast sums of taxpayer money on public venues that don’t impact the local economy.   An $18M bridge from the State Capitol into the Delaware River is a distraction just like the Ballpark and Arena were.

Chapter 1 -  CLEAN and NEAT

This chapter will cover:

• How to inform citizens about trash disposal methods
• How to consistently inspect properties for code violations as opposed to inconsistently and capriciously
• How to make the city code work for you.  Do you know what’s in it?
• Trash cans, they can help

Chapter 2 – It’s the Tax Base Dummy

In this chapter, we’ll cover some basic economics and math like:

• How using State and Federal money for development subsidies has a better ROI than anything
• Land Value Tax and how cities benefit
• Consistency is the friend of investment
• Bribery is bad business

Chapter 3 – Transparency and Accountability

In this chapter, we’ll cover basic public relations technique like:

• Using the Internet as a communications tool
• Getting voters bought into your plan, assuming you have one
• Robo-calling, “Less is More”
• Answering citizen concerns
• Modern technology and how “trouble tickets” help organize citizen complaints
• The connection between budgets, spending and priorities

Chapter 4 – Making Trenton a Living Hell for Criminals

This self-help chapter will cover:

• Responding to citizens before it’s too late
• Leveraging private surveillance
• The Economics of Crime
• Criminal databases for everybody

Living in Trenton its easy to understand the appeal of Donald Trump’s message.

As a city, we’re losers so often that it just feels normal. So when we hear a guy talk about turning that around and being winners again, or just doing things well (as a government) it’s attractive. You wonder, what would that feel like?

What would it be like if we didn’t have our money stolen, if we could hire a real IT firm, if we could enforce our laws (big ones and small ones), if we had a tax policy that didn’t punish new investment?  What would it be like if we could communicate and enforce trash disposal policies instead of seeing it thrown all over our streets?

What would it be like if we didn’t get confused by letters saying our buildings were vacant, our water bills were past due and our taxes weren’t paid when they really were?  What would it be like if our water department weren’t running one illegal scheme after another out of their building?

What would it be like if our leaders could be transparent about the city’s issues? What if they didn’t brawl at public meetings?  What would it be like if we didn’t have to file Open Records Act forms to get information from the city, what if they just posted it online?  What if our Mayors didn’t get sent to Federal prison?

What would it be like if our snow was plowed, our potholes were fixed and our broken sidewalks and streetlamps were restored to their original state?

What would it be like if the only hotel in town weren’t about to close and taxpayers hadn’t spent $65M to build it?  What if hockey teams and arena football teams didn’t fail in Trenton?  What if we didn’t give away prime real estate to “connected” non-profits that don’t pay property taxes?  What if we could have a budget passed before the fiscal year starts?  What if we could pay for our own schools?  What if they actually graduated most of the kids?

What if the contaminated dirt at MLK school had been dealt with honestly?  What if we didn’t invite corrupt developer Robert Kahan in to Trenton? What if we didn’t fall for the Manex ponzi scheme? What if we hadn’t turned the historic Douglass House in Mill Hill Park into a drug den? What if we hadn’t forced the Broad Street Bank to be rent controlled? What if we hadn’t ignored Chambersburg’s concerns before the restaurants left?

What if simple building inspections only took 4 hours (like in Philadelphia) instead of 3 weeks?   What if you could communicate with the city through its web site and via email?

What if our property tax rate wasn’t the highest in New Jersey (the state with the highest property taxes in the nation)?  What if drunks and drug dealers didn’t infest our streets?   What if thieves were actually afraid of being caught?

What would it be like if we could recommend that a friend move to Trenton?

What would it feel like to live in a city of winners?