Officials React to 2-Percent Property Tax Cap

As a state 2-percent cap on property tax passed yesterday, Mayor Mark Smith said it might be tough for the Cranford government in the coming year. 

While Smith believes the cap is "a gigantic step in restoring fiscal responsibility for the state," he added that it poses challenges for the future 2011 budget. "It's going to be hard, it's not going to be an easy thing." 

Smith added that the township this year has reduced the proposed budget cost by eliminating some township positions. He is optimistic that this will help alleviate costs for 2011 as well. "We have been trying attrition as our tool of choice to reduce township expenses.  I think we're almost there."

The challenge for the township lies in two features of the legislation.

First, more than 50 percent of the loopholes will close. While 2010's 4-percent tax levy allowed municipalities more wiggle room by offering 11 different exemptions, next year's 2-percent tax cap only offers five exemptions. That's in addition to the cap itself, where the town may raise taxes only by about $440,000, Smith said.

The municipality also won't be able to use an accounting trick to keep underneath the cap like it did this year. The township pulled out the sewer charge from the budget and billed it as a separate fee.

"You do it once. (You can only) benefit from it once," Smith said.

Commissioner Daniel Aschenbach also offered his opinion on the tax cap. In e-mail correspondence with Patch, he wrote that he agrees property taxes should be moderated – but said he was concerned about the challenges the cap may pose to township services.

He wrote that he is worried the future effect of the cap may be the reduction of public safety, public works projects and emergency services. However "tough challenges are what local government should be about. And as long as I have served that is what it has been about."

In the e-mail he also suggested  that the township consider a 20-member bipartisan commission to "critically question the essentiality of each local governmental function...After the public review the question  about a 2-percent cap would be put to citizen opinion by a vote."

Planning Ahead

The township committee hopes to be proactive from day one, Smith said. "The hope is to have a plan going into 2011 and take actions right at the beginning of the year."

Even though the committee will officially approve a budget that takes the cap into account the summer of 2011, Smith said they don't want to squeeze all budget fixes in during the latter half of the calendar. It would be better to stretch out the cost-cutting throughout the year.

He explained that the state has a different fiscal calendar, which means that, "by the time we really know what's going on half the year is gone."

He said that's what happened this year – as a result of the state adopting a 4-percent tax levy for 2010, cost-cutting measures are being crunched into the latter half of the year. That's the reason why administrative workers, secretaries and other public workers – except safety employees like police and firefighters – will be asked to take a seven-day furlough if 2010's budget is passed on July 20.

"We're looking to reduce spending right from the beginning," Smith said.