SOMERVILLE, NJ – A final public hearing on the borough’s 2017 budget, which includes an average tax increase of $145 for individual homeowners, will be held Monday, May 1 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.
The property tax increase is based on the assessed valuation of $270,538 for the average home.
That increase does not include county or school taxes; the proposed increase on the country level is less than $5 annually.
The public will have an opportunity to comment on the proposed tax increase before the Borough Council votes on the budget, which had come in with an original proposed tax increase of $165; that total was pared down by the borough’s Finance Committee, headed by Councilman Tom Mitchell.
Year in and year out, homeowners in the seat of Somerset County government 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 $145 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.