Once faced with a municipal tax increase of more than 40 cents due to a severe revenue shortfall, East Brunswick officials are now looking at about half that increase.
During its June 8 meeting, the Township Council approved a budget resolution that reduced the budget further and lowered the proposed tax increase from 23 cents to 20 cents per $100 of assessed valuation.
Much of the reason for the large increase is due to the expected loss of an anticipated $4 million that developer Toll Brothers was scheduled to pay East Brunswick as part of its purchase of the Golden Triangle redevelopment property. Toll Brothers had been paying the town in annual installments, but that deal is now the subject of two lawsuits between Toll Brothers and the township.
Mayor David Stahl said last week’s 3- cent reduction was realized due to modifications requested by the state Local Finance Board, as well as cuts made by the council during its budget workshops, and grant money the town has recently received.
“All that made the tax rate drop 3 cents,” he said.
The council has yet to adopt its final budget, but introduced it earlier this year than in past years in order to give the council more flexibility with budget decisions as the year unfolds. Stahl said he is very pleased with the fact that the council has found ways to reduce what was once a 43- cent tax decreased down to 20 cents, which he realizes many residents will still have a difficult time absorbing.
“You’re never satisfied by any tax increase,” Stahl said.
An increase of 20 cents per $100 of assessed valuation amounts to $200 on a home assessed at $100,000. Municipal taxes are one component of a homeowner’s property tax bill, which also includes school, county and open space taxes. The East Brunswick Board of Education’s 2009-10 budget does not include a tax increase.
The council has reduced municipal appropriations by about $4.5 million, Stahl said, noting that officials asked every department to take a cut this year, and for the department heads to forego salary increases. Some municipal positions were also eliminated.
“But the residents are still feeling the pinch,” Stahl said. “It’s not like the economy is taking off, but it’s good to provide whatever savings you can.”
Stahl also noted that the tax increase was trimmed from 43 cents to 20 cents without deferring the township’s contribution to the state pension system, a new budgeting option that some towns have used this year. Though the deferral would have saved about 8 cents on the tax rate this year, he said, the move would wind up costing the town more in the long run because it would eventually have to pay retroactively.
As for the $4 million owed by Toll Brothers, Stahl said that equates to about 20 cents on the tax rate, and thus residents would have seen nomunicipal tax increase if the redevelopment project was moving forward. Toll Brothers had offered to work with the township before filing suit last year, but Stahl said the new deal offered by the builder included significant changes to the redevelopment plan that were “unacceptable.”
In addition to the expected loss of funds from the Golden Triangle deal, the township lost over $4.5 million in revenue due to reductions in state aid, program revenues and diminished reserves.
Stahl said the 2009 municipal budget, which totals about $60 million, has been the most difficult package he’s dealt with since becoming an elected official. He said the 12 percent loss of revenue, plus the overall decline in the economy, made the budget very challenging. As mayor, he is faced with leading the charge to find ways of bringing savings.
“I was responsible for preparing this budget. On council, you review and make suggestions,” he said. “But it was more challenging because you take over as mayor on Jan. 1, and so you are already behind the curve.” Work on a given year’s municipal budget actually begins during the previous summer or fall. In fact, Stahl said he has already begun to examine the 2010 budget.
The township is scheduled to hold a public hearing on the latest amendment to this year’s budget on June 22.