Maplewood May Need to Exceed 2% Tax Cap for 2015 Budget Levy

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 Updated March 4, 2015 with additional information from Committeeman Jerry Ryan.

Unexpected expenses and reduced revenue could force the Maplewood Township Committee to raise taxes above the 2% tax increase cap for the first time since the cap was imposed by the state in 2010.

However, Mayor Vic DeLuca and Committee members have said that they will look at every option to bring the tax levy in as low as possible.

The budget situation came to light at the March 3 Township Committee meeting when Township Chief Financial Officer and Tax Collector Juan Uribe reported that the draft budget currently exceeds the property levy cap ($27.7 million) by “close to” $700,000 ($28.4 million).

The 2015 budget is scheduled to be introduced to the Township Committee at its March 17 meeting.

Uribe explained that part of the hit comes from “a hefty bill from 2014” from the State of New Jersey for employee pensions. He said that the bill was for retroactive payments delayed by the state Division of Pensions. Uribe explained that “it can take years for [the state] to come up with those calculations.”

On the revenue side, Maplewood unexpectedly lost its “biggest account” in sewer fee payments when Maplewood Beverage moved its sewer service to Irvington. Uribe explained that Irvington made the request “because the discharge of [the Maplewood Beverage] sewer was in their town.” He explained that the lost fee represented “over half a million dollars.”

With regard to exceeding the 2% cap, Uribe said, “We are looking into all possible opportunities to bring that cap into compliance at this point. We may need to use some of the banking we have had the last 2 or 3 years.” Uribe explained that when the town does not exceed the amount of allowable appropriations per year, it can bank that amount to use as taxing authority in future years. Township Administrator Joseph Manning said that the town had $2.5 million in banked cap.

Uribe said that town staff did not want to use the banked cap to raise taxes above 2%, but “We don’t have many choices yet…. We came to the consensus that we need to tap that.”

Manning said to the TC, “We’re going to have to have a meeting to discuss this after you’ve had time to digest it.” In the meantime, he asked that the TC agree to introduce the budget “as it is now” on March 17 “with the provision that we will work to decrease and find ways if there are any ways — I can’t really promise that there are any rabbits in the hat.”

Although the state deadline to introduce municipal budgets is March 13, a March 17 introduction would be considered timely, according to Uribe. Should the Township introduce after that date, it would face a $25/day fine.

TC members questioned whether various revenue sources had been tapped or counted. Deputy Mayor Kathy Leventhal was assured by Manning that the surplus capital of $474,000 had already been baked into the budget.

Committeewoman India Larrier asked,  “All the fixes are in and we are still short 700k?”

Uribe responded, “Yes, ma’am.”

TC members discussed what portions of the budget could be exclusions from the cap; however, Uribe noted that excluding items from the cap still “doesn’t help us when we are balancing the budget.”

Committeeman Jerry Ryan asked if the town could ask the state to spread out the pension bill since it was “an unusual bump.”

“Can you smear that out over a couple of years?” asked Ryan.

“You could probably go one year,” said Manning, though he cautioned there was “no guarantee. Usually they are due upon receipt but we can ask them.”

Uribe also suggested that the town could borrow to pay the pension bill. Manning noted that it was currently “relatively cheap to borrow.”

Larrier questioned that: “Borrowing to pay a bill that you owe?”

Committeeman Marlon K. Brownlee said he wanted to exhaust options for bringing the budget in at 2% before introduction. “I want to have exhausted those alternatives before introducing. … I want to do that before because I want to introduce it as close to where we end up being.”

In the end, the TC agreed with DeLuca who said, “This is going to be a ‘hold-your-nose-and-introduce-the-budget'” situation.

Ryan noted that the current budget situation was not so different than in past years where the TC introduced budgets that were different than those passed. “We know that we are not happy with the introduced budget. We know that there’s work to be done to bring it to a better place, and we know how to do that work, and there’s time.”

Manning said that the best that the Township could hope for was to get $200,000 of the pension payment delayed and “find” another $250,000. “That’s about the best we could do. That’s $450,000,” said Manning. “Still not 2%.”

(In an email exchange after the meeting, Ryan explained that the draft budget represents a 6.08% increase. However, he stressed “that what was introduced is NOT what will be passed on final.”)

“We understand,” said DeLuca. “But that may not be the only option the TC wants to do.” The mayor said that the TC would “look at a lot of options.”

Ryan said, “There’s a lot of discussion to have between now and final.” DeLuca said that the budget would be discussed at a finance committee meeting on March 31.

“There’s a lot of ways to get where we want to be and some of them are not pleasant,” said Mayor Vic DeLuca.

“The only ones to get where we want to be are not pleasant,” said Manning.

Editor’s note: In an email, Ryan explained that the revenue from the pending sale of the post office site on Maplewood Avenue has not been included in the 2015 budget since the sale will not close soon enough for the township to be able to anticipate the revenue. 

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