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Zero municipal tax-hike not a done deal
(by Karen F. Mrnarevic - March 12, 2008)
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AT A GLANCE
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Current proposed Budget*
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Adjusted for
State aid cuts*
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General Fund
$10,195,876
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General Fund
$10,195,876
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Tax levy
$7,092,888
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Tax levy
$7,308,888
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Tax rate
$0.51
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Tax rate
$0.529
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Average assessed home of $519,000
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Average assessed home of $519,000
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Tax bill
$2,647
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Tax bill
$2,746
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Tax increase
$0
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Tax increase
$99
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$650,000 home
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$650,000 home
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Tax bill
$3,315
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Tax bill
$3,439
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Tax increase
$0
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Tax increase
$124
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$400,000 home
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$400,000 home
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Tax bill
$2,040
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Tax bill
$2,116
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Tax increase
$0
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Tax increase
$76
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*Based on last year’s state aid
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*Based on 2008 proposed state aid
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The Borough of Emerson introduced its preliminary municipal budget on Tuesday, March 4, and as it stands, it would result in zero tax increase on the municipal level. While there are areas of increased spending, mainly on items subject to state mandated increases, the borough was able to offset the effects by cutting spending in other areas through consolidation of services with surrounding towns and an increase in tax revenue due to new development. This is the second time in three years that the borough has been able to maintain a zero percent increase in municipal taxes.
Based on the current numbers, property owners in the borough are looking at a tax rate equal to last year’s, $.51 per $100 of assessed value. That means that the average homeowner, with a house assessed at $519,000, can expect to shell out $2,647 in municipal taxes this year. However, if the State’s budget passes, the town will see a $216,000 reduction in state aid, which will result in an average municipal tax increase of about $100, according to Borough Administrator Joe Scarpa.
In a read-through of the budget, Scarpa pointed out that many areas in which the borough can expect to see increased expense are actually not controlled by the borough, but are subject to increases mandated by the state. For instance, the state instituted a mandatory increase in police pension contributions, resulting in a $121,225, or 47 percent, increase over last year. The borough’s mandatory contribution to public employees’ pensions has also increased by $55,143, more than a 117 percent increase. Another area in which spending is controlled on a state level is funding of the local public library. Emerson’s contribution to the municipal library has increased from $433,197 in 2007 to $448,671, a $15,474 increase.
Scarpa also pointed out that there are various requirements of the borough now mandated by the state that will result in increased spending in upcoming years. While the borough has made sacrifices in order to keep spending in line with revenues, Scarpa said state-imposed regulations pose obstacles to keeping taxes stable. “The state is now mandating that towns have a qualified purchasing manager and a certified recycling coordinator… The state is the one that created the pension mess… these are not things the town did. These will have a profound impact on increasing property taxes,” said Scarpa.
So how did the borough manage a flat tax rate with all these increased mandatory expenses? Scarpa said that while reduced spending in certain areas played a part, an increase in ratables, and therefore added tax revenue, is the main contributing factor. This is due largely to new construction, both commercial and residential.
The borough’s administrative costs, including salaries and wages as well as insurance of borough employees, account for a large portion of municipal taxes. In 2008, the Borough of Emerson will appropriate $860,100 for employee group health insurance and $146,733 for workers compensation, both figures up from last year. The 2008 budget includes $80,000 appropriated for capital improvements for road improvements and sewer repair and a municipal debt service (the borough’s loan payments) appropriation of $801,692, which includes a yearly payment of approximately $187,000 for the Emerson Woods, which will be paid in installments until 2021. The borough’s current total debt is approximately $6.6 million, and there is a current existing surplus of $989,952.
Scarpa said his fiscal experience has helped him make the job look pretty simple, when in reality devising a municipal budget is a very complicated process. “I’ve done 30 town budgets in my time… I know a little about budgeting and keeping tax increases low.”
Karen F. Mrnarevic's e-mail address is Mrnarevic@northjersey.com.
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