Tax Cap Hits New Jersey’s Richest
Homeowners in the town of 18,700 people 20 miles (32 kilometers) west of Manhattan have only a few more days to summon a public-works truck for no charge to collect whatever they neglected to set out on garbage day. On Jan. 1, a cheaper private hauler will replace municipal employees collecting trash in the township, whose median household income of $170,000 a year is more than triple the national average.
“You would call, and they would come, and that’s not going to happen,” Mayor Sandy Haimoff, 73, said in a telephone interview. “People will realize they have to get the garbage out the night before.”
Even as poorer cities such as Camden and Newark struggle with reduced state aid that has made them shrink police forces, some of the wealthiest towns in the second-richest U.S. state are also rethinking expenses that once seemed routine as they cope with Governor Chris Christie’s 2 percent cap on annual property-tax growth. The governor, a 49-year-old first-term Republican, cut aid to towns last year as he limited annual increases in local taxes, forcing mayors to weigh worker firings and program reductions.
‘Outside the Parameters’
Montclair, a bedroom community of about 37,000 people 12 miles west of Manhattan, shed 10 percent of its workforce in the past two years, said township manager Marc Dashield. This year it cut library funding to a state minimum of $2.36 million, from $3.13 million, and scrapped the budget for the Arts Council and First Night, an alcohol-free New Year’s Eve celebration.
“When we made our cuts, we had to make a decision and say, ’These are the core functions of government,’ and anything outside was open to examination,” Dashield said in a telephone interview. “The Arts Council was a great thing for this community. First Night was a great thing for this community. But it was outside the parameters.”
A property-tax cap in neighboring New York that will take effect Jan. 1 will have a similar impact, Moody’s Investors Service said in a July report. Governor Andrew Cuomo in June signed a law that prohibits any annual increase above 2 percent or the rate of inflation, whichever is lower, unless 60 percent of voters agree.
Moody’s cited that cap this month when it downgraded the credit ratings of the village of Suffern and the city of Long Beach.
Medford, Long Hill
In New Jersey, Moody’s gave the Burlington County township of Medford’s rating a negative outlook in November after the town deferred school-tax payments. In June, the company lowered its rating on the Morris County township of Long Hill to Aa3, the fourth-highest investment grade, from Aa2.
The towns, commuter suburbs of Philadelphia and New York City, had eliminated jobs and reduced garbage collection and other expenses. Analysts cited high debt and, in Long Hill’s case, few prospects for revenue growth.
Almost 60 percent of U.S. municipal officers said finances were worse in 2011 than in 2010, according to a September survey by the National League of Cities. Two in five reported that their city cut services other than public safety and social programs, including funding for libraries, parks and recreation.
The strains prompted New Jersey voters in November to approve a merger of Princeton township and borough, after at least three earlier referendums failed. Local officials estimate the combination will save as much as $3.1 million a year.
“It’s about making choices: We can’t any longer think we can sit around and have everything we want and pay for it,” Christie said in a November public meeting with the Princeton mayors after the election. “We can’t try and govern in a way that makes everyone happy.”
New Jersey is the second-richest state in the U.S. after Maryland, with median household income of $70,378 in 2008. It has the nation’s highest property taxes, averaging $7,576 last year, according to the state Department of Community Affairs. The levies, the main source of funding for schools and towns, have climbed 70 percent in the past decade.
In 2010, Millburn’s average $19,441 property-tax bill was the third-highest in the state, while Montclair’s $16,413 was 12th-highest. In Princeton, the average was $15,255 in the borough and $16,212 in the township.
In Upper Saddle River, ranked by Bloomberg Businessweek as the 21st-richest U.S. zip code, fifth graders are learning on iPads bought by the school district and donors. Administrators don’t know whether they can afford to buy the devices for all of their students, said Angela Sacco-Torres, 50, president of the school board and co-owner of JMT Mortgage Consulting.
The town of 8,200 in northern Bergen County has been hit by job losses in financial services, Sacco-Torres said. While total employment in New Jersey fell 3.5 percent from 2004 to 2009, the state’s financial-services industry lost 6.1 percent of its jobs in that period, according to the New Jersey labor department.
“Upper Saddle River was a new-money community,” Sacco- Torres said in a Dec. 15 telephone interview. “We had a lot of people who worked on the Street and then the economy went southward. A lot of people in town are struggling. A lot of people are losing their homes.”
Parks and Rec
Upper Saddle River residents in November voted not to renew a tax for parks and recreation.
“For the next five years or so, people are going to be very wary about any tax increase,” Sacco-Torres said.
Harding, a Morris County township about 45 miles from Manhattan that has an average residential property value of $1.26 million, merged its municipal-court services with three other towns in 2010. This year, the council closed its public tennis courts rather than spend $50,000 on resurfacing.
“Do we just remove it or do we repair it?” Gail McKane, 57, the township administrator, said by phone Dec. 19. “How does the community feel?”
Millburn estimates saving $800,000 a year when the private trash hauler takes over, and the mayor isn’t expecting gripes. During the summer, officials ended Saturday drop-off for recyclables, and with it overtime costs for sanitation staff.
“I must say, I have not received one complaint from the residents,” Haimoff said.
To contact the reporter on this story: Elise Young in Trenton at email@example.com
To contact the editor responsible for this story: Mark Tannenbaum at firstname.lastname@example.org
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.