WEST ORANGE, NJ — Accompanied by a slide show, West Orange Mayor Robert Parisi outlined the details of two plans he saw for this year’s budget during Wednesday’s township council meeting. He ultimately made a case for “Plan B,” which would see a property tax increase of 8.5 percent the average homeowner without cutting services if the governing body approves the budget as proposed.
The increase is well above the 2 percent state cap and is significant in the wake delivering a zero-to-2-percent tax rate increase since 2011. However, Parisi explained that there is a “$6.9 million increase in costs that are not negotiable.” Only after the state passes its budget will the township council be able to vote on the 2019 municipal budget.
“We’ve been able to put off obligations as long as we could [and] balance some things each year that kept us in a better position than we are in now,” he said.
Parisi elaborated on some of the fiscal challenges facing West Orange that include the costs involved in maintaining a paid fire department and an “overwhelming reliance of Residential Property Tax Base,” according to his presentation, which also explained that residential properties represent 83 percent of the tax base.
Although the township utilizes creative sources of tax revenue—such as a hotel tax that generates approximately $515,311 in revenue as well as ambulance billing that generates approximately $1.2 million—much of the tax revenue in a community like West Orange falls on residents, according to the mayor.
Parisi explained that one of the main reasons for the tax hike is the ever-increasing cost of employee health benefits. However, some of the valued special services that also continue to be covered in the municipal budget include full-time senior citizen transportation, free Jitney shuttle routes, unlimited bulk pickup of trash and curbside co-mingled recycling.
Although New Jersey caps out property taxes at 2 percent each year, Parisi said the state allows for exceptions when the municipality needs additional tax revenue in areas such as health benefits, pensions, capital improvements and debt services.
In West Orange’s case, pensions and municipal health benefits, which the mayor said are negotiable costs, continue to strain the township’s coffers and prove to be one of the most enduring challenges going forward, according to Parisi.
During his presentation, Parisi shared that 10 percent of the operating budget goes toward covering retiree benefits for employees.
When discussing his broader views on how health insurance will ultimately impact municipal fiscal policy, Parisi said he doesn’t believe that the “pressure and stress on future retirees to have the township benefit is going to be the stress it is today.”
“Long before 25 years, these future hires will then be retiring to the safety net of a universal health care in America,” said Parisi as he explained the administration’s recent adoption of a new contract with the fire department that eliminates health benefits upon retirement for new hires.
The mayor reiterated that he believes universal health care in America is probable and that this is “a part of [the township’s] negotiating strategy.” Parisi also characterized the 10 percent of the operating budget dedicated to retiree benefits as a “crushing obligation” and applauded the two fire unions for appreciating the immense fiscal pressure that the township is under.
“You have a huge salary and wage obligation every year,” said Parisi. “This year, it’s a $2.4 million increase with most of the unions agreeing to a 0 percent increase in salary and wage line items.”
Citing 26 miles of road paving, the purchase of a new fire engine at a cost of approximately $1.2 million and improvements to the highly popular community pool as examples of what this debt is providing to the township, Parisi also addressed an increase from $14 to $18 million in bonded debts.
During his presentation, Parisi put this budget’s tax increases in context with other Essex County municipalities, stating that West Orange has had the “second-lowest municipal tax increase of any of the 22 municipalities in Essex County” since 2008.
According to the mayor, it remains to be seen whether or not this trend will continue years to come. However, he also reiterated that this challenging budget is not yet finalized, and a public budget hearing is scheduled for June 8 and June 9 starting at 9 a.m. in the municipal chambers.