South Brunswick Municipal Budget Presented with 5.5-cent Tax Rate Increase

The municipal budget for this year was presented during last night's South Brunswick Township Council meeting, though there is still much work to be done before the budget is finalized. The proposed $47.3 million budget carries a 5.5-cent tax rate increase, which would raise the municipal tax rate from 72.1 cents to 77.6 cents per $100 of assessed valuation.

Township Manager Bernard Hvozdovic and Chief Financial Officer Joseph Monzo presented a grim assessment to the council as revenue losses continue to affect South Brunswick.

The township has cut spending from $45.9 million in 2008 to $44.6 million this year. South Brunswick has reduced the municipal workforce by 44 employees during that timeframe. Over the last five years, South Brunswick is down 56 positions from layoffs and attrition, which reduced the township workforce from 295 people to 239 people.  

"The township is facing the toughest budget task in years with challenges to overcome on the revenue side of the equation," Monzo said. "Our revenues have faltered over the last several years."

The township ratable base dropped 4.3 percent to approximately $3.6 billion, with a high number of tax appeals being blamed for the decrease. Over the last seven years, the township's ratable base has decreased by $180 million.

"The decrease in total assessed value alone accounts for a 2-cent tax increase," Monzo said. 

In addition, the cost of Hurricane Irene and the Halloween snowstorm accounts for an additional 1.66-cent tax increase, according to Monzo. The township surplus has gone from 9.8 million in 2007 to $1.9 million at the end of 2011.

"During the last three years alone, 8 percent of our ratable base has been diminished from the net affect of tax appeals," he added.

The township's pension costs dropped by $191,000 last year, after experiencing a sharp increase over the last few years. In 2007, the township's pension obligation came in at $1.5 million, which increased to $3.5 million over the following years.

 "This is a result of the state not making its pension contribution and the way they value the pension system," Monzo said. "Until last year, the pension system merged together the state with county and local, so when (the state) didn't make their payment into the bigger fund, the smaller members suffered."

Under the so-called 2-percent tax cap, the township was permitted to raise taxes by 7.7-cents, or 9.6 percent. Increases in health care, emergencies like Hurricane Irene, and the loss of tax ratables can be built into the tax levy, according to Monzo. He said the 2-percent tax cap is a fallacy

"That 2 percent is a floor, not a ceiling, that's the starting point at which taxes are permitted to increase," Monzo noted.

Highlights noted in the budget presentation included a new garbage contract which saved the township $170,000 and an energy audit which saved about $60,000.

Fewer retirements are also expected this year, as retirements of township employees cost the township just over $1 million in 2011. 

The budget does not include an increase in utility fees, as the cost for water and sewer decreased by about $59,000.

State officials have instructed the town to assume state aid, now called revenue replacement, will remain the same as last year's approximately $5.2 million.

"We no longer get state aid, we get energy receipts tax revenue replacement," Monzo said. "That money used to come to municipalities, but long ago the state decided the money should come to them first so they could siphon off a piece and then get it to us."

While the proposed budget falls about $5.4 million under the spending cap, council members said more work needs to be done.

"That sounds nice, but for the people up here that doesn't mean anything," said Councilman Joseph Camarota. "We need to cut more spending. With taxes going up, saying we're under the cap, people don't relate to that.

"I think we've got to look under every stone to see if there's a way to decrease our spending."

The council will now begin meeting with the various department heads in an effort to trim the budget further. The municipal budget must be formally introduced by March 9.