By: centraljersey.com
The month that Chris Christie was elected governor, a Quinnipiac University poll found that 73 percent of New Jersey voters support merging school districts and local governments to lower property taxes. Public support for consolidation increased over a similar poll in 2006, a natural consequence of the deep recession that put intense pressure on state and local finances, particularly in New Jersey.
Our state’s shaky fiscal model, once supported by innovative industries and highest in the nation per capita incomes, is no longer viable. Over reliance on property taxes, unfunded public pension liabilities, and a failing transportation trust fund are only a few examples of the ongoing mismatch between the commitments of New Jersey’s public sector and its ability to pay. The problem is aggravated by "home rule," New Jersey’s multi-layered government that gives us 566 municipalities, 600 school districts, and hundreds more authorities and commissions.
The fiscal situation is likely to get worse, at both the state and local level. Although state revenues across the United States have begun to recover from their historic plunge in 2009, the Wall Street Journal reported last week that New Jersey has not yet posted a year-to-year revenue increase. State public finances historically tend to lag behind national economic recoveries, and states this year will face the additional challenge of replacing the expiring federal assistance provided by the 2009 American Recovery and Reinvestment Act.
New Jersey’s municipalities, including the local governments of Hopewell Borough, Hopewell Township and Pennington Borough, face related fiscal challenges.
The rapid escalation of real estate prices in the last decade, both residential and commercial, led to an even more rapid collapse in the tax base when the bubble burst. Although Hopewell Valley largely avoided the worst extremes of the housing bubble, it is indisputable that the ratables base declined, and may decline even further if the "shadow inventory" of foreclosed homes continues to force real estate prices down this year and next. If housing prices eventually return to a more normal rate of increase, 1 1/2 to 2 percent per year, it could take a decade or more to return to 2006 levels.
Hopewell Valley property tax rates are based on property values established in the Mercer County ordered revaluation in 2005 and the budgets prepared by all of the entities financed by property taxes: public schools, county government, municipalities and fire districts. The tax rates are not set locally, but the level of spending for our schools, towns and fire districts is.
The basic math is simple, with just three variables; spending, property values, and the tax rate. If property values decline (as they have), and spending remains the same, the tax rate must increase. With declining property values and increasing spending, the tax rate must increase even more.
New Jerseyans understand and are increasingly unhappy about this downward spiral. With the unforgiving truth that we pay the highest per capita property taxes in the country, it seems obvious that removing duplication and overlap in government services is the preferred way to reduce those taxes.
While it is true that our local governments, in Hopewell Borough, Hopewell Township and Pennington Borough, each adopted resolutions last year to jointly review municipal budgets with an eye toward savings, nothing happened. Following the November election, most of the same people returned this week to the same or similar local government leadership posts.
Given the economic situation, shouldn’t Hopewell Valley taxpayers be able to expect more than business as usual from the usual suspects?
Here’s a straightforward path to significant Hopewell Valley property tax savings:
1. Leaders, perhaps the mayors of our three municipalities, should organize a meeting of elected town officials and finance staffs. The working group should include citizen volunteers.
2. A consistent format for budget reporting, more informative than the obscure categories required for state submissions, should be agreed to.
3. Using the agreed categories, the budget and staffing for each of the Hopewell Valley municipalities should be developed.
4. The three budgets should be compared, side by side, to show how much is being spent by town and Valley wide for such things as public safety, public works, and municipal overhead. The comparison should consider state and other mandates, as well as discretionary funding decisions.
5. Areas of overlap and duplication, such as two police departments, three departments of public works, and the dozen or more positions required in each town by state law, should be assessed.
6. Potential cost savings should be identified, taking advantage of new state law provisions adopted in 2007 that make municipal consolidation easier.
7. Town by town and combined tax rates should be estimated.
8. Hopewell Valley taxpayers should be able to debate and vote on the changes.
We cannot afford political "third rails" like home rule any more. Our three Hopewell Valley municipal governments, no matter how well run, are a prime example of the duplication of positions and services that drive high property tax costs in our state. No matter what storm winds blow at the national and state and state levels, on this issue, we must expect Hopewell Valley officials to stand up for local property taxpayers.
David Sandahl is a volunteer member of the New Jersey Accountability Task Force and a former deputy mayor of Hopewell Township.

