Township Begins Preliminary Budget Talks with 5-cent Tax Rate Increase

South Brunswick began discussions Tuesday evening to craft the municipal spending plan for this year with a preliminary budget that would increase the tax rate by 5-cents, however that figure is expected to change as the township begins budget hearings.

Township Manager Bernard Hvozdovic and Chief Financial Officer Joseph Monzo presented a preliminary budget to the Township Council that would bring an annual municipal tax increase of $94.20 for homes assessed at the township average of $188,400.

Last year, the council approved $47.9 million budget that held the tax rate firm from the previous year at about 72 cents per $100 of assessed valuation. The preliminary budget presented Tuesday carries an increase in spending of about $257,000.

"This is the first throw of the javelin and we'll take a hard look at this, take time to digest it and come back with suggestions," said Councilman Joseph Camarota. "I start at (a zero-cent increase) and look at ways to keep it around that. But a spending increase of $257,000, I will go on record that I will not support any additional spending this year."

Hvozdovic said the township experienced several positive signs last year that the economy was turning around. South Brunswick saw an increase in revenue from new construction, with about $2.4 million collected in permit fees.

"Overall I'd say 2012 was a clear indication that the economy in the township is on the rise," Monzo said. "The 2013 budget year shouldn't prove to be as difficult as previous years."

Over 170 new businesses moved to South Brunswick in 2012. The township went from about 10 million square feet of unoccupied warehouse space down to less than 2 million square feet of unoccupied space.

However, the township still experienced a which alone would account for a 2-cent tax rate increase for the coming year. The township also must account for spending on emergencies such as Hurricane Sandy, which will eventually be reimbursed by FEMA, but must still be included in the spending plan. Combined with about those losses would account for an additional 1.68-cent tax rate increase.

On the plus side, revenue from a hotel tax brought in an additional $80,000 last year, revenue from cable fees increased by $227,000, and revenue from court fees rose about $27,000. South Brunswick will also save a projected $500,000 by switching health care providers.

The township has reduced the municipal work force by 44 employees since 2007. South Brunswick maintains 237 full time employees and 22 part time employees.

The full South Brunswick tax rate last year was $4.49 per $100 of assessed valuation, with municipal taxes accounting for 16 percent of that total and school taxes accounting for 63.5 percent of that total, according to Monzo.

South Brunswick's average municipal bill last year came in at $1,589.53, below the average municipal bill statewide of $2,324.66, according to Star Ledger analysis.

Under the tax levy law, South Brunswick is permitted to raise the tax rate by 10-cents, or about 12 percent, because the so-called 2 percent cap allows the addition of health, pension and emergency costs. The preliminary budget would come in at about $1.6 million under the spending cap.

Pension costs rose in South Brunswick by $72,000 last year. The township's pension costs increased by nearly $4 million over the last seven years. Council members said the state has long exacerbated the problem by continually failing to make its payments into the pension system, which created a $54 billion shortfall in state pension accounts. 

"We're paying more because they're not paying in," said Deputy Mayor Chris Killmurray.

South Brunswick also had its bond rating dropped by Standards and Poors from Double A with a positive outlook to Double A with a negative outlook, due to the lack of a tax increase last year to support municipal services.

"Their criticism was that you should raise (taxes) the maximum amount that's permitted," Killmurray said. "That's what they wanted us to do. I don't answer to them. I answer to the people in this town."

The municipal budget needs to be formally introduced by March 15 and must be adopted by April 26, or the first council meeting after that date. 

The council will begin holding a series of budget meetings with department heads over the coming months to look for areas to cut.

Mayor Frank Gambatese said he was concerned about making drastic cuts because of an increase in corporations looking to move into the township as a sign the economy is improving, which could require more employees to maintain the same service levels, he added.

New Councilwoman Jo Hochman, about to begin her first budget cycle on the governing body, said she would not support a budget that increased taxes.

"I agree with (Councilman Camarota), I can't see raising taxes," she said. "We're not stable enough yet with the people who live here still going through tough times."