LIVINGSTON, NJ - On April 8, the Township Council introduced the 2013 municipal budget. According to Michelle Meade, township manager, this year’s budget is driven by three major factors: tax delinquency, tax appeals, and operations.
The 2013 budget must compensate for past due, uncollected taxes owed by the East Orange Water Commission (EOWC).
“The most burdensome increases in this year’s budget are the direct result of the East Orange Water Commission (EOWC) tax delinquency. The fact that the EOWC has not paid its taxes will cost the average homeowner $101.51 – an increase of 4.14%,” stated Township Manager Michele Meade. “Without the tax delinquency, the tax increase for the average Livingston homeowner would have been $38.74, or 1.56%. Because we must cover the EOWC delinquency, the increase to the average homeowner will be $140.25, or 5.7%.”
The two components that make up the 1.56% increase include:
- 0.75%, or an increase of $18.82, based on a decreased tax base due to tax appeals, and
- 0.81%, or an increase of $19.92, based on ongoing operations costs.
“While the 5.7% increase is over the 2% levy cap, the increase is permitted by the State because the Township has a cap bank made up of unused levy cap amounts from prior years,” said Meade. “Although the 2013 budget must absorb the impact of the EOWC tax delinquency, it provides $2.58 million for payment of tax appeal refunds, and makes the adjustments that are necessary for us to continue to provide quality services throughout 2013 and into the future.”
The larger tax increase arises because of an $800,000 shortfall in current tax payments from the EOWC during 2012. That shortfall reduced the amount of surplus available to support the budget in 2013. The non-payment of taxes also reduced the Township’s tax collection rate, requiring an increase of $675,000 in the appropriation for uncollected taxes.
The Livingston Township is currently in litigation over EOWC’s non-payment of taxes and is making efforts to move the case forward quickly.
Livingston’s assessable real estate base has decreased by approximately $68 million dollars due to 2012 tax appeals. The decrease in value of taxable properties within the Township will cause taxes to increase by an additional 0.75%, or $18.82, for the average homeowner in 2013. This represents one of the two portions of the 1.56%, or $38.74, local tax increase, without the EOWC liability.
Since 2009, tax appeals have decreased the total value of the assessable real estate tax base by $382.8 million, or 5%. To off-set these diminishing statistics the Township plans to hold a traditional tax sale as well as an accelerated tax sale. This will eliminate the impact of tax appeal refunds for 2013. The traditional tax sale will allow the town to sell all liens on unpaid taxes from 2012 and the accelerated tax sale will allow the town to sell the current year’s liens on unpaid accounts.
Even though the tax sales will alleviate one deficit, the local tax levy must still increase by $1.47 million due to the EOWC tax delinquency. Overall, the Township’s $44.5 million spending plan for 2013 is $262,000, or 0.6% higher, compared to 2012.
As the tax base decreases due to tax appeals, the tax rate must increase. Regardless of any changes in the local tax levies, a certain number of actual dollars must be collected in order to meet the municipal budget requirements.
In 2012, Livingston set multiple new policies into motion that has saved the township thousands of dollars. As a result, the cost of energy has decreased by $50,000, recycling cost dropped by $60,000 and legal expenses were lowered by $107,000. Salary and benefits costs will increase by 1.4% in 2013. Department “Other Expense” budgets will rise by 0.2%. The net increase in operating costs, which include capital down payments and debt service, is $273,498 more than in 2012.
Non-tax revenues will increase by $320,000 compared to last year, in order to offset spending increases, as the Township anticipates higher receipts from new fees and inter-local agreements with other government entities. An additional $440,000 of delinquent tax receipts is also anticipated during 2013 due to a declining tax collection rate and shortfalls in tax collections during 2012. Even still, the Township experienced a significant decline in surplus for budget purposes.
Ongoing operations will increase the 2013 local tax levy by $241,106, or 0.81%, compared to last year –an increase of $19.92 per average household. This represents the second of the two portions of the 1.56%, or $38.74, local tax increase, without the EOWC liability.
For more information, visit the Township’s web site at www.livingstonnj.org.