Property tax hikes kept in check, but officials warn of looming cuts in services, educationSunday, December 2, 2012 Last updated: Sunday December 2, 2012, 1:15 PM
BY DAVE SHEINGOLD
STAFF WRITER
The Record
Tax increases, town by town The annual increase in property taxes — long bemoaned by most residents as an inexorable and painful fact of life in New Jersey — slowed to a trickle in 2012, a second year of historically low growth in the cost of local government.
In Bergen and Passaic counties, the overall amount demanded of property owners in tax bills that went out this summer and fall grew by less than 2 percent. There were some outliers, but the trend held true in the majority of the region’s 86 communities.
Governor Christie’s office praised the trend, hailing it as a direct result of the 2 percent ceiling on annual tax increases that he proposed and the Legislature enacted in 2010.
The numbers will no doubt play a prominent role in Christie’s bid for reelection. As a cornerstone of his first term, Christie successfully challenged the notion that the cost of government — and most notably, the salaries of unionized public employees — was beyond the control of elected officials.
Officials throughout the region said they were able to comply with the law by tapping a mix of budget surpluses, one-time revenues, line-by-line cost-cutting and payroll reductions, all of which eased the burden of taxes that fund municipal and county services as well as public schools for 2012 and into 2013.
But they warn that cuts in academic programs and municipal services loom over the next few years as they run out of other options for holding down increases in tax levies.
“It will be very difficult, to say the least” to stay under the cap, said Raymond Herr, chief financial officer for Paramus. “You can’t keep things level forever.”
With blunter words, Hawthorne school Superintendent Robert Mooney said: “It’s not even remotely sustainable.”
The trend stretched across North Jersey, from upscale Tenafly, where the tax levy went up 1.9 percent, to the more modest quarters of Lodi, where it rose 1.1 percent. In town after town, increases sought in 2012 paled in comparison to those imposed in the prior decade, according to an analysis by The Record of property tax data for this year.
The results helped keep the increase in the typical residential tax bill to $100 in Bergen, from $9,232 last year to $9,332 this year, and $124 in Passaic, from $8,618 to $8,742, the analysis found.
To be sure, North Jersey property taxes remain among the highest in the nation and continue to rank among residents’ foremost concerns. At a time when salaries and incomes are falling behind inflation, and the cost of owning a home consumes 25 to 30 percent of the typical North Jersey household’s income, property taxes represent one of the largest expenses for most homeowners.
But in the previous 10 years, median residential property tax bills in most communities rose by $300 to $500 annually, with some increases running $750 to $1,000.
Governor Christie’s office hailed the trend, noting that Trenton didn’t just enact the cap law, it tried to help localities stay within the 2 percent ceiling by adopting cost-saving reforms to health and pension benefits and public-employee salary arbitrations.
Indeed, there are signs that some key underlying inflators of the cost of local government are easing. According to the state Public Employment Relations Commission, salaries in contracts it has on file for the first four months of this year show increases of less than 2 percent; that builds on a similar trend for all of 2011.
“The 2 percent cap is the law and must be met with limited exceptions; so it’s working as intended,” said Michael Drewniak, the governor’s spokesman. “That’s good and it’s gratifying that municipalities have reset spending priorities and streamlined their operations.”
State Senate President Stephen Sweeney, D-Gloucester, said the trend “shows that the cap … is working.” He added that government “needs to be run more efficiently and at a reduced cost to the taxpayers of this state.”
Nevertheless, local officials say they expect future pay raises negotiated with public-employee unions, rising pension and health insurance expenses, and the increasing cost of maintaining buildings and grounds to make it tougher to find places to cut.
“It’s got to give somewhere,” said Robert Finger, business administrator for the Teaneck schools. “[We], and probably every other district, will be saying: OK, we are staying within the 2 percent cap. But guess what? Courtesy busing is going away. Class sizes will increase. We will put off doing that new roof. And we won’t be expanding the library.”
As the debate continues, taxpayers welcome the trend, but some wonder if it goes far enough.
From two residents in Northvale, where the typical $9,453 residential bill and 2 percent increase echoed Bergen County-wide figures, the latest numbers drew a mixed reaction.
“It’s less than I have to worry about paying out of my pocket. I’m a lot happier,” said Robert Otworth, adding that he is pleased with what he gets in municipal services and school programs for the tax on his two-story colonial.
But a few blocks away, retiree Edward Kammer said even a small increase was difficult to pay.
“Even that little bit is a little too much,” he said, noting that he objected to six-figure salaries made by some police officers. “I’m just barely making it.”
Cutbacks, shared servicesIn its analysis, The Record found that:
•The total tax levy across Bergen County municipalities rose 1.8 percent to $3.39 billion, from $3.33 billion in 2011-12. (The figures cover all but East Rutherford, which has yet to set its levy because of a dispute over payments by the Meadowlands Sports Complex.) The total in all Passaic municipalities rose 1.7 percent to $1.34 billion, from $1.32 billion. Levies comprise total taxes paid by all property owners in a town to fund municipal and county governments, as well as public schools.
•Increases stayed at or below 2 percent in 44 of the 86 municipalities in Bergen and Passaic, with 19 others coming in at less than 3 percent.
