William J. Guhl
To the editor:
On April 17 Lawrence voters go to the polls to consider a budget which exceeds the 2 percent limit on a municipal property tax increase for 2012. In a curious bit of counter-intuition, residential property owners save money if the referendum question passes. The purpose of the referendum is to continue providing residential garbage collection as a service funded by property taxes.
In Mercer County some towns use municipal employees to collect garbage, others contract with private companies for the service and a couple of towns don’t provide the service, leaving property owners to contract individually. Lawrence Township currently utilizes an outside contractor for curbside collection and pays for the service through property taxes. Conventional wisdom says there is an economy of scale benefit to providing the service in bulk.
Since 2011, New Jersey law limits the increase in property taxes for municipal services to 2 percent above the prior year tax levy. As a consequence, towns have been struggling to operate within that ceiling. To compound the challenge state revenues to towns were reduced substantially in 2010. The result has been a reduction in both services and staffing. In addition, towns now are charging fees for services that in the past were funded by the property tax.
Some services cannot be fee based public safety, roadway and park maintenance, and municipal administration and finance are examples. As the cost of services continues to increase, more of the amount available in property taxes will be consumed. Discretionary services will have to be funded by fees or discontinued altogether. Lawrence Township faces that dilemma in 2012. Rather than go to a fee-based system or eliminate residential collection, local elected officials are giving voters the opportunity to continue the service and fund it with property taxes. Voting “yes” will save homeowners money.
With the exception of the mom-and-pop retail uses, garbage collection is for residents only. In Lawrence, approximately 62 percent of taxed property is residential. The remaining property, comprised of corporate campuses, shopping malls, office parks, and industrial sites, is also subject to the property tax that funds garbage collection a service those properties don’t receive. So for every $1,000 Lawrence pays for garbage collection, residents are subsidized $380 by non-residential taxpayers. In addition, nearly everyone who owns a home itemizes deductions when filing federal income taxes. Real estate taxes are a permitted deduction, and keeping the cost in the property tax saves on one’s income taxes. Therefore, residents currently are subsidized by both non-residential property tax payers and Uncle Sam.
If the referendum fails, the cost of garbage collection will become a fee-based service. Only those receiving the service will pay the cost. The current subsidy provided by non-residential property taxpayers will disappear. And so will the benefit of an income tax reduction because service fees cannot be itemized. It’s very simple math. Vote “yes” on the referendum.
William J. Guhl
Hopewell Township
Note: Mr. Guhl is a former municipal manager for Lawrence
