Saturday, March 5, 2011

Maplewood to Introduce Budget with Zero Percent Tax Increase

Maplewood to Introduce Budget with Zero Percent Tax Increase

Citing a "perfect storm" of stresses on taxpayers, the Maplewood Township Committee voted to direct staff to introduce a budget with a 0% tax levy increase.
Section Sponsored By patch
"We're instructing staff to prepare a budget with a zero percent tax increase," said Mayor Vic DeLuca, after the Maplewood Township Committee voted 4-1 to do just that at a rare Friday night meeting on March 4.
The Committee had pledged in January to bring in a budget under the state-mandated 2% cap — without invoking or utilizing any exceptions for items allowed outside the cap. But Friday night's directive to bring in a 0% cap was a surprise and, as far as Patch can discern, a first in New Jersey for the 2011 municipal budget cycle. (Last year, West Orange brought in a budget at 0% using a one-time sale of two cell towers.)
The town will be introducing the 0% tax increase budget without making any cuts to staff or services — although some requests from department heads for additional staffing and expenses are not being granted. Capital projects will also be curtailed, though not abandoned altogether.
The budget will be introduced on March 15 but will not be finalized until June. The Committee felt assured that administrative staff could meet the dictate after several preliminary public budget meetings over the past two months in which expenditures and revenues were carefully analyzed, unexpended bonds were cancelled and moved into capital surplus, and an audit of the previous budget was completed.
Township Administrator Joseph Manning at first presented a preliminary 2011 budget of $38 million-plus and a proposed levy of 3.5%. Although auditor Joseph Faccone had told the Committee at its March 1 meeting that the town was allowed by state law to almost completely deplete its general fund surplus and capital surplus, Manning and CFO Peter Fresulone had left more generous sums in surplus. "It's just a conservative position," said Manning to the Committee, "for next year, to offset costs."
Added Fresulone, "We need this money. We need to keep government operating while we're waiting for tax bills to go out."
However, Township Committee members found, over the course of Friday evening's meeting, that they could bring the tax increase down to 0% by applying a $190,000 payment from the shared courts, $137,000 in audited surplus from the After School Program, $155,751 from interfund transfers, and $12,500 reserved for debt service (none of which Manning had applied to the budget as yet) as well as taking an additional reduction of $200,000 from the reserve for uncollected taxes and an additional $290,541 from the capital surplus.
The combined amount of $985,792 bridged the gap from 3.5% down to zero, leaving $417,000 in the general fund surplus and $209,459 in capital surplus.
An audit of the most recent year of the After School Program (which is currently underway) may yield additional surplus from that program that could be applied in place of other surplus before the budget is finalized in June.
Deputy Mayor Fred Profeta led the charge for the 0% increase, starting in early January. On March 4, Profeta said, "I am more and more of the view that our tax problem is the most important thing we need to fix."
"It's a crisis," said Profeta.
He added, "It's appropriate in this case — although we need to have a view to other years — we have to give people a break." Profeta cited the "perfect storm" in which residents are faced with the "worst economy" in decades and "the people hit the hardest live in the least affluent part of Maplewood, and those are the parts of Maplewood that took the biggest hit with the reval."
Mayor DeLuca, Deputy Mayor Fred Profeta, and Committee Persons Marlon K. Brownlee and Jerry Ryan voted for the zero percent increase. Vice Mayor Kathy Leventhal was the lone dissenting vote.
Leventhal said that she felt it was "irresponsible introducing a budget anticipating unaudited dollars." Leventhal wanted to leave a general surplus equal to the amount of tax appeals granted for 2010 (an amount of more than $600,000) as she anticipated that there may be many tax appeals following last year's revaluation. "I don't want another 2009 where we have no surplus and we are laying off people," said Leventhal.
Profeta argued that the opposite is true in a post-revaluation year — that less appeals are awarded, not more. Ryan made a different argument. "By final adoption we will know the final number of appeals filed," said Ryan, who said that the budget could be adjusted at that time. The deadline for filing property tax appeals is May 1.
Before voting, Brownlee asked Township Administrator Joseph Manning and Township CFO Peter Fresulone if the Township Committee would be "putting ourselves in jeopardy" by applying so much surplus to revenues in order to reach a 0% tax increase.
Fresulone replied, "Until August comes along and we see the 2011 tax rate taxes' effect and we see the first state aid in August, it is difficult, but we'll get through."
Afterward, DeLuca was sober about the momentous decision. "This does use a lot of one-time resources," said DeLuca. But, he explained, "I went for it from the original proposal because we can bank this for the future." DeLuca was referring to a change in state law concurrent with the 2% tax levy cap that rewards towns for bringing in lower tax increases rather than penalizing them. A town can "bank" the amount it brings a levy in under the cap for future years' budgets.
Before, said DeLuca, "If you didn't increase, you couldn't increase the next year."
DeLuca and other members of the Township Committee said they felt that the town was in a good financial position due to difficult choices made two years ago when 17 municipal employees were laid off and furloughs were instituted. The town is not using furloughs in 2011.
But, before tax payers get too excited, it's important to note that the municipal portion of local tax bills is only about 28 percent. Approximately 12-14 percent goes to the county and the majority — some 58-60% — is absorbed by the South Orange-Maplewood School District. The Board of Education will be voting to adopt a 2011-2012 budget on Monday, March 7.
The $112 million preliminary draft school district budget discussed at the February Board of Education meeting would necessitate a tax levy increase near to the 2% mandated tax levy cap — despite the elimination of 20 positions and other cost-cutting measures. However, Superintendent of Schools Brian Osborne said that it is still possible that the district could be granted an exception to the levy cap due to enrollment increases.
The school tax levy must be approved by the Board of School Estimate which is made up of elected officials from Maplewood and South Orange. The date for this vote has not yet been set.
Stay tuned.

No comments:

Post a Comment