N.J. League survey: Tax cap forces layoffs, deferred projects, shared services, more

TRENTON – New Jersey mayors are sharing services, deferring capital projects, requiring employee concessions, cutting personnel and doing what they can to cope with the state-imposed 2 percent tax cap.

That finding comes from the annual Legislative Priority Survey conducted by the N.J. League of Municipalities.

More than 100 mayors responded to the league survey, whose findings show that in addition to finding ways to cope with the tax hike ceiling, more towns in this lingering down economy are fielding tax appeal requests.

The league is an association of 566 municipalities, with more than 560 mayors. Surveys were mailed to all mayors and distributed at the Annual Convention in Atlantic City in November.

While in general towns and the league cheered the imposition of the 2 percent tax cap, they also equally shared concerns when other related measures – such as civil service reform – were not adopted by the Legislature.

They have stated that it’s difficult to live with the tax cap if not given the tools to make it workable.

In this 13th annual survey, 29 percent of the mayors who responded indicated their municipality’s final total levy increased 2 percent, but with the exclusions for debt services, capital expenditures, pension cost, health benefit cost and declared emergencies. 

The survey showed that 19.35 percent saw tax levy increases of between 1.5 and 1.99 percent over last year’s level.  That was followed by 18 percent whose tax levy increase was under 1 percent.

The mayors were asked what steps they are taking to cope with the cap and they ranked them as follows:

1.      Shared Services

2.      Used a higher percentage of surplus than in previous years

3.      Increased Health Care contribution from employees

4.      Deferred Capital Improvements

5.      Concessions from Employees

6.      Increased Fees

7.      Reduced staff from Full-time to Part-time

8.      Reduced appropriation to the capital improvement fund

9.      Reduced Services (tie)

10.  Lay-offs (tie)

11.  Furloughs (tie)

12.  One-time revenue (i.e. sale of public property) (tie)

13.  Initiated Accelerated Tax Sale

Sixty-six percent of the mayors who responded saw an increase in their residential tax appeals in 2011, the league stated.  Of those, 63 percent noted that the results of the tax appeals will affect their available surplus in their 2012 budget.  However, 71 percent noted that they do not plan on increasing their budget in regards to fighting tax appeals in 2012.

OPRA battles 

Another impact on municipal budgets is the cost associated with defending a municipality’s compliance with the Open Public Records Act.  Only 15 percent of the mayors noted that their municipality had appeared before the Government Records Council or Superior Court regarding OPRA.  Of those municipalities, municipal attorney fees ranged from $1,300 to $10,000.   Only one mayor reported paying prevailing attorney fees of $6,000.

Housing

The survey also indicates a changing trend in how municipalities plan to meet their affordable housing obligations, the league reported. 

Nearly half of the mayors noted that once a prospective housing obligation is determined their municipality will turn to partnerships with non-profit sponsors to address part of their future obligation.  

Gasoline tax

And 59 percent of the mayors surveyed support an increase in state motor fuel taxes if the proceeds are used to finance the repair and renovation of municipal and county transportation infrastructures.

 

N.J. League survey: Tax cap forces layoffs, deferred projects, shared services, more