July 2, 2010
MUNICIPAL STUDIES DEMONSTRATE
LOCAL SPENDING RESTRAINT DESPITE COST DRIVERS AND BUDGET STRESS.
LEAGUE REPEATS CALL FOR FLEXIBILITY,
MANAGEMENT REFORMS AND MANDATES RELIEF.
Today in Trenton, the Assembly Budget Committee took testimony on property tax caps from DCA Commissioner Lori Grifa, representatives from the School Boards Association, the Association of Counties, various public employee groups and the League.
League Executive Director Bill Dressel pointed out that based on a League review of all municipal budgets, the 4% statutory levy cap appears to be working. Under the 4% levy cap average municipal spending went up 4.3% in 2008 and 1.4% in 2009. Average municipal property taxes went up 7.5% in 2008 and 3.7% in 2009. Municipal property taxes went up at a greater rate than municipal spending in large part because in 2008, average municipal property tax relief funding was down 8.5%, and in 2009 it went down another 2.8% from that reduced allocation. We expect that study to reveal a continuation of the trends already evident. Under the statutory 4% levy cap, municipalities are bringing down spending and slowing property tax growth, despite declines in State distributed property tax relief funding and other revenues, and despite some dramatic increases in costs.
Further, the 4% statutory cap is working despite municipal budget stresses. Snow removal costs went up 37% in 2009 and another 45% in 2010. Public employee pension costs went up 18% in 2009 and another 29% in 2010. Health insurance costs went up 3% in 2009 and another 10% in 2010. Workers’ Comp insurance went up 5% in 2009 and another 9% in 2010. In those same years, municipal budgets absorbed decreases of 17% and 33% in interest earnings, of 2% and 4% in construction code fees, of 4% in municipal court revenues this year and, as mentioned, in dedicated municipal property tax relief funding.
“So, we support efforts to restrain municipal spending, and accordingly, support more stringent caps,” said Dressel. “But for those caps to work, we call on the Legislature and the Administration to join in efforts to restrain municipal costs. Our Executive Board is united in calling for management reforms and mandates relief, in order to allow municipalities to work within any new cap, without jeopardizing essential local services. Meaningful cost containment measures must be a part of the package that will limit future spending.
“In the interest of fairness and out of respect for the efforts of local officials struggling to do what is best for their municipalities and to serve their fellow citizens to the best of their abilities, any proposed cap must be the final piece, not the centerpiece of this year’s property tax relief effort.”
* * * *
For further information contact: William G. Dressel, Jr., Executive Director at (609)695-3481, extension 122 or 609-915-9072.