Sparta manager warns of roughly $3M budget increase; health insurance cited as primary driver

Manager Zepp told the Sparta Township Council at a March 7 special budget workshop that the township is facing a “critical budget situation,” driven chiefly by rising health insurance costs for about 190 employees and retirees. “The projected increase over last year's budget is approximately 9 to 10%, representing roughly a $3,000,000 increase,” Zepp said, adding that “this increase alone represents almost 70% of the total cost.”

The finance team outlined immediate corrective options to meet state statutory requirements on the levy and appropriation caps. Zepp said officials are considering reducing the 2026 capital improvement plan to zero — a move he calculated would save roughly $1,800,000 — restricting overtime to essential tasks, maintaining a hiring freeze and trimming operating and professional-service lines.

Why it matters: under New Jersey rules the township must submit a balanced budget that complies with both the levy cap and the appropriation cap. Finance staff emphasized that some revenue categories are “expandable” under state guidance (for example, health-care and pension costs), but that most discretionary increases must be addressed on the spending side.

Council members pressed the finance team for alternatives on the revenue side but were reminded that the state requires substantiation before new revenues can be relied on in the budget. Finance noted the town’s auditor is finalizing the annual financial statement; the manager said staff aim to introduce the 2026 budget at the March 24 council meeting, pending that audit.

Specific figures and next steps: Zepp listed other line-item pressures including a $250,000 repayment of a 2025 emergency appropriation, a $275,000 veteran tax look-back benefit and continued subsidizing of the sewer utility (about $191,000). He said finance will go back through O&E lines with department heads to try to find the remaining roughly $700,000–$800,000 shortfall. If those cuts are insufficient, Zepp told the council he may return with proposals that could include limited staff changes or policy decisions affecting town events and discretionary programs.

Quotations and attribution: Manager Zepp and members of the finance team provided the numeric estimates and policy options. As Zepp put it: “These actions taken together should allow us to produce a balanced 2026 budget, though it's important to note that doing so will still require a 9 to 10% municipal tax increase yet to be calculated.”

What’s next: finance will produce further line-by-line detail and handouts for council review and is awaiting the auditors’ annual financial statement to finalize surplus numbers. The council recessed during the workshop and resumed to take public comment on potential cuts and revenue options; the manager reiterated the goal of introducing a balanced budget at the March 24 meeting.