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Challenges to Balancing the Montgomery Township Municipal Budget – Inflation, Salaries, Benefits

By Caprice Benifield-Sanchez | March 14, 2024


Employee salaries, benefit packages, and inflation are key factors expected to influence Montgomery’s 2024 municipal budget — which is expected to be introduced to the public at the Township Committee Meeting on April 4.


Michael Pitts, the township’s CFO and tax collector, talked with The Montgomery News about what he foresees as big ticket items.


Union Contracts

“We have union contracts coming up at the end of this year that expired. Probably in the summer, we’ll start negotiating with them,” Pitts said.


There are upcoming negotiations with two police unions: the New Jersey Superior Officers Association (NJSOA) and the New Jersey State Policemen's Benevolent Association (NJSPBA).


Both labor unions represent police of different ranks, negotiating “for improved wages, hours, working conditions, welfare and job security,” according to the NJSOA’s website.

Montgomery Township CFO Michael Pitts.


The police department makes up about 30 percent of the municipal budget, which is the biggest part, Pitts said.


Unions will likely negotiate between 2.5 to 3 percent salary raises this year for municipal employees, he said. “I believe Somerville even raised theirs by 4 percent. There are going to be some difficult negotiations, but at the same time, we try to be fair to not only unions but the residents as well.” 


The salaries and wages of the officers in total for 2023 were $4.1 million, which included a $1.2 million grant used from the American Rescue Plan. (The federal grant was part of a stimulus package that proved funding for local governments to help them recover from the economic impacts of the COVID-19 pandemic. The grants were used entirely for Montgomery police salaries in 2022 and 2023, which helped ease the impact on Montgomery taxpayers.)


Other municipal employees belong to AFSCME New Jersey, but their contract does not expire until December 31, 2026.


Police Salaries

The average salary in Montgomery Police Department of 35 officers is $116,537.14, with the highest being $185,781. 


Pitts said, “There’s also a pension for police. You have to add another 36 to 37 percent because of pensions to those salary costs.” 


“We have statutory obligations, for example, pensions. Full-time employees, if they qualify, get into a pension system, and we have to contribute a certain percent. And those we have no control over how much we contribute,” Pitts said. “That increases every year. So those numbers are looking relatively high.”


Captain Silvio Bet (center) with his family. (The Montgomery News file photo).


Captain Silvio Bet, the director of the Montomery Police Department, said the police also have capital and operating budgets added to the municipal budget.


The capital budget funds major improvements to facilities and infrastructure lasting over five years said Bet.


The police capital budget is $100,300, including mobile vision/body-worn cameras, body armor, and investigative equipment. The operating budget includes annual department operating costs, including uniforms, ammo, professional development and recruitment, he said. The police operating budget is $388,000.


Bet said, “Both capital and operating budgets are calculated using the last year’s budget as a basis, then accounting for any anticipated increases are service costs (licensing fees, etc.), equipment costs, projects and technology.”


The 2024 police budget is to be decided, said Bet. 


Inflation 

The Inflation rate for the 12-month period leading up to January 2024 is 3.1 percent.

“If we could look into the future, a couple of issues that we will keep an eye on it is, of course, inflation. Municipalities aren’t immune to inflation and increasing prices,” Pitts said.


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Health Insurance 

A total of $1,776,000 was allocated for the employee’s group insurance, according to the 2023 budget. “Of course, health benefits always goes up. Liability insurance always goes up,” Pitts said. “Contractual negotiations are always around that.”


Contractors’ price increases due to inflation cause maintaining infrastructure to be expensive.


“The cost driver, a lot of it, is employee costs, but at the same time, it’s very expensive to maintain roads every year. We could spend four or five million trying to keep up with the roads. We don’t do that because we can’t, but that infrastructure is expensive to maintain.”


The township struggles with a dwindling workforce, finding quality workers and the turnover cost to replace employees.


Pitts said, “If anybody knows the local government workforce right now, it’s not in great shape.” 


“So as retirees are leaving the workforce, there’s nobody to fill in for them unless, unfortunately, you take from other municipalities,” he said.


“When you lose an employee, it’s difficult to find a quality local government employee,” Pitts said. “So that’s something we need to look at — ways how to attract employees and retain quality employees.  ■


Note: Municipal taxes are one item on a property owner’s total tax bill, which also includes Montgomery Township School District taxes and Somerset County taxes. The largest factor in Montgomery Township, by far, is the School Tax, which makes up about 70 percent of the total property tax.




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