| Author | Message | ||
     nwyave Citizen Username: Mesh Post Number: 21 Registered: 1-2003 |
ok here goes - a thread to its own! It seems like most of the focus on our high real estate taxes is on the high percentage of taxes attributable for the schools. I am not thrilled about the high school taxes at all, as I truely wonder if we have made all the difficult decisions that need to be made. However, notwithstanding that, I believe that our tax problem goes beyond beyond school taxes and the "cost of carrying Newark." Why is there year after year (including this year) an increase in the municiapal tax? Remember, until last year, even the county was able to keep a lid on taxes for many consecutive years. Are we (as a municipality) living within our means in difficult economic times? It appears not. When I read that part of the increase was due partially to unexpected interest expense , I was truely surprised. How can interest expense not be projected accurately. We have certain debt on our balance sheet and in a very favorable interest environment, this should be the last thing that is a surprise in preparing a budget. I now live here a year and a half and often sit quietly in trustee and planning board meetings, to try to educate myself. I am getting the strong feeling though, that we do not always make the difficult decisions - ones that might not be popular, but ones that are important. For example, while I totally agree that relying so heavily on property taxes is a crazy way of generating funds, the reality is what it is. We can not continue to blame the system, but learn to live with it, for better or worse. I also fear that things are buried in the budget as "capital expenditures." Capital expenditures or regular operating costs, these are usages of our hard earned dollars. Again, I make the analogy to corporate finance. If the revenue $s are not there, a prudent financial executive, will report back that a reexamination of the budget is necessary. I get insulted when I read that the "average" increase is "x" dollars per SO resident. This, I believe on some level is an attempt to try to minimize in the taxpayers mind the increase. The increases are real and in a very tax weary municipality are increases over substantial bases. | ||
| doublea Citizen Username: Doublea Post Number: 9 Registered: 3-2003 |
I certainly agree with you and thank you for starting this thread on a subject which requires much more discussion than it has received in the past. It almost seems as if many of our officials feel that our taxes are not really that high (I have really heard this), or there is nothing we can do. Several years ago, the South Orange Board of Trustees agreed that the municipal portion of taxes would be increased 1.5% per year, so as to even out any tax increases. That agreement did not even last through the then current year(I think this was 1999). We have been told that the Gaslight Commons was going to relieve our tax burden.Yet, when the municipal budget was introduced, there was a significant increase. Even though Gaslight Commons is only one-half occupied, where is the tax relief that was promised ? It really seems as if residents have stopped questioning the Board of Trustees about taxes. I do know that in the past, when the Citizen's Advisory Budget Panel made recommendations, they were given short shrift by the Board of Trustees. | ||
| mayhewdrive Citizen Username: Mayhewdrive Post Number: 201 Registered: 5-2001 |
I agree, as well. In the past I have heard some of the Trustees say that taxes will always go up a certain percentage every year due to wage increases. In the company that I recently joined, I've been told that last year wage increases were ZERO for most people due to the lousy economy. Of course that is awful, but it is the reality we are dealing with. There is no reason government employees can't be subjected to the same thing in tough economic times. | ||
| nwyave Citizen Username: Mesh Post Number: 23 Registered: 1-2003 |
With regard to salary increases, I agree 100%. Unemployment is over 6% and our economy is barely out of a recession. Believe me, I am a real capitalist and definitely understand that compensation is a very important part of employee productivity and morale, however with the same logic, I also understand that everybody realizes the state of the economy. People are very happy to have jobs and understand that in hard times, raises are not an automatic. Another example - a very interesting new development has been in the press recently w/re corporate America. During these times, many large corporations have also suspended matches on employees 401k contributions. Is that something any of us like - most notably the affected employees? Of course not. Again, however, there is a need to efficiently allocate scarce financial resources. I believe the same log applies here. We need to live within our financial resources. | ||
| doublea Citizen Username: Doublea Post Number: 10 Registered: 3-2003 |
