EXECUTIVE OFFICES

2009 Atlantic County Executive
Financial State of Atlantic County

Presented January 13, 2009

I come before you to report on the financial state of Atlantic County government. Usually, at this time we present and introduce the annual budget to the Freeholder Board for approval. Our Administrative Code requires that we do this by January 15. However, this year will be a bit different. The state has extended the deadline since they have not made a final determination on some critical budget cap and pension related issues. We cannot finalize our county budget until these matters are settled. Therefore, our formal budget will be officially introduced at a later date. In keeping with the requirements of our administrative code, what I would like to do today is to present you with an overview. However, it must be understood that this information is subject to change based on what the state may decide.

In preparing the 2009 Atlantic County Budget we were confronted with challenges unlike any we have experienced in previous years. The nation is in the midst of a severe, global economic recession, the likes of which, some say, has not been seen since the 1930s. This recession has had an adverse impact on every aspect of our economy and, as you may have heard from numerous news reports, has undermined many state, county and municipal budgets. All 21 counties in New Jersey are in a similar predicament.

In Atlantic County, our casino industry has been hard hit. For the first time casino revenues have experienced a decline from the previous year, resulting in the layoff of over 1500 employees. New casino development projects that only a year ago promised the creation of 15,000 additional jobs have been put on indefinite hold and several casino hotels are reported to be struggling to avoid bankruptcy.

The real estate market has been greatly stressed with property values declining and many people finding it harder to obtain a mortgage.

Our state government’s ongoing fiscal crisis continues. The state must address a current year budget deficit of $2.1 billion, a billion dollars higher than originally projected just last month, and next year's deficit is expected to approach $4 billion. The result of state government’s years of bipartisan financial mismanagement is having a real impact on county and local governments as the state now requires us to pick up an additional $2.6 million of costs they once carried or have resulted from state policy.

The impact of these trends on Atlantic County’s financial situation for 2009 has been immediate: Our costs are up. Our revenues are down.

Another factor that affects our final budget numbers is our year end surplus. The surplus is made up of revenue that comes in during the year and funds that are unexpended. Atlantic County has always maintained responsible surpluses. Traditionally, it has been county policy to allocate approximately 50% into the budget. The benefits of maintaining strong cash reserves are apparent. Rating agencies specifically cited our practice of maintaining strong surpluses as an important indication of sound financial management, which, of course, positively affects our bond rating.

In 2008, our year end surplus was approximately $21 million, of which we reallocated approximately 50%. For the coming year, we estimate our year end surplus to be only $15.5 million. This decrease is a direct result of the current economic conditions. Of this amount, it is our recommendation that the most responsible thing to do is to allocate $7.75 million, 50%, into the 2009 budget.

The bottom line is this: When you put it all together, increased expenses, decreased revenues, reduced surplus, more state imposed costs and apply the more restrictive property tax CAP mandated by the state, we needed to reduce the 2009 budget by $8.5 million. This was no easy task and required the cooperation of every aspect of county government.

To accomplish this, we had to make some very difficult decisions that included countywide voluntary furloughs, the reduction of operational costs, freezing vacant positions, and the reduction or elimination of important but non mandated services. Altogether, 54 positions have either been frozen or eliminated. By doing so, we were able to reduce our salary and wage expenses and our operational expenses, bringing us closer to our budgetary target.

It must be understood that personnel reductions of this magnitude will have a definite impact on county services. For years it has been our policy in county government to do more with less whenever possible. Thanks to the dedication of numerous employees who were willing to assume additional responsibilities, we have been able to achieve that goal. However, with the number of positions that we are now eliminating, we will be doing less with less. Certain county services will be reduced. Routine road repairs and snow removal might take longer. There will be fewer highway improvements. Our permitting and approval processes might be a bit slower. Our parks and pistol range will see reduced hours. Many of our human service programs will be impacted. The pace of our open space acquisitions will be reduced.

I have always said that those who don’t have much interaction with county government should consider themselves fortunate. The majority of our clients include the poor, elderly and most vulnerable. Although we gave a high priority to protecting these populations when developing this budget, they will undoubtedly be affected. At a time when large numbers of private sector workers are being laid off, those applying for food stamps, public assistance and training and employment programs might experience inconvenient delays. While we have done our best to maintain the necessary level of services for our senior and disabled residents who rely on our transportation services for shopping and medical appointments, recreational trips will be much more limited.

The total Atlantic County budget we project for 2009 is $179,487,612.05, up one and a half percent from last year. We project a slight increase in the 2009 county tax rate bringing it to nearly the same level it was two years ago.

Managing this budget in the coming year will require a high degree of diligence and oversight since any dramatic drop in revenues may make further modifications and cuts necessary.

Despite the restrictions imposed upon us by the national economy as well as a reduction in personnel and operational funding, we will continue to work hard to meet the vital public safety and transportation infrastructure needs of our citizens.

In the coming year we hope to see work begin on major projects such as the Airport Circle in Egg Harbor Township. We hope to see the Delilah Road Bridge open on schedule and continued progress toward improvements to the intersection of Fire and Mill Roads. If you recall, we received a commitment from NJDOT for $5 million toward the cost of this important improvement. We will explore the feasibility of generating hydro electric power at the Lake Lenape Dam and begin the installation of solar panels at certain county facilities.

Our Office of Emergency Preparedness will continue to work with our municipalities, the FAA and the SJTA towards the development of a countywide centralized communications facility for police, fire, and EMS.

In conclusion, I would like to thank the members of the Board of Freeholders, especially the members of the Freeholder Budget Committee, which consists of Tom Russo, Jim Curcio, Charles Garrett and Frank Giordano. They, along with their fellow freeholders, worked diligently on this budget. Their interest, level of participation and spirit of bipartisan cooperation is commendable.

I would also like to thank our financial management team of Gerald DelRosso, Jane Lugo and Diana Rutala whose dedication and experience provide the citizens of Atlantic County with an invaluable asset.

Most of all I would like to thank the numerous county employees who volunteered to take unpaid furloughs in 2009 in order to help us get through this financial storm without devastating cuts in service. You have our deepest appreciation and gratitude.