EAST BRUNSWICK — The Township Council has adopted a nearly $56 million budget that cuts spending but raises taxes by 6 percent.
The 2011 municipal budget adopted July 25 reduces spending by about $750,000 or about 1.2 percent from last year. But because of a shrinking tax base and numerous tax appeals, township officials said a municipal tax rate increase was needed just to stay even.
For a home assessed at $100,000, taxes will increase by $162.75 for the year, according to Township Chief Financial Officer Lou Neely.
The overall tax base has shrunk by $50 million from last year, which is the result of a downturn in home and business values, Neely said.
As such, Neely said half of the 6 percent tax increase is needed just to maintain the same level of tax revenue.
Tax appeals have also hit the township hard. To date, the township has paid out over $25 million in tax appeals, he said.
Given the challenges the township is facing, Republican Councilman Mike Hughes was supportive of the budget.
“This budget is less than last year’s, less by a significant margin,” Hughes said. “I think it is a very responsible budget.”
Township officials said they have heard complaints from many residents about taxes increasing by 12 percent this quarter. However, Neely explained that it is really just a 6 percent increase condensed into the second half of the year. The reason this occurs is because the state works on a fiscal-year budget — running from July 1 to June 30 — while East Brunswick runs on a calendar year budget. East Brunswick must wait for the state to set state aid in the budget before it can approve the township budget, Neely said.
“We already go through half our year before the state tells us the amount of revenue we may receive and put in our budget,” Neely said.
As such, Neely said the first two tax payments this year in February and May were based on last year’s tax rate. The last two tax bills, forAugust and November, will be based on the 6 percent tax increase.
“We are asking them to pay in six months what they would normally pay in 12 months,” Neely said.
Neely said the process is confusing for homeowners as tax rates oscillate back and forth over the course of the year.
“It is not our design to do that,” Neely said. “It is a condition of the state government.”
Republican Councilman JamesWendell asked about moving the township to a fiscal year calendar to match the state. But Neely said this is complicated because tax laws and court cases are all based on a calendar year budget. Some towns have switched to a fiscal year budget in the past but are now switching back because it only creates “an extra bureaucratic process” that adds another layer to local government.
Yet the 6 percent tax increase is still of concern for some residents and business owners who worry about the impact it could have on local business.
H. Scott Aalsberg, an attorney based in East Brunswick, said he fears that increasing taxes will force businesses to move out of town, which will only hurt the local economy.
“When people can move to other towns and pay less, they will do that,” he said. “They will forgo East Brunswick and go to those cheaper towns.”
Council members, however, said there is only so much they can do. Of each tax dollar received, Neely said, approximately 65 percent goes to the Board of Education, 14.5 percent goes to the county, 19 percent goes to the township, and 2 percent goes to the library. An additional .22 percent is used for municipal open space.
Councilwoman Denise Contrino said that the township cannot control the Board of Education or fire district budgets.
“The township is a conduit for collecting money,” Contrino, a Democrat, said. “They are separate. All we do is collect the money and give them the money.”
Yet when tax appeals shrink revenue, Republican council President Camille Ferraro said, it is only the township that suffers the financial consequence.
“We absorb that cost,” Ferraro said.
And even though the Board of Education recently received $1.3 million in additional aid, Ferraro lamented that only half went toward property tax relief.
“It’s a bad situation,” she said.