Government

Lake Como Officials: Police Outsourcing Triggers Property Tax Decline

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LAKE COMO, NJ — Lake Como property owners will pay slightly less in municipal taxes this year under a $3.6 million budget approved May 2 by the borough council.

The decrease translates into a savings of $3.3 cents on every $100 of assessed value — an amount that may seem insignificant, but it represents a major turnaround in Lake Como’s financial position, triggered by last year’s decision to disband the borough’s police department, according to borough officials.

“This is the first time in my memory that we have had a reduction in (municipal) taxes. And it is due to the extraordinary measure in public safety taken in the previous year,” said Borough Auditor Robert Allison during his presentation of the spending plan.

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In May 2016, Lake Como eliminated the borough’s 10-member police force after residents in a special referendum overwhelmingly voted down a budget proposal that would have seen the municipal tax rate climb 22 percent — due in large part to staffing of the police department. Estimates at that time showed it would have cost Lake Como at least $2.4 million to maintain its own police department at a state-recommended capacity.

As a result, Lake Como signed a 10-year police contract with neighboring Belmar, which includes a five-year opt-out provision, with Lake Como paying 25 percent of Belmar’s annual police budget, excluding special police officers. This year, Lake Como has budgeted $1.175 million under that agreement.

Before the borough council voted unanimously to approve this year’s budget, Mayor Brian Wilton acknowledged “all the hard work and changes we had to make last year. It was not easy, but it was necessary,” he said. “Shared services can be successful for small towns, and we will look into more of these types of consolidations as we move forward.”

Additionally for the first time in years, Lake Como has money in its surplus account: $543,000, representing 15 percent of the total budget. That’s in sharp contrast to the borough’s tenuous financial position, which began to take the hardest hits in 2014 when its surplus was under 5 percent and tax increases were necessary to cover a deficit in operations, according to Allison.

“There was a structural imbalance … a big failure,” he said, providing a chronology of how conditions began to spiral downward.

In 2010, Lake Como received its last budgetary boost of Extraordinary Aid from the state Department of Community Affairs. That funding was traditionally awarded to municipalities with essential service demands that exceeded the ability of its taxpayers to support. As a shore town whose operations are strained during the summer, Lake Como qualified for the special aid for years — and depended on it.

With that aid now gone, the borough began to “draw down” its surplus to cover operating expenses over the next several years, until the fund was nearly depleted. A tax increase in 2014 covered an operational deficit, and in 2015, “we threw in everything but the kitchen sink” to balance the budget, Allison said.  

In 2016, the situation reached such a critical point that an “extraordinary measure” needed to be taken, resulting in the decision to disband the police department, he added.

In a sharp contrast from the 2016 budget hearing, there was little public comment on the current $3.6 million spending plan, which is down about $565, 000, or 13.6 percent, from the 2016 budget of $4.3 million. Some $2.71 million will be raised through taxation, compared to $2.73 million last year — a less than 1 percent reduction.

The resulting municipal tax rate of $0.699 per $100 of assessed value is about $0.033 less than in 2016. That means for a home valued at $400,000, municipal taxes will decrease $131.00 in 2017. These amounts do not include school or county taxes.

Other budget highlights include:

  • Without a police department, salaries and wages will decrease by $172,283 to $667,908 in 2017. Other borough employees and managers have not received a pay increase since 2014, with the exception of three Public Works Department workers who got a raise in 2015.
  • In 2017, the $277,887 expense for police pensions is the first of two final “legacy” obligations associated with the elimination of the Police Department. The borough will have to budget for police pensions for the last time in 2018.
  • The municipal debt service decreased by about $40,000 to $98,950 — the result of paying off a Monmouth County Improvement Authority bond last year.
  • The $25,000 in the Capital Improvement Fund is being put aside for future projects.
  • The borough brought in nearly $381,000 in court revenues — about $188,000 more than anticipated.
  • In the dedicated water & sewer budget, there is a total operating surplus anticipated of $225,000 for 2017, compared to $1,990 in 2016, when that budget’s surplus was transferred to the general budget to help offset budgetary increases. This year, the borough hopes to rebuild the water utility surplus.

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