The election is over, but numerous voters have expressed confusion over the fiscal health of the borough of Caldwell.
Though a zero-increase in municipal taxes was welcomed, there is information in Caldwell that may be misleading to residents.
Now that the election is over, the numbers speak for themselves, and need no party line to back them up in any manner whatsoever. Whether you are a die-hard Democrat or Republican, or a voter who chooses a leader for their convictions and not their party line, these numbers don't lie.
Over the past few months, Caldwell residents have heard rumors and read campaign literature from 2 Democrats, Frank Rodgers and John Kelley, who successfully ran run for council seats, stating the borough's surplus was being "depleted" by a Republican for "political gain". Their campaign literature, sitting before me, states: "This year as an incumbent up for re-election, he (Republican incumbent Joe Norton), voted to deplete the borough's cash reserves for political gain. Any prudent businessperson will tell you, "never deplete surplus". Any unforeseen emergency could wipe out remaining reserves and compromise our fiscal stability."
Is it true? No. After attending every meeting, including long, exhaustive budget meetings, for years here in the borough, this reporter can tell you: this is 100 percent false. The surplus in Caldwell is a healthy $430,000. This surplus is about 5-6 percent of the operating budget, which shows a robust and even rare surplus, since most towns in New Jersey and even the county are coming in at 2 percent or less.
Now that the election is over, it's time to review the surplus in Caldwell.
And, here is the current RATING status in Caldwell, which is quite substantially higher than years past: FROM STANDARD AND POOR: Standard & Poor's Ratings Services' has assigned its 'AA-' long-term rating to the Borough of Caldwell, N.J.'s series 2011 general obligation (GO) bonds, reflecting our opinion of the borough's:
Credit Profile
US$4.329 mil GO bnds consisting of gen imp & wtr util bnds due 07/15/2026 Long Term Rating AA-/Stable New
What is a Surplus
In every town and county, there is an extra amount of emergency money set aside, called a surplus. It's just like when you save up for a rainy day, in case you have to fix your roof or buy a new stove. It's money that is "just in case".
What is the appropriate state mandated surplus every town must have?
In New Jersey, there is no official requirement for municipalities to have a specific surplus. Kevin Roberts, who works for the state of New Jersey in Trenton in this budgetary area, said there is no hard number but there is a way to determine if your surplus is healthy.
"It varies by town given their particular circumstances, so we don’t have a comment on a specific state recommendation," he noted. "For background, I am advised that a good rule of thumb to point you in the direction of would be to ask or look at the individual town’s latest bond rating, as that can generally contain information addressing your inquiry."
What is Caldwell's bond rating?
Caldwell CFO Marge Cherone said Caldwell's bond rating has gone up over the past 2 years, indicating a healthy surplus.
She said, "Per Standard and Poor's 6/28/11 rating on Caldwell's General Obligation Bond Sale: " AA-" with a stable outlook:
per Moody's rating date of 4/23/10: "A1"
Comparison between the two can be viewed as follows. Each rating agency has four tiers (some have sub-sets):
S&P Moodys
AAA Aaa
AA (AA+, AA, AA-) Aa (Aa1, Aa2, Aa3)
A (A+, A) A (A1, A2, A3)
BBB Baa1, Baa2, Baa3
Without getting too intricately into each meaning, suffice to say that Caldwell earned a slight increase in the rating scale from 2010 to 2011.
In short, an increase in a credit rating (with a noted stable outlook) provided for increased interest by the investment community in purchasing our bonds which also provided us with more competitive pricing regarding the interest costs we incurred and the premium we were paid by the successful bidder."
Caldwell Mayor Ann Dassing added, "As you can see, in 2010 when the Republicans gained control, we actually began using less surplus each year -in 2010 we used 53.5% and in 2011 we used 46.2% compared to the climbing percentages from 2006-2009. Our Standard and Poor’s rating is AA- which is a very good rating based on many factors, such as moderate debt and a fiscal house that is in order."
Why is this misinformation mailed to residents a big deal?
Understanding politics and fiscal reality is not easy. Even numbers can get twisted.
Rodgers and Kelley wrote in their campaign literature sent out last month, "We will NOT play politics with your tax dollars and will bring Caldwell back to fiscal stability."
However, Caldwell is currently enjoying great fiscal stability, with a robust and enviable surplus, and a zero increase tax for all residents.
Without transparency in the borough, which currently does not televise council meetings, misinformation will continue to build in Caldwell.
Twisting numbers or using misinformation to help win an election is business as usual in most politics, but is also a dangerous tool in any form of government, especially a democracy.
Watch unedited videos of ALL financial and important council discussions from every meeting, here on our front page.
And remember to pay attention to the surplus, and the budgetary numbers in your home town, since voters are responsible for the leaders they elect, and the tax burdens they must shoulder.
