SOMERVILLE, NJ – Homeowners in the county seat will see their municipal property taxes increase by an average of $165.03 in 2017, according to a preliminary budget released Monday night by the Borough Council.
The increase of $13.75 per month is based on the assessed valuation of $270,538 for the average home.
That increase does not include county or school taxes.
Year in and year out, homeowners in this 2.2-square mile borough are forced to bear a disproportionate share of taxes because of the preponderance of buildings that do not pay any taxes. Nearly 40 percent of the real estate in the borough is tax-exempt – including Somerset County government buildings, churches, cemeteries, schools, group homes, non-profit organizations and Robert Wood Johnson University Hospital/Somerset.
Councilman Dennis Sullivan said the total assessed valuation of exempt property in the borough is $442 million. The total assessed value of taxable properties is $1.15 billion. Sullivan estimated an additional $4 million in property taxes would be generated by those exempt entities.
However, “we can’t mandate any tax collection on these properties,” he said.
To offset the tax-exempt properties, the borough is in the beginning stages of a sweeping commercial and residential redevelopment that will generate significant revenues for the borough as buildings are completed, rented and leased. Those payments from the developers will help to level off tax increases in the future, according to Mayor Brian Gallagher.
The preliminary municipal budget totals $19,155,477 and anticipates revenues of $6,679,241, according to Kevin Sluka, borough clerk. The balance of $12,476,235 must be raised through taxes.
The borough will use $1.8 million in surplus funds to lessen the tax increase for each homeowner.
State aid to New Jersey municipalities has been reduced drastically over the past several years, according to Sluka; Somerville expects to receive $1.3 million from New Jersey.
The 2017 budget is an increase of $638,092 over the 2016 budget; of that total, $515,000 represents debt repayment, according to Sluka.
Revenues have been impacted by significant debt payments; a slow return on PILOT agreements; tax appeals, a loss of rateables and a decline in construction fees, according to Sluka. The loss of rateables translates to a $15 per homeowner in the $165.03 overall increase.
PILOT – Payment in Lieu of Taxes – is a government program that encourages builders to develop blighted or neglected properties; in return, the municipality offers incentives based on construction costs and other economic factors to determine the amount of money paid by the developer to the municipality.
The Edge at 125 Main, a luxury apartment development in the center of downtown Somerville, and Cobalt Apartments on Veterans Memorial Drive East are the first two developments in the borough’s PILOT program.
Councilman Tom Mitchell, chair of the Finance Committee responsible for compiling the budget, said it is likely there will be some adjustments made over the next several weeks.
A public hearing on the budget proposal will be held April 17 in council chambers at Police Headquarters, 24 So. Bridge St. The meeting opens at 7 p.m. following a one-hour executive session closed to the public.