•Jumps of greater than 4 percent — ubiquitous just a few years ago — were seen only in Edgewater, Moonachie and Park Ridge in Bergen County, and Little Falls, Ringwood and Woodland Park in Passaic. Nowhere in the two counties did taxes rise more than 6 percent. Increases of more than 2 percent are allowed under the cap law in some circumstances, including the need to pay for emergency expenses, jumps in health and pension benefit costs and construction loans.
•The typical residential tax in the most recent bills ranged from $5,902 in industrial Carlstadt to $15,445 in mansion-heavy Alpine. Individual tax bills are the result of how towns parcel out the tax levy to each property owner. The median bill actually dropped in some towns because of updates in tax assessments that shift relative tax burdens among residential and commercial property owners.
Cost-control tactics varied from town to town and school system to school system, local officials say.
In some, payrolls were cut by reducing full-time employees to part time or by filling jobs vacated by retirees with lower-paid workers. Some left positions vacant.
Others used nuts-and-bolts measures: energy-efficient utility systems, shared services with nearby communities, centralized gas purchases for municipal vehicles or garbage collection contracts renewed at reduced rates.
“It’s not really a headline grabber when a borough stops letting the volunteer ambulance corps buy their own gas, but those are the things that are going into stretching out the low increases for another year,” said Frank Di Maria, auditor for Lodi and eight other Bergen County municipalities.
Still others used surpluses and short-term fixes to keep levies in check.
In Northvale, Councilman Pat Marana said the borough had unspent funds from the 2011 budget and money left over from completed construction projects. The borough also saved money by converting its public library to a digital media center.
In Teaneck, school officials helped keep the town’s overall levy increase to less than 1 percent by using extra state aid in 2011, a budget surplus and a decision to postpone plans to install new lockers and upgrade school security systems, said Finger.
Higher local feesMunicipalities have also found ways to stay within the cap by increasing fees for municipal services, such as recreation, trash collection and water — moves that help balance the books but don’t necessarily benefit taxpayers.
Christie and Sweeney are pushing to close that loophole by making fees fall within the cap. Sweeney introduced a bill in May and the Senate adopted it that month, but it hasn’t moved out of committee in the Assembly.
A separate bill that passed the Senate last week and is pending in the Assembly would require local governments to share services when there is proof of cost savings. Voters would cast ballots on whether to share services and if they defeat the measures, the town would lose state aid equal to the amount of the projected savings.
Beyond the balance sheets, local officials said the weather lent a hand with a warm 2011-12 winter that kept heating and snow-removal costs down, freeing up money for other things. In the wake of superstorm Sandy, officials said they expected to recoup most of the cleanup costs with federal aid and insurance payouts.
But not every place was able to keep increases low, and in many cases officials made use of exemptions available under the cap law.
Leonia’s 3.6 percent increase was driven largely by the need to pay off bonds sold to finance school building improvements, said school district Business Administrator Julia Perez.
In Bogota, a rise of just under 4 percent resulted partly from increases in pension contributions, deferred overtime expenses from 2011 and money needed to pay off bonds, said Borough Manager Leonard Nicolosi. He noted that a 2 percent increase in the borough’s budget would barely pay for police raises.
And in the Passaic Valley Regional School District, which serves Woodland Park, Totowa and Little Falls, the property tax support required by the district shot up 9 percent mainly because of an unusually large 8.4 percent rise in enrollment, said Business Administrator Paul Gerber. That included a jump in the number of special-education students who require more expensive programs, he said.
One other factor that led to increases in Edgewater, Moonachie, Little Falls and Woodland Park, and declines in Englewood, Rockleigh and Paterson, was a reallocation among municipalities of levies required to fund county governments.
Looking ahead, officials predict that increases exceeding the cap will become the rule rather than the exception, unless residents are willing to accept service cuts.
“You can get by for a while with cutting expenses, but you’ve got to find ways to increase revenues,” said Herr, the Paramus finance chief.
Others note a weak economic recovery, sluggish real-estate market and potential cuts in state and federal education and local government aid as additional obstacles.
“We’re looking at hoping the economy kicks in,” said William Dressel, executive director of the New Jersey League of Municipalities. “It kind of gives you a headache when you look at the prospects.”
Staff Writer Melissa Hayes contributed to this article.
Email: sheingold@northjersey.com
Easing the burdenIncreases in tax levies to support municipal and county government as well as local and regional schools continued to slow in 2012, following the imposition of a 2 percent cap in 2010.
Year Bergen County Pct chg Passaic County Pct chg
2000 1,876,633,659 724,096,687
2001 1,963,506,736 4.6 755,207,452 4.3
2002 2,082,626,899 6.1 802,900,610 6.3
2003 2,201,698,956 5.7 851,594,654 6.1
2004 2,358,571,178 7.1 904,418,302 6.2
2005 2,516,466,512 6.7 963,272,286 6.5
2006 2,680,865,184 6.5 1,029,176,577 6.8
2007 2,856,304,136 6.5 1,094,192,591 6.3
2008 2,999,323,288 5.0 1,152,383,645 5.3
2009 3,118,811,131 4.0 1,197,414,568 3.9
2010 3,247,232,218 4.1 1,258,144,653 5.1
2011 3,331,984,845 2.6 1,318,922,016 4.8
2012 3,393,070,740 1.8 1,341,901,368 1.7