A few years ago, the South Orange Board of Ttustess discussed the possibility of having Seton Hall make an"in lieu of" annual payment to the Village. I don't remember any further discussion on this point. My guess is that now that Seton Hall is or will be involved in SOPAC,there has been no further discussion of an in lieu of payment. I do know that Monmouth University makes an in lieu of payment of $100,000 per year to West Long Branch, the town in which it resides. | ||
| Brian O'Leary Citizen Username: Brianoleary Post Number: 1238 Registered: 3-2002 |
Sometimes it helps to look over time. Since 1993, the schools tax rate has gone up 74%; the municipal rate has increased 32%; and the county rate has increased 27%. The 2002 assessments were $2.72 (per hundred dollars of assessed valuation) for schools; $1.37 for the village and $0.89 for the county. This means that about 54% of the money raised by property taxes goes to schools; 27% goes to the village and 18% goes to the county (the numbers don't quite add due to rounding). There are a couple of things that this analysis doesn't take into account. The first is that, while the populations in the towns have stayed relatively constant, the last ten years have seen a 32% increase in student enrollment (from 4,806 to 6,342). If you look at the per-student cost of property taxes, it has grown the same as the village tax rate - 32%. The other consideration is that the schools cannot raise revenue locally by any means other than the property tax. The towns and the county can collect revenues through fees, fines and the like, and they can make agreements to accept payments in lieu of taxes (PILOT), money that supports the municipal budget but not the schools. The net effect of a PILOT agreement is a shift in the schools tax burden from the PILOT site to other property owners in South Orange. Because a PILOT arrangement is often negotiated for a significant length of time (10 to 30 years), the long-term impact should be a careful consideration. We've been doing some other research into the trends in this area, which I'll try to bring back to the Board in the near future. | ||
| doublea Citizen Username: Doublea Post Number: 11 Registered: 3-2003 |
Brian: There can't be any dispute that school taxes account for 54% of total taxes. However, I think that when we speak of percentages with regard to municipal taxes,it can be deceiving be cause the amount in absolute dollar terms is so large. | ||
| nwyave Citizen Username: Mesh Post Number: 24 Registered: 1-2003 |
Doublea, that is exactly right. There is so much focus on the education portion of the tax bill, that I believe that we have lost sight that the municipal tax portion, in absolute dollars is a very large portion of the actual taxes paid. Mr. Rosner and Mr. O'Leary as you are both candidates for a trustee position in the upcoming elections, can you state what your slate's thoughts on future increases on municipal taxes. The trustees how significant imput in this regard and thus I think it is an important election issue. I think it is important that the electorate cleary understand these positions and we begin holding candidates more accountable for what they promise during the campaign. Rather than vague positions, I think it would be worthwhile to hear specific ideas, if any, regarding ways of holding municipal taxes in line (or freezing for that matter). If either of you think that this is not the correct venue for such a discussion (not sure why), please indicate how the electorate will obtain this information, so that we are better educated when we cast our votes. Thanks. | ||
| Brian O'Leary Citizen Username: Brianoleary Post Number: 1239 Registered: 3-2002 |
Thanks, doublea; I offered the percentages in part to provide some background for the discussion. I understand your point about the dollar impact. Nwyave, it may be a small distinction, but I am actually standing for village president against the incumbent, Bill Calabrese. I am running with two other candidates, Eric DeVaris and David Lackey, who are campaigning for trustee. Although we are running as a ticket (Open South Orange), on May 13 you vote separately for one person for president and three (of five running) for trustee. I do think that this is one of the forums for raising ideas on how to better manage taxes. There is also a debate sponsored by the League of Women Voters on April 30 and an Open South Orange "meet the candidates" event at Bunny's on April 24. We are also talking with our community in a variety of forums, including several coffees. An updated schedule of events is posted at our web site, www.OpenSouthOrange.com Because I am running with two other people, I'd like to talk with them briefly before posting. That will help you better understand how the three of us would approach the issue, rather than just hear my ideas. Thanks. | ||
| mrosner Citizen Username: Mrosner Post Number: 217 Registered: 4-2002 |
