Tax bills go out & city sees relief on the way

Tax bills go out & city sees relief on the way
Sale of tax anticipation notes not necessary
BY KENNY WALTER Staff Writer

LONG BRANCH — It appears that the city has managed to avert a financial crunch with the use of some creative financing moves.

On July 14, Long Branch Director of Finance Ron Mehlhorn Sr. painted a gloomy picture for Long Branch, stating that he was unable to send out tax bills because the municipal tax rate had not yet been authorized by the county.

Without collecting taxes and with upcoming bills to pay to the schools and the county, Mehlhorn said at that time he might have to borrow up to $10 million in tax anticipation notes.

The $10 million, he estimated, would cost taxpayers an extra $200,000 to $400,000 in interest.

But during the July 28 workshop, Mehlhorn said the problem has been solved.

"There's been an outcry since the last meeting about the tax anticipation notes," Mehlhorn said. "With some innovative financing and a lot of hard work, it looks like we won't have to borrow money."

While the current situation is still bleak, there is help on the way.

"Where we stand right now, we have $672,000," Mehlhorn said. "The tax bills went out on Friday."

Mehlhorn said in an interview that people have stopped him on the street and said they've received their tax bills, which are due in August.

Long Branch will raise more then $70 million from the tax levy for the fiscal year. While some residents have already paid their taxes, the larger share of the first tax bill is not expected for a few weeks.

"It's going to take a little while for those to start coming in," Mehlhorn said.

He also said that the city would receive about $2.5 million in state aid on Aug. 3.

Mehlhorn previously stated that it costs between $1 million and $2 million a week to run the city, so with cash flow low, the state aid is coming at an opportune time.

He added that a $2.1 million bond was sold to an institutional investor two weeks early to give the city some extra cash.

During the interview Mehlhorn explained that selling the bond early is a departure from the city's standard practice.

"We usually sell one bond and buy another on the same day," he said. "Right now we have two bonds out."

Mehlhorn said the move will initially cost about $1,300 to obtain the $2 millionplus, but that the $1,300 will be recouped when the bond is sold two weeks from now.M

ore revenues, roughly $1 million, will be needed because the city's next scheduled payroll date is Aug. 7. The city also must pay $3.6 million to the county by Aug. 15, but that date is somewhat flexible, he said.

"I talked to the county, and if we don't have the $3.5 million for a couple of days or a week, we won't be penalized," he said. "Everyone has worked with us on this, so we will get through all right."

Mehlhorn said the biggest news since the last meeting was that the county certified the tax rate, thus allowing tax bills to be sent out.

"At that point [two weeks ago] we just didn't know," he said. "The problem was nobody owed [the city] anything, and I had payroll and school bills and county bills due."

We couldn't tax anyone, so it looked like I was going to have to borrow money," he added. "July is historically the worst month, with no taxes coming and the schools being able to request 20 percent of their money."

Mehlhorn credited his staff for working long hours and getting the tax bills out as quickly as possible.

"They did a great job getting them out," he said.

While Mehlhorn credited his staff, both the City Council and residents credited Mehlhorn.

"Thank you for getting the tax bills out," Councilwoman Mary Jane Celli said during the workshop.

Contact Kenny Walter at

kwalter@gmnews.com.


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