Lawrence council opts for 1-cent tax rate jump

Members deem 3-cent hike too much.

By: Lea Kahn
   A proposed 3-cent increase in the municipal property tax rate to support the proposed $31.4 million municipal budget for 2003 should be reduced to a 1-cent increase, Township Council decided Tuesday night at its budget workshop session.
   Aiming to minimize the municipal property tax bite, Township Council instructed Municipal Manager William Guhl to pump an additional $500,000 of surplus funds into the budget as a source of revenue. The proposed budget already includes $4 million in surplus funds as a revenue source.
   The council’s decision to use an additional $500,000 of surplus funds in the proposed budget means the municipal property tax rate would be 52 cents per $100 of assessed value, down from 54 cents in the proposed spending plan that was presented to the council last week.
   A 52-cent municipal tax rate means the owner of a house assessed at the township average of $162,950 would pay $847.34 in municipal property taxes for 2003 — an increase of $16.29 over the $831.05 that homeowner paid in municipal property taxes for 2002.
   Township Council plans to introduce the proposed 2003 spending plan at its Feb. 18 meeting. A public hearing on the budget would be held in March, followed by a vote on the document.
   Mr. Guhl told the council that the 2003 proposed municipal budget does not contain any new programs or new employees. Departmental budgets have been kept at the 2002 level. In some cases, some of the spending accounts in those departments have been reduced, he said.
   If the council decides to make changes to the appropriations, or spending, side of the budget, those changes would have to be in the areas of personnel or services — "plain and simple," Mr. Guhl said.
   If a township employee retires or resigns, a decision would be made whether to replace that employee after analyzing if that job is needed, Mr. Guhl said. The exception, of course, is in the Police Department, he said. If a police officer retires, that position automatically would be filled.
   "I don’t want to cut services," Mayor Greg Puliti said. "I want to keep the level of services. What about the other side of the (budget) equation — the surplus? We are looking at a 3-cent tax rate increase. If we knock off 2 cents, we would have to take $500,000 (from surplus funds)."
   The township ended 2002 with $8.1 million in surplus funds. If the council decides to use $4.5 million in surplus funds, it would leave $3.6 million in that account, Mr. Guhl said. But there is no guarantee that the township can "regenerate" the $4.5 million that would be used in the 2003 budget, he said.
   "If we use surplus funds, we have to be able to regenerate it at the same level," he told Township Council. "It is the principal source of our investment income. We lost $360,000 in (anticipated) interest income last year (because of lower interest rates). Aside from the surplus line item, there are not many areas where we can generate more revenue to create a surplus."
   For example, last year’s budget anticipated generating $955,000 in construction fees and permits, but the township actually received a little more than $1 million in fees and permits. The budget also anticipated $500,000 in court fines and costs from Municipal Court, but received $646,000. The township expected to receive $770,000 in delinquent tax payments last year — but it actually received $1.1 million.
   "When do we use surplus funds?" Deputy Mayor Mark Holmes asked rhetorically. "By the state Department of Community Affairs standards, we carry a hefty surplus. The rule of thumb is, the surplus should equal 10 percent of the amount of the budget. I don’t have a problem using surplus. It’s times like this, when you are going through difficult times, that you use it. We should go down 2 cents on the tax increase."
   Council members Rick Miller and Pam Mount said they agreed with Mr. Holmes that the municipal tax rate increase should be kept to a minimum. The council wants to be helpful to the citizens and avoid wide swings in the tax rate, Ms. Mount added.
   "It is good to have a budget surplus," Mayor Puliti said. "This is my eighth year on council. It is a rainy day, and this will help the residents. (A 2-cent cut) is good. We don’t know what next year is going to bring (in the economy). I think we should be cautious, and offer relief when we can."
   Councilwoman Doris Weisberg said she thought "long and hard" about the budget since Mr. Guhl handed it out last week. She said that initially, she favored a 1-cent drop in the tax rate, but she is "happy" with the 2-cent tax rate cut.
   "One of the things that concerns me is that we just had an increase in the school tax (due to the school bond referendum)," Ms. Weisberg said. "Some retirees who don’t have pensions are living off the principle (money they have saved and invested). Also, property taxes are a burden on young people.
   "I am really concerned about the tax rate for the general population," she said. "I think next year is going to be a tougher year. We can’t keep taking surplus money. We may have to make some hard decisions next year."
   "I don’t think there is a wrong answer in this case — 52 cents, 53 cents or 54 cents," Mr. Guhl said. "If we take $500,000 in surplus, we will be $500,000 short next year. If you wanted to take $1.5 million (from surplus), I would say that would be really unwise."