By Nick Norlen, Staff Writer
The majority of municipalities throughout New Jersey received the sobering news this week that state aid allocations will likely be greatly reduced in the coming fiscal year.
Most local mayors and administrators reacted to the changes — which include reductions up to 37 percent in the area — by saying that the cuts will likely necessitate tax increases, the use of their surpluses, or reduction of services.
As part of Gov. Jon Corzine’s belt-tightening budget plan, the reductions, posted this week at the Web site of the State Department of Community Affairs’ Division of Local Government Services, are subject to approval by the legislature.
Gov. Corzine discussed the proposed cuts, which he called “unprecedented,” in a speech given to local officials on Thursday.
”The fact is, New Jersey has a government its people cannot afford,” he said. “I know the cuts are a tough pill to swallow for small communities. And I’ve heard many of you argue that it will lead to property tax hikes as a result. I respectfully disagree.
”There is no reason that consequence is inevitable,” he said. “Some local cuts may well be warranted. But more importantly, I actually think the proposed cuts in local aid present all of us an opportunity to share services, eliminate overlapping tasks, and renegotiate contracts.”
Here is a rundown of how the proposals affect Packet-area municipalities:
Princeton Borough
In Princeton Borough, officials were notified of an 11 percent reduction — or approximately $164,000 — that includes cuts of $70,000 in Homeland Security funding, $66,800 in consolidated municipal property tax relief and $26,400 in municipal property tax assistance.
Borough Administrator Bob Bruschi broke the news to the Borough Council during an introduction to the budget process Tuesday, citing the state aid reduction as “another obstacle to overcome.”
”It’s hard to deal with those kind of numbers in Princeton Borough,” he said. “We don’t have the ability to cope with those things. It’s been a real challenge to try to figure out how we’re going to be paying this when we’re really limited as to what our tax rate increase can be.”
Mr. Bruschi said Tuesday that the losses translate to an additional 2 cents on the borough’s tax rate, but said he — and his counterparts in other towns that are considering even heavier tax hikes — don’t expect the governor to change his mind.
”We’ve been down this road before with the state,” he said. “It appears to me that they’re meaning business.”
Because the borough has limited revenue options, it will likely use surplus money — probably about $1.7 million, the same amount used last year — to address this year’s situation, which is compounded by a $300,000 decrease in construction fees, Mr. Bruschi said.
Though he said the borough will be able to “make it work” this year, Mr. Bruschi said he’s more concerned about finding a long-term solution.
”Our ability to look at a one-year snapshot is now an extinct animal. We can’t do that any longer. We need to be able to look further ahead the best we can,” he said. “I have no silver bullet here but we need to identify and create some alternative revenue. That’s going to be a real challenge for a town that doesn’t get a lot of ratables.”
Princeton Township
In Princeton Township, state aid will likely be reduced 8.4 percent — or $183,416 — including cuts of $98,600 in consolidated municipal property tax relief, $70,000 in Homeland Security, $62,800 in municipal efficiency performance program, and $40,000 in municipal property tax assistance, buoyed by an $88,700 increase in total tax receipts distribution.
Princeton Township Administrator Jim Pascale said the combination of the tax levy cap and the reductions in state aid “forebodes difficult times for municipalities.”
”What’s happening is that towns are being forced to either reduce services or reduce their surplus or a combination of both,” he said. “We stand in the latter.”
Similar to remarks made by Mr. Bruschi, Mr. Pascale said most individual department budgets are being maintained, while costs like pensions and insurance rise.
”There’s nothing of any significant amount that could counter a loss of $183,000,” he said.
To compensate, the township will draw down its approximately $5.3 million surplus — but that could be depleted after about three years, Mr. Pascale said, noting that the township’s AAA bond rating is in jeopardy.
”With the artificial cap on what you can spend … that means there’ll have to be significant reductions in services — no ifs, ands or buts,” he said, echoing Mr. Bruschi by saying that towns “have very few alternative revenue options.”
He added, “New Jersey municipalities are very much creatures of the state.”
Montgomery
Montgomery officials said they expect the state’s proposed 9.6-percent cut in aid to force them to raise taxes and cut services.
Last year, the township received $2,091,332 in total formula aid from the state on its approximately $27 million budget, versus the $1,889,712 the state proposes to allocate this year — a decrease of $201,620.
