By Joanne Degnan, Managing Editor
ALLENTOWN — The borough’s draft $2.19 million budget for 2012 spends $229,953 less than the prior year, but still requires a projected 5.9-cent increase in the tax rate that will cost the average assessed homeowner about $174 more a year.
Mayor Stuart Fierstein delivered the bad news at the June 12 Borough Council meeting when the proposed spending plan was introduced.
Mr. Fierstein said the tax increase was needed to compensate for higher fixed costs, such as pension contributions, and the refusal of Verizon, the borough’s second-largest taxpayer, to pay $46,190 in business personal property taxes it owes for this year.
The borough originally had faced a 13-cent tax hike, but whittled away at that with $229,953 in cuts that reduced the increase to 5.9 cents, the mayor said.
”I have had conference calls with the auditor; anything less than this (tax increase) he will not sign off on,” Mr. Fierstein told the council.
There are no salary increases in the budget, and planned purchases will not be made, including the new police car that was supposed to replace a 10-year-old Crown Victoria that spends more time being repaired than on the road, Mr. Fierstein said.
A 5.9-cent increase in the municipal tax rate would raise it from 61.8 cents to 67.7 cents per $100 in assessed value, a 9 percent increase. This means the owner of an Allentown home assessed at the borough-wide average of $294,000 would pay $1,990 a year in municipal taxes — an increase of $174 a year, or $14.50 a month.
There will be no increase in water or sewer rates in 2012, the mayor said.
The proposed tax levy, which is the total amount of taxes that needs to be collected to support operating costs, is $1.31 million (compared to $1.21 million in 2011) and complies with the 2 percent levy cap law. This is because $73,596 in borough expenses — including higher pension fund obligations set by the state and allowable debt service and capital leasing increases — are permitted cap exclusions.
Mr. Fierstein blamed Verizon for 2.7 cents of the 5.9-cent tax rate increase. In a budget as small as Allentown’s, the $46,190 in business personal property taxes owed by Verizon for 2012 is equal to the average taxes paid by about 24 homes.
”By virtue of the fact that someone has decided they are not going to pay (their taxes), it falls back on the rest of property taxpayers to pay,” Mr. Fierstein said.
Verizon notified the borough in March that it would stop paying taxes on its poles, wires and other equipment located within Allentown. Verizon maintains a state law permits it to stop paying the business personal property tax to any town where it no longer provides landline service to 51 percent of households.
As more households switch from traditional copper-wire landlines to cell phones, Internet-based phone service or cable TV company-based phone service, the list of towns affected by the 51 percent rule has grown to at least 68, according to the New Jersey League of Municipalities. Hopewell Borough was among the first towns to challenge Verizon in tax court, but the judge has not yet issued a decision.
Mr. Fierstein said he is frustrated by Verizon’s refusal to provide any documentation to support its position landlines are serving less than 51 percent of Allentown’s 594 homes. He noted the 08501 Allentown ZIP code and the 259 and 208 Verizon phone exchanges identified as Allentown actually serve several surrounding communities, not just the half-square-mile borough, and questioned whether Verizon is even using accurate data in applying the 51 percent rule.
In an interview Friday, Mr. Fierstein noted the Verizon tax dispute has implications beyond the municipal portion of residents’ property tax bills. School taxes for the Upper Freehold Regional School District are apportioned between Allentown and Upper Freehold, using a state equalization formula that is based on total population and the collective assessed property value of each municipality.
The school district must use the state-provided valuation figures that still include the $1.81 million assessed value of Verizon’s business property as part of the borough’s tax base — even though the borough is unable to collect the $46,190 in taxes Verizon should be paying, Mr. Fierstein said.
”Our school taxes are too high,” Mr. Fierstein said. “We’re paying more than we should be.”
Mr. Fierstein said that because the state valuation data given to the school districts is based on a “three-year rolling average,” it will take time for the impact of the Verizon case to be reflected in the data.
”It will take four years for the problem with the figures to work itself out, but we have no way to go back to the district and recapture the money,” he said.
The public hearing and adoption vote on the borough’s municipal budget is set for 7 p.m., Tuesday, July 10, inside the municipal building at 8 N. Main St.

