The document that follows is a detailed summary of the anticipated revenues and appropriations for the coming year. Within this document you will find not only a standardized accounting of all projected 2001 revenues and expenditures but also a detailed set of explanatory notes for each line item.

Throughout the budget process, the Committee emphasized the need to minimize tax requirements while maintaining high quality public service as the major budget goal for the year. We are pleased to report that we have been successful in reaching this goal with no increase in the municipal tax rate. The adopted budget calls for a municipal tax rate of $.42 per $100 assessed value and a municipal open space tax rate of $0.04 per $100 of assessed value, the same rates approved by the Committee in the 2000 budget.

An overview of the 2001 budget is provided below, reviewing in more detail, budget goals and highlights. This general introduction will provide a context for the technical budget document which follows.

THE BUDGET IN BRIEF

The 2001 budget totals $6,391,130. This is the total general operating budget for 2001. This total does not include the budgets for the Municipal Open Space Trust, Mendham East Sewer Utility (Drakewick Subdivision), and the Recreation Trust. These three budgets are separately funded, self-sustaining enterprises, supported by dedicated taxes. A breakdown of the general operating, open space, sewer, and recreation budgets, as well as a comparison of costs between 2000 and 2001 follows:

Budget	2000	2001	Diff
Current Fund	$5,917,358.00	$6,391,130.00	8%
Open Space	$351,665.00	$364,000.00	4%
Sewer Utility	$186,919.00	$168,786.00	-10%
Recreation Trust	$115,100.00	$134,275.00	17%

As you can see, the general operating budget has increased eight percent. This increase was driven by costs for fuel, snow removal, health insurance, litigation, and the sealcoating of roads, among others. Other line items are held at close to prior year’s levels. Despite the overall increase, the 2001 budget calls for no increase in the municipal tax rate. This is attributed to a 4.7% increase in the total assessed valuation. A higher assessed valuation generates more tax revenue than in prior years.

The Open Space budget also increased as a result of the increased assessed valuation. Four cents in 2001 generates more revenue than four cents did in 2000. The Sewer Utility budget, on the other hand, decreased 10% as a result of reducing the general fund contribution and controlling areas prone to overexpenditures. This budget anticipates sewer rates remaining unchanged from 2000. Lastly, the Recreation budget increased 17% due to a budgeted increase in field maintenance costs. The Recreation budget is funded by user fees and a $20,000 municipal contribution to fund field maintenance.

2001 BUDGET GOALS

The primary budget goal, as stated above, was to adopt a fiscally responsible budget. In the end this was best achieved with no increase in municipal taxes. Our second major goal was to responsibly provide funds for operating expenditures to continue the quality of services expected by residents. This goal was also accomplished as resources are provided to sustain, and in some cases enhance the many services performed by the municipality.

BUDGET HIGHLIGHTS

There are a number of highlights in the 2001 budget on both the revenue and expenditure sides worth noting. 

REVENUES

Surplus used to fund the 2001 operating budget increased $258,000 over 2000 to $995,000. By increasing the use of surplus we were able to maintain a constant tax rate and manage the Fund Balance. This increased use of surplus is fiscally responsible, however, as the generated over one million in surplus in 2000 and is expected to do the same in 2001.

Local revenues are budgeted approximately $18,000 less than in 2000 due to an increase in the Legislative Incentive Municipal Block Grant. As a result, local revenues will likely generate additional surplus in 2001.

State Aid is budgeted at $656,770, approximately $28,000 more than in 2000. This is due to the aforementioned increase in the Legislative Incentive Municipal Block Grant along with a 4% increase in other aid packages.

Revenues from Public and Private Programs are dependent upon grant awards received during the year, and thereby vary annually. Furthermore, expenditures for these programs are directly offset by these revenues.

The current property tax levy totals $3,880,000 an increase of $192,250 over last year. This increase represents revenues generated from new construction incurred during the year. As a result of this increase in ratables, the 2001 budget requires no tax increase.

General operating expenditures, not including the separately budgeted Open Space Trust, Recreation Trust, and Sewer Utility, total $6,391,130. This is an increase of $473,773 or 8 percent from 2000. Line items with sizable increases are outlined below.

Salary adjustments account for approximately $146,000 of the increase. While the Police contract is still pending, the Teamsters contract calls for a 3.5% over the prior year. The estimated increase for Administrative salaries is an average of 4.0%.

Debt Service: Due to a higher interest rate and more notes, the payment of note principal an interest represents an additional $100,000 over 2000.

Group Insurance: Due to a sizable rate increase, the amount due the State Health Benefit fund increased $55,000 over 2000.

Streets and Roads: To make up for reductions in sealcoating in 2000, a $40,000 increase is necessary to sealcoat additional roads in 2001.

Police: Due to increased patrolling in Mendham, the police motor vehicles have more mileage and have become more costly to maintain. An increase of $30,000 is needed for vehicle repairs and purchases.

Legal: Due to existing and anticipated litigation, an additional appropriation of $20,000 is necessary.

Utilities: Due to an increase in fuel prices, an additional $18,000 is needed to cover gasoline and $10,000 for electricity.

Engineering: Due to an on-going GIS project and other engineering studies, an additional $15,000 is required.

Recreation: In accordance with direction from the State, the General Fund budget will now fully fund field maintenance costs. As a result, the appropriation increased approximately $15,000.

Historic Preservation: An additional $14,000 is appropriated for historic district signs and the completion of Multiple Properties district.

Construction: An additional $13,000 is appropriated to fund a new computer system for the Construction Office.

Library: An additional $11,000 is appropriated for aid to the library.

BUDGET CAP

We are pleased to report that the 2001 budget is far below the maximum budget cap for Mendham calculated by the State of New Jersey. It is important to note that the "deflator price index" which is the basis for the formula to calculate the cap on municipal budgets is the most stringent cap on any public agency in the State of New Jersey. The 2001 cap is 4.0 percent.

The ability to remain under the budget cap is attributable to the combination of limitations on expenditures and various credits that are available for items such as new ratables, capital improvement appropriations and debt service.

SUMMARY

The Committee has worked hard over the past several months to craft a budget which addresses the needs of the community without requiring additional taxes. The committee is pleased that its 2001 budget achieves this goal.

The community continues to be in a strong financial position. The 2001 budget supports this standing. The careful use of surplus in support of the budget, conservative estimation of revenues, and continued efforts to managed the debt are just a few of the ways this budget enhances the long term financial stability.

We wish to express our appreciation to the efforts provided by the boards, committees, volunteers and employees who have worked to improve services at a reasonable cost for the people of the community.