Lawrence taxpayers face 9-cent hike

Municipal rate could rise 14 percent.

By: Lea Kahn
   Township property owners are staring at a 14 percent increase in the municipal property tax rate, based on the proposed $35.1 million municipal budget for 2005, unveiled before a stunned Township Council on Tuesday.
   The municipal property tax rate would jump by 9 cents — from 56 cents per $100 of assessed value to 65 cents, Municipal Manager William Guhl told Township Council. This is the largest property tax increase since the 1990s.
   The proposed 9-cent property tax rate increase follows on the heels of a 4-cent tax rate increase last year — which, at that time, was the single largest municipal tax rate increase in Lawrence since the 1990s.
   The 9-cent tax rate increase means the owner of a house assessed at the township average of $163,000 would pay $1,060 in municipal taxes — an increase of $147 over the 2004 tax bill of $913.
   Township Council members appeared surprised at the size of the proposed increase. Councilman Mark Holmes said, "something’s got to give." The council plans to begin reviewing the budget at its Feb. 1 meeting.
   Municipal services will remain at the 2004 level — despite a $2.1 million increase in the proposed budget. That represents a 6.5 percent increase in municipal spending, Mr. Guhl said in his budget message that accompanies the document.
   Of that $2.1 million increase, $661,000 is attributable to the normal increases in salaries, he said. Debt service increased by $527,000 to pay for the bonds for the Police Department Municipal Court building and the first steps toward Municipal Building renovations.
   The cost of health benefits increased by $260,000 and pension bill costs went up by $232,000. There is no end in sight to escalating health benefits costs, Mr. Guhl told the council.
   The Reserve for Uncollected Taxes is proposed to increase by $323,000, Mr. Guhl said. The increase in the reserve anticipates increases in school district and county property taxes. The school and county budgets are adopted long after the township approves its spending plan.
   The reserve provides a cushion against school, county and municipal taxes that have been billed but not collected, he said. The township acts as a tax collection agency, doling out the taxes to the school district and the county before it receives its own share, he said.
   The proposed budget does not include new programs, but it does include one new position — that of a paid firefighter. The township already employs four paid firefighters, who are on hand during the day to drive the fire engines. Volunteer firefighters make up the rest of the crew that responds to a fire.
   If Township Council approves Mr. Guhl’s recommendation to hire a fifth paid firefighter, it would cost about $35,000 — including salary and benefits — for 2005 on a pro-rated basis. The cost for a full year would be about $60,000.
   Mr. Guhl noted in his budget message Tuesday night that 2004 had been a "watershed year" for the community. It was the first year in more than a decade that the municipal property tax rate exceeded inflation, he said.
   Real estate development opportunities dwindled as available land become more scarce, he said. Ratable growth was a fraction of what the township had seen on average over the past 10 years — and that trend has continued. It is due, in part, to the township’s acquisition of undeveloped land for open space preservation, he said.
   The vast majority of township services, such as police and fire protection, garbage collection, road construction and maintenance, emergency medical services and park maintenance are paid for with state funding, local revenues such as investment income and court fines and finally real estate taxes and surplus, Mr. Guhl said.
   "The trend in state and locally generated revenues in recent years has been virtually flat," Mr. Guhl said. "Interest income remains modest due to continued record low rates. State revenues are being budgeted at 2004 levels with no expectation of increase, given New Jersey’s budget woes."
   Ten years ago, state support was $5 million and accounted for more than 20 percent of the municipal budget costs, Mr. Guhl said. This year, state assistance is $5.26 million, which will fund less than 15 percent of the budget. Had state support increased at the rate of inflation, the township would have received $6.72 million in state aid, he said.
   "Simply put, state assistance and locally generated non-tax revenues will not support the normal growth in costs," he said. "The remaining potential revenue sources are surplus and real estate taxes."
   Mr. Guhl said that last year, the administration pumped $4.9 million of surplus into the budget as a revenue source. The township has relied more and more on surplus funds to fill revenue gaps over the past 10 years, but it appears that the township has reached its full potential in using surplus funds, he said.
   The township regenerated $4.6 million in surplus funds at the end of 2004 — less than the $4.9 million that it pumped into the 2004 budget. As a result, Mr. Guhl said, he is recommending using $4.5 million out of the $7.9 million in surplus as a revenue source in the 2005 budget.
   "I and my staff have examined carefully the services we provide and their costs and cannot, without reducing those services, reduce the tax rate," Mr. Guhl said. "We are not a community that provides luxury services and, as such, I do not recommend cutting them."
   When Mr. Guhl completed his delivery of the budget, Mr. Holmes said Township Council needs to take a "serious, hard look" at the budget.
   Mr. Guhl said the administration, which prepares the budget, is open to any suggestions. The only way to reduce the budget is to reduce expenditures, he said. It would involve looking at services — but the services provided are the ones residents expect, he added.