A $4.2 million consolidation could cut proposed 10-cent tax hike to between 3 and 4 cents.
By: Sharlee Joy Dimenichi
A debt refinancing plan introduced by the Township Council on Tuesday could cut an anticipated tax increase to about a third of its size.
The plan, which would consolidate $4.2 million in debt due to be paid off over the course of this year and spread the payments out over the next three years.
Doing so would save the township about $4 million in debt service payments in 2004, cutting a proposed 10-cent tax increase to between 3 and 4 cents, according to Ron Schmalz, township public affairs coordinator.
The council introduced an ordinance Tuesday night by a 4-0 vote authorizing the refinancing plan. The council’s four Democrats Mayor Frank Gambatese and council members Carol Barrett, Chris Killmurray and Edmund Luciano voted for the introduction. Republican Councilman Ted Van Hessen was not in attendance.
Township Manager Matt Watkins said the refinancing would reduce debt service payments in the proposed 2004 budget from about $7 million to about $3 million.
The preliminary budget, which Mr. Watkins presented to council on Feb. 3, included $40.7 million in spending, down 2 percent from the $41.6 million 2003 budget. The plan had called for a tax rate of 56 cents per $100 of assessed valuation, up 10 cents from the previous year.
The tax hike is being caused by the downturn in the economy. The township saw slower ratable growth in 2003 than anticipated, meaning it has less surplus available to use as revenue in its 2004 budget.
Under the proposed rate, the owner of a house assessed at the township average of $188,600 would have paid $1,056 in municipal taxes in 2004.
If the refinancing can shave 6 cents off the tax rate, the owner of the same house would pay $943 in municipal taxes in 2004. The owner of a house assessed at the township average paid $867 in 2003.
Council members said they would oppose the budget because of the tax increase. Mr. Watkins has said it was a working document.
The township was to have submitted the refinancing plan to the state Local Finance Board by Wednesday, said Joseph Monzo, township chief finance officer. The Local Finance Board meets March 10 and a public hearing on the ordinance is scheduled for March 16.
The refinancing would spread debt payments over three years and enable the township to take advantage of favorable interest rates, Mr. Schmalz said.
If adopted, the refinancing would affect nine series of general improvement bonds issued between 1986 and 2003. Money from the 1986 bond issue went primarily to construction of the municipal complex, Mr. Schmalz said.
The 1996 series was issued primarily for road overlays, improvements to Sondek Park and purchases of equipment and property, Mr. Schmalz said.
The 1998 bonds were intended for road overlays and the extension of Beekman Road, Mr. Schmalz said.
The 1999 bond series was issued for property acquisition, mobile data computers for police officers and radio equipment for various township departments, Mr. Schmalz said.
The 2001 bond issue went toward road overlays, equipment purchases and playground equipment renovations, Mr. Schmalz said.
Most of the 2003 series financed early retirement benefits for township employees, Mr. Watkins said. The township’s obligation to pay early retirement benefits is separate from its commitment to contribute $83,927 to the state pension fund, Mr. Watkins said.
The township did not have to allocate money to the pension account in 2003 because state officials said the fund was over-funded, Mr. Watkins said. The state pension fund covers township police officers and fire officials.