Government

Increasing Tax Ratables Easing Borough’s Budget Process

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NEW PROVIDENCE, NJ – We have “a very nice situation,” Councilman Michael Gennaro told the council at the recent meeting as he lifted the vail on the borough’s upcoming budget. He referred to the fact that there has been “significant increases” to the borough’s tax ratables this year, similarly as last year.

There is not the same degree of difficulty in approving requests for spending as in previous years due to the favorable tax ratables, he said. “We are able to say ‘yes’ to some people,” when in the past it was not possible. However, he cautioned that this situation will not continue indefinitely. “This will probably be the last year with this size of an increase.” The ratables are projected to go up for a couple of years, but not to the same degree as this year, he explained.

Due to the increase of tax ratables the borough is able to limit the tax rate increase to 1.53 percent, “well below the two percent we shoot for every year.” The tax rate increase includes the hike of the open space tax from 0.0045 percent to 0.006 percent. The open space tax funds allow the borough to acquire open space or use it for different projects, such as for example the clean-up of the Ping Wang property.

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The open space tax funds can also be used for field upgrades. We expect the artificial turf to last, but eventually they will need to be replaced in 8-12 years depending on the level of wear and tear. We don’t want to leave the future council with no means to pay for those projects, Gennaro said.

The tax rate increase will translate into $40.70 annual increase for the average home with an assessed value of $282,000. Gennaro noted that the market value is approximately double of the assessed value.

This year we are able to increase spending by 4.3 percent or $816,000. The amount of money raised by taxes will see an increase of 4.5 percent, totaling $554,000. The total value of assessed borough properties has grown above $40 million recently. “It is a great thing for the borough’s budget, but also a testament to the attractiveness of the borough.” We were able to attract businesses that were willing to spend money on their land and buildings. “We are pretty proud of that,” Gennaro stated.

Gennaro also listed some of the planned spending items. One of them is updating the borough’s tax maps in preparation for a borough-wide tax assessments “that will be forced upon us in probably two years,” he said. The borough is budgeting $50,000 for the tax maps.

The borough is also going to add one police officer. “We are still not back to the level we were when we cut the staff to accommodate budget needs,” Gennaro said. The cost for an added police officer is estimated at $140,000 per year. Additionally, the borough will add a full-time employee in the Community Activities Center, which is becoming busier each year with an increased number of both child and adult participants.

Other spending items include a $55,000 sewer charge increase to the Joint Meeting, $120,000 for tax appeals and $200,000 for funding ordinances that will eventually be financed through bond sales.  The borough will also set aside $50,000 for the statutory reserve of uncollected taxes.

The proposed capital budget will be approximately $1.2 million. A total of $405,000 will be spent on road work and $225,000 on building improvements. The borough will also purchase a new loader for $50,000 and new computers for $27,000. The borough expects to spend $250,000 on recreational facilities. The Fire Department will get new gear and equipment with a budgeted cost of $170,000 while $100,000 will be spent on surveillance equipment for the Police Department.

Gennaro explained that the borough is looking ahead and anticipates tax increases for the next five years. In 2018 the tax increase is estimated at 1.87 percent, and in 2019 and 2020 the rate will be approximately 2 percent.

Councilman Jim Madden reflected back to the past and the difficult times when then council had to make cuts in the budget and cut personnel. “I give those people a lot of credit. They were tough decisions, but right decisions,” he said.

Gennaro said that the council had a lot of debates back then, but always supported those difficult decisions. “We are lucky now,” but at the same time the Financial Committee understands that this situation is not “a license to spend.” It is our responsibility to keep the property taxes reasonable and to vet all spending items carefully, he said.

Mayor Al Morgan added that planning ahead five to ten years gives the borough an edge when dealing with spending.

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