NEW PROVIDENCE, NJ – As the Borough Council approved a resolution to certify the annual audit report at its Monday, July 17 meeting a discussion regarding borough finances ensued.
Councilman Michael Gennaro explained that overall the borough’s audit was well received. The borough could accumulate debt up to 3.5 percent based on the equalized property values. The allowable debt could total over $86 million. However, the borough’s current debt represents only one percent of the equalized value or approximately $21.9 million. “We could borrow more, but we don’t want to,” he said.
Councilman Robert Robinson asked the council about the benefits of carrying debt. Gennaro explained that for it would be unreasonable to appropriate large amounts of money in one year for some projects when that expense can be distributed over multiple years. Mayor Al Morgan noted that the five year planning cycle allows the borough to plan large scale projects. Instead of carrying a lot of debt at once the borough plans a new bond sale when the old debt matures.
Gennaro also noted that for several years the assessed valuation of properties has gone up. The increase in ratables is mostly due to large commercial entities that have found a home in New Providence. On the other hand the borough has seen many tax appeals regarding commercial properties in the aftermath of the 2007 economic meltdown.
Gennaro explained that a resident had asked him what the borough is going to do with the additional tax income due to the increased ratables. He said that the better question would have been: “How are we able to absorb the impact of devaluated commercial properties.”
The borough had been gifted “a significant piece of property” which it sold and took the proceeds to cover the gap left from multiple tax appeals instead of raising taxes. Gennaro said that he doesn’t expect many more commercial tax appeal cases to wreak havoc to the borough’s finances.
The borough’s tax raise is capped at two percent. The borough has been increasing its budget within the cap. The five year planning helps the borough to plan projects and also to be prepared for unexpected or emergency situations. Robinson noted that the county does not have caps. Last year Union County taxes rose 7.9 percent.
The borough is also taking advanage of multiple grant opportunities. Last year the grants received totaled $665,000. At the Monday meeting the council authorized two grant applications.
Gennaro also touted New Providence as “a strong community” as 99.5 percent of assessed taxes were collected.
However, the annual report had one recommendation for the borough to correct. It is recommended that the borough has its venders fill out a disclosure form identifying their political contributions. The council approved a corrective action plan as required by the annual audit.