Last month, Governor Christie delivered his third State of the State message. Later this month, he will deliver his fourth budget proposal. Together with considerations of this November’s elections, these two presentations will shape policy debates in Trenton for the rest of this year. Accordingly, this seems like a good time for some observations on the current state of our municipalities and their forthcoming budgets.
In 2011, property taxes increased by 2.4 percent. Obviously, local officials are doing all that they can to limit increases. They deserve credit for making the tough decisions in tough times. They have
cut budgets, pursued savings, engaged in tough negotiations, reduced the workforce, shared services, cut spending, applied best practices,
emptied reserve accounts and deferred investments. They did this as property values declined, tax appeals increased, development and economic activity stalled, employment slumped and property tax relief funding was diverted to the State Budget.
That said, they could not have gotten down to 2.4 percent without the reforms enacted by the Governor and the Legislature. For things like the cap on arbitration awards and pensions and benefits reforms, the Governor and Legislative leaders deserve our thanks and recognition.
The 2 percent levy cap allows certain common sense exceptions. Hopefully, many of the ‘Sandy’ emergency costs will be off-set by FEMA reimbursements. However, the costs of health insurance and pension costs, as well as ‘inside the cap’ costs such as insurance premiums, utility bills and motor fuel, will continue to rise by much more than 2 percent.
In 2013, the municipal budget maker has to be concerned with all costs, whether outside the cap or not. So for the vast majority of municipalities that already do everything they legally can to control costs (including sharing services, reductions in force, negotiating give-backs, etc.) there are only three alternatives.
They can cut essential services. They can ask the voters, who are already facing their own financial concerns, to approve higher property taxes. Or they can be given the energy tax monies that were meant for property tax relief. That would give municipalities the income they need to meet their increasing costs, without asking voters to sacrifice financially or do without essential services.
The next advance in property tax relief has to involve ending the state’s taking of Energy Tax Receipts and CMPTRA funds that are meant to be distributed to municipalities for property tax relief
Editorial from New Jersey
Municipalities, Volume 90, Number 2, February 2013