MILLSTONE: Municipal budget’s tax implications unclear

By Joanne Degnan, Managing Editor
   MILLSTONE — The Township Committee has introduced a $5.9 million budget for 2012 that cuts overall spending by 3.3 percent, but township officials are not yet disclosing what the projected municipal tax rate will be.
   At the May 16 Township Committee meeting when the draft budget was introduced, Township Business Administrator Thomas Antus would only say the total property tax bill — which includes school taxes, municipal taxes, county taxes and fire district taxes — would no higher in 2012 than it was it was 2011.
   ”We anticipate that when a resident of Millstone Township opens their tax bill, the total tax from all entities, there will be no tax increase,” Mr. Antus said.
   After the meeting, Mr. Antus and members of the Township Committee were asked specifically about the municipal tax rate.
   ”We are going through a state budget review this year, every three years we go through a budget review, and until they actually tell us and sign off … we’re not going to know exactly what our rate’s going to be,” Township Committeeman Bob Kinsey said.
   ”It is going to be higher than it was last year,” Mr. Kinsey said. “But the rate was already higher than it was last year, just on paper, because of the reassessment.”
   A reassessment done in the fall has significantly lowered the average assessed value of township homes from $511,00 to $450,00. When overall property values decline after a reassessment, a corresponding increase in the tax rate is needed if the municipality intends to collect the same amount of revenue as before.
   Mr. Kinsey said Millstone’s 9.8-cent municipal tax rate will need to be raised about 1.5 cents just to compensate for the lower property values after the reassessment.
   ”If we introduced the exact same budget as we introduced last year, the municipal tax rate would be reflective of 11.5 cents,” Mr. Kinsey said.
   Both Mr. Kinsey and Mr. Antus declined to say whether the municipal budget that was introduced last week would require a tax rate higher than 11.5 cents.
   ”That’s something we’ll be able to tell you on June 20,” Mr. Antus said, referring to the public hearing date.
   Mr. Antus and Mr. Kinsey emphasized the 2012 budget makes $207,651 in spending cuts, continuing a six-year trend of leaner municipal budgets. It also utilizes less of the prior year’s fund balance, or surplus.
   ”The pressure has been on us to preserve as much of the fund balance as possible,” because of steep declines in investment income and state aid, Mr. Kinsey said. “This budget uses only about $1 million in fund balance, where five years ago it was $3 million.”
   Mr. Antus added: “The use of fund balance, commonly called surplus, has to be reduced because we simply cannot regenerate it … that’s what this budget reflects.”
   Municipal property taxes represent about 6.3 percent of a Millstone resident’s total property tax bill. The lion’s share, about 73 percent, is school taxes, and that part of the tax bill is declining in 2012.
   The Millstone Board of Education’s new budget calls for no increase in the tax rate, which when coupled with the new lower property values means an average $247 drop in school taxes for the average assessed home.