How Can NJ Towns Balance Their Budgets Without Raising Property Taxes?
Gov. Chris Christie’s proposed New Jersey budget for fiscal year 2018 holds state aid to municipalities flat once again.
The result is towns across the Garden State are now scrambling to make ends meet, which in some cases will mean an increase in property taxes beyond the state-mandated 2 percent cap.
Michael Darcy, the executive director of the New Jersey State League of Municipalities, said the cap is doing its job, holding the line on increases that have been significantly higher in the past, but there are built in exceptions to the cap, such as insurance and pension costs.
“The result is towns across New Jersey are finding it increasingly difficult to hold the line on tax hikes while providing necessary services because municipal aid from the state has been held flat for the past nine years,” he said.
“It’s certainly not going to lead to an expansion of services and programs, that’s for sure.”
Darcy pointed out if your paycheck hasn’t changed since 2008, the effect of inflation on that paycheck erodes the value.
“The same thing happens with municipal aid, and we’ve calculated that the erosion from the cost of living is somewhere around 11 percent. The value has been lost there, even though we’re getting the same dollars,” he said.
He said this means “one source of revenue to municipalities is losing value, at the same time other costs in the budget are increasing as they normally do in most budgets.”
To deal with this conundrum without raising property taxes, municipalities are using several techniques and strategies.
“Sometimes it’s a matter of reducing the number of staff that are doing the work of the municipality, sometimes it’s a matter of reducing the programs that the municipality offers,” said Darcy.
“You may have had more frequent trash collection in prior years and then the number of trash collection pickups done now might be less. Or it could be programs involving recreation or senior centers that are not open as many hours as they had been in the past.”
He said it requires local leaders to think outside the box.
“This may involve sharing services with neighboring communities, but you have to make tough choices. I think local government officials are very good at making those tough choices, very good at being creative and finding solutions. They don’t have a choice of putting off costs for another day.”
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