South Brunswick State Aid Stays Flat

As expected, state aid to South Brunswick Township will stay relatively flat this year. The township will receive $5.1 million in aid, after receiving $5.2 million last year.

"I'm just glad our aid wasn't cut. That's the amount we budgeted for so we're happy it's staying the same," said Mayor Frank Gambatese. "We hoped by the governor raising the state budget that some more aid might've been given back to municipalities. It's very difficult to stay within the cap and maintain the services we believe we need to provide for people, like our senior community, etc. But at least our aid wasn't cut."

South Brunswick's by township Chief Financial Officer Joseph Monzo. 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. However, the budget process has only just begun and that figure is expected to change.

The flat state aid to South Brunswick comes two years after aid was cut by $1.1 million. Gambatese added that the term "state aid" is misleading, because the money comes from the energy receipts tax, which first goes to the state who takes a portion before directing it to the town.

Gambatese estimated the energy receipts tax generated between $7 million and $8 million.

"All of our residents are paying this tax when they get their electric bill from PSE&G, which adds an extra 3 percent," he said. "The purpose of this tax is to give some revenue back to the towns, so when you lose $2 million of that money it has a dramatic affect. When something like that adds about 3-cents to the budget and we're not getting the revenue to offset it, consequently it really hurts. We have a 2 percent cap and salaries we're trying to fit in, so it's not enough to prevent an increase even with some areas falling outside the cap."

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.  

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

Gambatese said the drop in ratables is largely based on tax appeals by corporations. He said about 100 companies successfully sued the township for a tax reduction last year, which accounted for over $100 million in lost ratables (full story on Tuesday).

Under the 2-percent tax cap, the township was actually 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.

"I always laugh when I hear the 2 percent cap has kept taxes down," Gambatese said. "While it sounds great, it's not a panacea and doesn't work the way they'd like it to, because there are too many things that fall outside the cap."