Fair Lawn isn't yet out of the woods when it comes to finances, but the messages of doom and gloom that permeated last year's municipal budget presentation were largely muted Tuesday when manager Tom Metzler and chief financial officer Karen Palermo laid out this year's financial roadmap for borough council.

The budget they presented calls for a 1.38 percent tax increase, rebuilds the surplus, pays down the debt service and contains no notable service or personnel cuts. An average assessed home will be taxed $2,836.72, or about $39 more than last year, Metzler said.

"It’s that tax and spend council again, holding debt service flat and actually paying down some debt. Imagine if the United States of America did that," Deputy Mayor Ed Trawinski remarked sarcastically. "The average assessed house is going to pay 11 cents a day in the borough of Fair Lawn. Tell me where else you get that? We’re accused of being a tax and spend council. That’s your tax and spend council at work."

While the budget news is rosier than last year, Metzler urged council not to take its eye off the ball because some of the borough's largest revenue sources are not sustainable.

"The good news, by virtue of us building that surplus, it hypothetically does kick the financial can down the road a year. It does create some stability," Metzler said. "But again, I think your long term goal is going to have to be to find sustained revenues or sustained cuts."

Federal Emergency Management Agency reimbursements for Hurricane Irene, a substantial decrease in the amount of tax court judgments against the borough and changes the borough made in health care benefits for retirees were all significant drivers that allowed the town to build its surplus by $1.5 million, Metzler said.

However, because those windfalls cannot be counted on to continue, Metzler said he was still concerned.

“You know how I think we both feel about the need for a strong surplus," he said. "But that’s not the way to do budget planning, counting on a natural disaster in order to build surplus.”

Or as Palermo, the chief financial officer, put it, "We got lucky."

The manager's plan calls for using $3 million in surplus to offset this year's budget, which leaves a fund balance of about $2.87 million going forward.

Palermo said that if the council sticks to the plan set forth in this budget, it should be able to replenish that spent surplus and use another $3 million to offset the budget in 2014.

"I need somebody in this position that’s going to keep this plan," she said in a plea to council. "It’s really important, because the minute we deviate, the minute it goes against any policies, any procedures we’ve established in this budget, I’m begging, I’m standing right in front of all of you and saying it’s not going to work."

Council plans to introduce the budget at its April 2 work session.

Members decided not to meet this Saturday morning to discuss departmental budgets, as had originally been planned, because they were content with the manager's general budget overview of each department.

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