95% Of Tax Increase Due To Municipality

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Published: October 14, 2012 @ 9:36 PM EDT

A letter signed by Mayor Joseph Accardi with tax levy information for 2012 was sent to property taxpayers earlier this month with a breakdown of the percentage of property tax that is apportioned to the municipality – 31.61%. Research in collaboration with information obtained by The Concerned Citizens Of Roselle Park show that almost 96% of the total property tax increase from 2011 to 2012 was due to the municipal portion of property taxes. Below a table is provided with a breakdown of the percentage as well as the dollar amount:

Portion
Percentage (%)
Amount ($)
School Tax
52.14%
$18,200,713.00
Municipal Tax
31.61%
$11,033,605.35
County Tax
14.65%
$5,113,654.50
Library Tax
1.11%
$386,240.83
Open Space Tax
0.49%
$173,610.05
$34,907,823.73

Data from 2010 through 2012 shows that the municipality was only responsible for 1.6% of the total tax levy increase from 2010-2011. In comparison, between 2011 and 2012, the municipality was responsible for 95.8% of the total tax levy increase for property taxpayers. It is the highest percentage in over 30 years, with the second highest percentage being in 2001 when just under 80% of the property tax increase for that year was due to the municipality’s tax levy increase in their budget.

Year
Tax Levy
(Total)
Increase
(Total)
Tax Levy
(Municipality)
Increase
(Municipality)
% of Increase
Due To Municipality
2010
$33,498,724.45
$10,613,416.04
2011
$34,485,594.51
$986,870.06
$10,628,925.93
$15,509.89
1.6%
2012
$34,907,823.73
$422,229.22
$11,033,605.35
$404,679.42
95.8%

During the 2012 municipal budget workshops, it was voted upon by council that $205,000 which had been placed in the sewer utility budget for years to be returned to the municipality’s operating budget. That amount had covered the salaries and benefits of municipal workers, including DPW personnel, which had been included in the sewer utility budget to offset the appropriations for the municipal budget. This, in turn, would affect the 2% cap limit set by the State of New Jersey on the amount of funds to be raised by the municipality through taxes. Even with removing $205,000 from the municipal portion of the tax levy to adjust for the transferring of that amount from the sewer utility budget in 2012, calculations show that  the municipality was still responsible for almost 92% of the total tax levy increase:

Tax Levy
(Total Adjusted)
Increase
(Total Adjusted)
Tax Levy
(Municipality Adjusted)
Increase
(Municipality Adjusted)
% of Adjusted Increase
Due To Municipality
$34,702,823.73
$217,229.22
$10,828,605.35
$199,679.42
91.9%

In requesting a comment from the governing body, Councilman-At-Large Carl Hokanson offered further detail on the affect that an almost 24% increase (from $825,251 to $1,022,800) in the reserve for uncollected taxes had on the municipal portion of the tax levy.

“The total appropriations for the year 2012 are $437,613.40 higher than 2011,” the councilman stated, “However $205,000 came from moving money over from the sewer utility budget and $197,959 came from the increase in reserve for uncollected taxes.”

He went on to explain the reserve for uncollected taxes, which is a calculation used to determine what funds the municipality expects have on-hand in order to pay the County’s and Board Of Education’s (BOE) respective amounts even if someone does not pay their property tax. He concluded, “In other words, we have to write a check to the BOE for $18,200,713.00 and so forth for the county and the library but if we don’t collect 100% of the property taxes because people don’t pay them,  for whatever reason, we’re still out that money and have to pay everybody else.”

First Ward Councilman Andrew Casais concurred with his colleague when referring to the $198,000 balance left after removing the sewer utility budget amount, “The remaining increase to the municipal tax levy is due in large part to an increase in the Reserve for Uncollected Taxes. The Borough maintains this reserve to combat shortfalls due to tax appeals and taxes that go unpaid by residents.”

Both the sewer utility budget amount and tax appeals, which – according to councilman Casais – are part of the reason behind the high reserve for uncollected taxes, are due to the current and previous governing bodies not addressing issues which impact taxpayers. Salaries were removed and kept from the operating budget by previous governing bodies and placed in the sewer utility budget to make it appear that wages and benefits for municipal employees were less than they actually were. The large number of tax appeals are a result of a majority of the current governing body not wanting to address when – not if – to hold a tax revalution or re-assessment to correctly adjust the property values for improvements done on them.

It should be noted that even though the amount placed in the reserve for uncollected taxes affects a current year’s budget, that amount is almost always paid back to the municipality the following year through a tax sale when investors pay the outstanding tax amount, in full, to the municipality. The investor then takes ownership of the tax certificate and expects to make a profit by having the property owner pay off the legally allowed, high, interest rate back to them. If the tax and interest is not paid back, the investor can then take ownership of the property itself. Tax sales in Roselle Park have almost always collected 100% of the unpaid taxes for any previous year with that amount then placed in a current year’s budget. If that amount goes unspent, it can get rolled over into surplus for the following year.