Proof 1: Terminal Leave Expenses now are Debt?  

The most glaring proof that Teaneck’s budget is not a so-called “Zero” budget is that it repeatedly misdescribes and treats as debt what are actually current expenses. In sum, Teaneck is now putting on a credit card it will hand to future taxpayers what has always been and should still be expensed this year.

For decades, Teaneck employees have been accumulating pay that they can collect when they retire – for unused sick, vacation and other accrued pay. Our CFO logged those owed dollars every year since they can be collected only at retirement. Over the past 20 years, several million dollars of these owed benefits have accumulated so that many employees retiring now are owed this year a very large amount of money. The official term for these owed dollars is “Terminal Leave”. Some of these retiring employees are due hundreds of thousands of dollars and the Town must give them what they are owed, a lump-sum six-figure check, when they leave.

The Township has always known about/tracked these accumulating dollars and the likely years of retirement when their payment would come due.  But even knowing that several years of multiple retirements were coming, the Town set aside nothing in reserve for 2019 and 2020. But beginning in 2019 Council leadership suddenly decided their budget totals/claims would look better if the Town stopped treating Terminal Leave dollars as a current expense. They told management to look around for a way not to pay the piper. It found what it thought would work by reversing course on sound fiscal practices. (The blue snip  [look right] from the Manager’s 2/27/2020 Power Point clearly acknowledges the plan to keep using the “Special Emergency” ruse.)

Let’s clarify this. In 2018, the Township budgeted from its current expenses, $750,000 in terminal leave payments to pay that year’s retirees. But, in 2019, and again in 2020, the Township Council cut this budget line to ONE DOLLAR, yet budgeted to pay  $1,346,000 to employees who retired in 2019  and will retire again in 2020. How? To pay these well-known obligations, the Township in 2019 told [in 2020 will tell] the State that these Terminal Leave payments were/are an emergency and  that it needs to borrow more than $1,300,000 from the State. And again in 2020, the introduced budget directs the Town to try to claim to the State that it has another emergency and the township will again try borrow another $1,300,000+. (If this gambit all works, State policy would then require that Teaneck [or better,Teaneck taxpayers] repay the borrowed $2.6 M+ by 2025) However, the State may or may not “buy” the Town’s second straight emergency claim – especially when it sees that in 2018 the Town was able to pay ¾’s of a million dollars for Terminal Leave but has planned to pay only $1 year in 2019 and $1 in 2020 as current expenses.

For the second straight year, the only way that that the Township Council can call its budgets Zero increase” budgets is by playing these games. Its deception here is to pay what it owes its retirees by asking the State to be the bank and by creating a taxpayer’s credit card to cover what it always knew should be a current operating expense which it should prepare to pay.

This single example of a Town recklessly kicking the can down the road until the credit card bill comes due is completely captured by 2 lines from page 76 of the Agenda Packet for the March 24th Council Meeting (click here) Or look here:

We have all heard for years that the Township has been increasing/adding to (and not reserving) for all sorts of purposes, some legitimate and some not.  But we can all agree that borrowing $2.6 million to pay current expenses is not a legitimate way to “balance” – create a zero increase  – a Town budget. Sadly, this gimmick will affect Town budgets for years to come and Teaneck taxpayers will have to foot the credit card bill to cover this debt.
Bottom Line: Residents will surely will want to re-evaluate the Council’s zero increase claim – and perhaps the performance of elected officials who would so baldly falsely label their actual achievements.