Amended Tinton Falls budget calls for tax hike

Amended Tinton Falls budget calls for tax hike
Council will vote on budget at Aug. 4 meeting
BY KENNY WALTER Staff Writer
The Borough Council followed the advice of the borough's finance director and introduced an amendment to the 2009 budget that would both cut some expenses and raise taxes.

The council adopted a resolution at the July 21 meeting by a 3-2 vote that would raise the tax rate by 2.7 cents per $100 of assessed valuation.

The tax rate will go from 35.3 cents per $100 of assessed valuation to 38 cents.

The total spending plan is $21.6 million, with a tax levy of $11.4 million. The proposed amendment resulted in an $805,823 increase in taxes.

The proposed increase would cost the owner of a house valued at the borough average of $343,760 an extra $92 annually in municipal taxes, according to Director of Finance Stephen Pfeffer.

Pfeffer had urged the council to revisit the budget, which as originally proposed, did not raise the tax rate from last year.

He also said that the borough cut more than $52,000 in expenses, which is the reason why the tax increase came in below what Pfeffer previously suggested, which was that the borough go to the state-mandated 4 percent cap on increases in the tax levy.

Low revenues and bleak prospects for the future is the reason Pfeffer initially suggested that the Borough Council amend the original zero-increase tax levy.

For Pfeffer, this amendment will help Tinton Falls in the coming budgets.

"I've prepared an amendment to the 2009 budget that accomplishes many of the problems that we discussed at the last meeting," he said in addressing the council. "We did find another $52,153 [cut from expenses]."

With the increase in taxes and exp enses trimmed, the budget increase over last year now comes in under the s tate-mandated maximum tax cap.

Pfeffer said the amendment allows the budget to compensate for the low revenues from permit fees and interest earned experienced in the early part of this year.

"The amendment basically is put forward to reduce our miscellaneous revenues to an amount that we could realistically collect," he said.

"Our analysis shows that our revenues have fallen off dramatically since 2008 and even somewhat in the beginning of 2009."

While municipal taxes will be going up, the owner of a home valued at the borough average of $343,760 will still see a $110 reduction in taxes overall because of reductions in the tax levy in both the Monmouth Regional and Tinton Falls school district budgets.

At the meeting, Pfeffer explained some of the revenue line items that were ultimately reduced.

"The major accounts that we reduced were the municipal court, interest on investment, Uniform Construction Code revenue and hotel tax revenue," he said.

"We went through various line items," he added. "Some had to do with changes in professionals, some had to do with just certain things that occurred in the last two months."

But one of the major problems affecting the borough's finances is the depleted surplus, which now stands at less than $50,000.

"How much is going to come from surplus?" Councilman Scott Larkin asked at the meeting.

"$3.15 million," Pfeffer answered, adding, "I think that left us with about 40- some-odd thousand [dollars] in surplus."

For Pfeffer, the current level of the surplus is a less than comfortable situation but is something he realizes is going to be an issue moving forward.

"If I had my way, I'd like to have a whole month's worth of payroll as the rainy-day fund," he said. "That would be approximately $600,000.

"But that's just not the reality of today, given the state has mandated certain changes in the budget," he added.

The revenue shortage is something that may have major effects on future budgets, according to Pfeffer.

"What we really need in order to get through 2010 is for the economy to pick up and our revenues to come in substantially higher than what we anticipated in the budget," he said.

Overshooting the projected revenue numbers would do a lot for future budgets, including replenishing a depleted surplus, he said.

"Because what that would do is replenish the surplus, and in 2010 that would reduce our reliance on taxes and also hopefully get us in [under] the levy cap," he said. "The key is how much above those numbers can we generate? The more we generate, the better we will be in 2010."

The way the economy is currently situated, coming in over the projected revenue figures may not be a realistic goal for Tinton Falls, he said.

"If the economy stays where it is and revenue stays where it is, we will have a major problem in 2010," Pfeffer said. "It would obviously be a lot worse if we didn't have this amendment."

Pfeffer predicts that without the amendment, the borough could possibly face a shortfall of about $1.5 million, which would force the administration to find alternative ways to raise the money.

"We would have to find a way to get inside the levy cap by making drastic reductions or by taking alternative measures, which would be looking for approval from the state and/or taxpayers," he said.

Pfeffer figured that without the amendment, the borough could possibly add $850,000 to the $1.5 million revenue shortfall for next year.

Councilman Andy Mayer, who voted against the budget, said he would rather find a way to not raise taxes.

"I just keep wondering if there is more to not impact the taxpayers as much," he said.

Mayer and Pfeffer went back and forth at the meeting over what seemed to be a difference in philosophy.

"I think the original point of the amendment was to get us as close to the maximum levy cap as we could," Pfeffer said.

"We could be looking at the revenue side; to balance that, we need to keep looking at the expense side," Mayer said.

"I agree, and the mayor has instructed us to keep doing that throughout 2009 so there is a positive impact in 2010," Pfeffer said.

"My fear is by increasing the taxes and by providing that revenue, there is less incentive to keep looking at those expenses," Mayer said.

"In this environment, I would have to disagree," Pfeffer said. "I think from the standpoint of the employees here, most of them now understand the gravity of the situation, and everyone seems to be pitching in and cutting costs as much as possible."

Mayor Michael Skudera said the borough did the best it could in looking to cut expenses.

"We have looked at different cost-saving measures," Skudera said. "Some of the things we looked at so far [are]: the prosecutor's salary is lower, the borough attorney is not taking health benefits, [and] the public safety position that was lowered to save money."

But those efforts did not satisfy all of the council members.

Larkin expressed concern that what was once considered a good budget now has so many holes in it.

"I'm sitting here with a sense of disappointment that we are here looking at additional monies on what was described a couple months ago as a good budget, and how things changed that dramatically that we are here," Larkin said. "I don't want to be back here again next year."

Larkin ultimately voted yes on the amendment, but Mayer and council President Duane Morrill voted against the amendment.

"I really don't like the idea of looking at tax increases right now, especially in this economic time," Mayer said.

Morrill said he understands that it is a tough economic time for Tinton Falls, but also feels the pain of the residents in the current economic climate.

"I also understand the borough is in hard times, but so are our residents," Morrill said as he voted against the amendment. "I drive through the neighborhoods, and every day I see another house up for sale and another one of our residents pulling out because they just can't afford to live here.

"It's tough times, and I can't see raising money and chasing more residents," he added.

A public hearing on the amendment is scheduled for the Aug. 4 council meeting, to be followed by a vote on the budget amendment.

Contact Kenny Walter at

kwalter@gmnews.com.


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