The elimination of homeland security assistance to Montgomery will also hit the township hard, according to Mayor Cecilia Birge. Without the $90,000 in this category of state aid it received last year, the township will be forced to shrink certain police department programs. The state has also eliminated $68,543 in municipal efficiency performance program aid and $38,027 in municipal property tax assistance from its total formula aid to Montgomery.
Mayor Birge said the cuts will have a “devastating effect” on an already “razor-thin” budget.
”We have not been able to fund anything beyond the most basic, critical and essential services that a local government provides in the past many years,” she said. “A significant reduction in state aid will force us to further reduce the services we provide to residents, and will undoubtedly have a significantly negative impact on residents’ quality of life.”
She added, “Like Gov. Corzine said, this is a new day. This budget forces us to put everything on the table including layoffs and significant reduction in services.”
The township is still unsure of the exact percentage increase in taxes the $201,620 decrease in state aid will place on Montgomery residents.
West Windsor
Similar long-term concerns were cited in West Windsor by Business Administrator Chistopher Marion.
”I’m concerned for this year, and I’m concerned for next year,” he said.
Mr. Marion’s comments followed news that West Windsor will face a 7.6 percent decrease in state aid in the proposed budget, a total cut of $240,412 in state aid.
About half of the cuts came from a more than 50 percent cut in consolidated municipal property tax relief, with the other half coming from the total elimination of several smaller state aid categories.
Township officials — who were waiting for the new numbers — said the budget they will send to council will likely require a tax increase of some size, because there is a reluctance in the community to make the reductions or elimination of certain township services necessary to counter the state aid cuts.
”I think the budget is going to be very tough, and very tight,” said Mayor Shing-Fu Hsueh. “If we are not going to cut projects and services, we will have to consider a property tax increase.”
The general reaction in West Windsor, Mayor Hsueh said, was that the majority of residents do not want to see services cut, but would rather face a modest tax increase.
Plainsboro
Plainsboro Township faces a total state aid cut of $218,679, which translates to a 9.4 percent decrease.
Roughly one-half of the cuts came from a reduction of $103,576 in the consolidated municipal property tax relief category.
”We weren’t certain what the level of impact would be,” said Township Administrator Robert Sheehan. “It was a little higher than what we thought it would be.”
Additional reductions were put into the new budget that the township did not expect, according to officials.
Like other towns, Plainsboro officials had been putting together the township budget but were waiting for the feared cuts presented by Gov. Corzine this month.
”It is something where we will have to go back into our budget and see if we can make some adjustments,” Mr. Sheehan said.
Plainsboro officials plan to introduce a preliminary budget at the March 12 Township Committee meeting.
Rocky Hill
Mayor Ed Zimmerman said he sees the state’s 37-percent decrease in state aid to Rocky Hill as a “major cut,” adding that it will force the borough to raise taxes and cut services.
Rocky Hill will be receiving $42,648 less in state aid for its approximately $1 million budget than it received last year, with the majority of the cut resulting from the complete elimination of consolidated municipal property tax relief to the borough, which totaled $41,676 last year.
Rocky Hill is one of the 300 municipalities in the state targeted for the most severe cuts in this category because it has a population of under 10,000.
Mayor Zimmerman said with the state calling for an elimination of free State Police service to municipalities like the borough that don’t have their own police departments, Rocky Hill residents would be paying higher taxes than their Montgomery neighbors this year.
”Without the State Police, we’re talking about a $120,000 hit, which translates to a 30-percent increase in taxes,” he said.
The state also eliminated municipal efficiency performance program and municipal property tax assistance categories of aid to the borough.
Another cost
In addition the proposed cut in state aid, towns are also facing a new tax on garbage — $3 per ton. Called the Recycling Tax, the program’s implementation will be delayed until April 1, under a bill currently under consideration by the Legislature. The tax would be charged by operators of landfills and transfer stations for all solid waste deposited at each facility.
Most municipal officials interviewed were unaware of the new tax.
However, like his counterparts, who reported that it probably wouldn’t be too much of a burden on their towns, Mr. Bruschi said the increase won’t be “too significant” for Princeton Borough.
”But it’s salt in a wound that’s bleeding freely right now,” he said.
Staff writers Greg Forester and Katie Wagner contributed to this story.
