Despite significant spending cuts, the municipal budget introduced by the Allentown Borough Council at its June 12 meeting will bring a 5.9- cent tax increase per $100 of assessed value for borough taxpayers.
“We’ve cut an awful lot to get where we are,” Mayor Stuart Fierstein said after the meeting, adding that before about $230,000— or close to 10 percent of the total $2,415,775 budget — in cuts were made, taxpayers would have seen a 13- cent tax increase.
For the owner of a home assessed at the borough average of $294,000, the proposed 5.9-cent increase equates to an increase of approximately $174 in municipal taxes.
One major contributor to the increase is an ongoing issue with Verizon. The company, citing a decades-old tax statute, is stating that it is not required to pay the business personal property tax on its equipment within the borough, because the percentage of its customers in Allentown with landline service has fallen below 51 percent.
“Verizon had $1.8 million in property tax value that cannot be taxed locally, which would give about $49,000 to the borough,” Fierstein explained.
The approximately $49,000 not being paid by Verizon must now be spread among borough taxpayers and equates to a 2.8-cent tax increase for the average homeowner, he said.
To combat the unpaid tax amount, the borough joined a countersuit against Verizon by Hopewell Borough after the company filed suit against Allentown. Aside from the old statute, which Verizon says exempts it from paying taxes, perhaps being obsolete because of the changing face of technology and telecommunications, the towns are asking the company to prove that fewer than 51 percent of customers in the borough have wired phone service.
Because the 259 and 208 phone exchanges used in Allentown are also used by surrounding towns, Fierstein said, Verizon’s calculations may not be correct.
“They will not respond to us,” he said.
Adding to the budget woes are statutory increases in public employee pension expenses, along with other mandated increases from the state, which comprise 3.8 cents of the tax increase.
Despite these increases, municipalities are still required to keep spending within the 2.5 percent cap on annual property tax increases.
Although state aid numbers won’t come in until New Jersey legislators adopt their budget by the July 1 deadline, Fierstein said borough officials are expecting the amount to remain flat from last year.
“We took out a number of things from the budget in order to compensate for what we are dealing with,” Fierstein said. “The cuts were numerous across the budget.”
Among the slashed items were the slated purchase of a police car to replace an early 2000s model and various planned capital projects.
Officials were also able to cut public works spending by $20,300 by purchasing less manpower for the year in their shared-services agreement with Robbinsville.
“You have to basically accept that everything you cut is going to create some additional burden, but you have to live within your means,” Fierstein said.
In better news for residents, the water and sewer utility budgets, also introduced at the June 12 meeting, will carry no rate increases.
The public hearing and proposed adoption for the municipal budget are slated for the July 10 Borough Council meeting.