Edison, NJ – On Monday, Edison Mayor Thomas Lankey presented his budget proposal before the Edison Council. Under the proposed budget, municipal tax rates will increase by 4.15%. In contrast, last year’s municipal budget increased the rate by 1.32%.
Mr. Lankey cited decreasing revenue, rising costs and a growth in the number of tax appeals as reasons for the increase.
“In the past few years I’ve generally come with a lot of positive energy and a lot of positive news. This year’s budget is a much greater challenge than we’ve had in previous years,” said Mr. Lankey during the annual budget presentation. “We’ve seen some of our revenues decrease. We’ve had to use a lot of one-time items this year which as you know we generally try not to do but in an effort to try to keep the tax increase low we did use a lot of one-time items,” he said.
According to the Administration, the Township’s 2018 revenues were approximately $2.5 million less than anticipated.
Mr. Lankey cited a number of reasons for decreased revenues, including a drop in Uniform Construction Code fees. In 2018, the Township received nearly $6.2 million in fees compared to $4.9 million this year, a decrease of nearly 20%.
“If you look at our collections, so far through the year, they are even down a little bit more than that,” he said, referring to the Uniform Construction Code fees. “You are looking at a $1.3 million reduction in that line item itself which is one of the reasons why we are seeing a difficult budget at this point in time for this year.”
Mr. Lankey also stated that the Township was facing several significant fixed costs, pointing to public safety and insurance costs. Approximately 85% of the Township’s budget is due to union contracts and state regulations, according to the Administration.
“When you look at our services and expenses, there’s not a lot of variability and not a lot places where you can make reductions. Lot of our insurance costs are pretty much set in stone by what our experience is. A lot of our pension amounts are set statutorily. So in far as looking at reductions, in some of these things, it’s a challenge to do that,” he said.
Mr. Lankey also pointed to an increase in tax appeal payments. “On top of the decrease in ratables, we actually had $44 million of refunds which we have had to payout and unfortunately we had a jump up again,” he said. Since 2009, the Township has refunded over $44 million in tax appeal refunds. In 2018, the Township paid out over $1.5 million, an increase from the $630 thousand paid out in 2017 in tax appeal refunds.
In light of decreasing revenue, Mr. Lankey’s budget proposal relies heavily on dipping into the Township’s surplus. “We are actually utilizing probably 90% of our surplus in this budget to keep the tax increase to the 4% that we are looking at,” said Mr. Lankey. The 2019 budget will use most of the surplus, leaving a remaining balance of less than $1 million.
Mr. Lankey also alluded to future increases. “Next year is going to be a huge, huge, huge challenge,” he said.