As Brian has stated on this board and I have stated in public many times, the property tax system that we rely on in NJ has a lot of serious flaws. Property taxes are used to maintain services in the village and unlike a corporation most taxpayers will not accept a cut in services. The problems with a property tax system are magnifed in a towns with minimum commercial space (Glen Ridge, Maplewood, S. Orange) vs. towns that have enormous amounts of income from commercial property (Milburn, Springfield, Union, etc.). I do not think any person who has studied the situation will realistically think that they will be able to lower the property tax bill. In fact, I think the level of increase will only vary by a small amount. It is almost impossible to compare a large coroporation's budget to a municipal budget. There are certain services that must be provided and union contracts usually have built in salary increases. We need to have a certain number of firefighters and police and I have never heard one person say they want less protection. The Police and Fire departments make up over 50% of the municipal portions of the budget. There are also road improvements that need to be done every year. All those years that maintenance was lacking (late 70, early 80's espectially) due to a slow economy and we are still paying the price trying to catch up. Everyone wants their street paved and those projects all go out for competitive bidding. I would not want to put the future of the village infrastructure at risk again just so I can say we had a lower tax increase. That is what they do at the state level, but we cannot afford to do that at our level. The village has a citizens' budget avisory committee that meets regularly and their input has not only been welcome, and their comments and advice have been followed. I do suggest to Nwyave that you join that committee. When we stated four years ago that the average tax increase had been 1.5%, and that we had hoped to keep the average increase the same in the future. The county which had a slightly lower increase in tax increases also had large cuts in services some of which did have an impact on the village. We have been doing projections five years out so we will have an idea of the costs and increases that are going to be coming. Seton Hall does make a payment in lieu of taxes and always has. I feel it could be greater, but it was around $140,000 last year. Since their total population is approaching 10,000, it would be wonderful if they would make a larger contribution. Legally, they do not have to pay a cent, but as a good neighbor they should. One very big positive is that they have agreed to be a partner in the Arts Center and will be making a very large contribution to that project. I know that this helps themselves too, but this will help bring more people into the downtown and will greatly enhance the relationship that we have been trying to build upon for years. As for a long term PILOT like the one given to Gaslight Commons, I have gone over the math numerous times and I only see that it is a positive for the village and next year will be the first year that we will have the full benefit of the revenue. | ||
| doublea Citizen Username: Doublea Post Number: 12 Registered: 3-2003 |
M.Rosner:It is good to know that Seton Hall is making an "in lieu of" payment.My recollection is that after the Seton Hall fire, you were involved in the Trustees' discussions involving how we could get Seton Hall to participate in the additional costs that the Village was going to incur resulting directly therefrom. Was the "in lieu of" payment in effect when those discussions were taking place, or as a result of those discussions? | ||
| mrosner Citizen Username: Mrosner Post Number: 221 Registered: 4-2002 |
They have actually always made some kind of payment. We try and get committments from them that extend several years which is what we now have. However, I specifically suggested that in addittion to those payments that each student be "charged" $100.00 per year to be specifically put into a trust that could only be used for public safety (Police and Fire). As of this time, they still have not agreed to do that. In the meantime, we have been trying to get the state legislature to require a percentage of tuition (1/2of 1%) be given to the municipality which in this case would be about $100.00. This does not seem to have a great chance of passing right now, but I am hopeful that with continued pressure, that maybe one day a version of this bill will pass. | ||
| doublea Citizen Username: Doublea Post Number: 13 Registered: 3-2003 |
M.Rosner: Thank you for your response and once again I would like to thank you for all the time and effort you have given to responding to the many questions thrown to you on this board. | ||
| Brian O'Leary Citizen Username: Brianoleary Post Number: 1241 Registered: 3-2002 |
I see how the PILOT payment is a benefit to the municipal government, but I disagree that it is a financial benefit to the Village. In the case of Gaslight Commons, we have added property whose market value is $25 million. If it were assessed at market rates (instead of being a PILOT), the municipal government would receive $342,500 and the schools would receive $680,000 (a total of over $1 million). Instead, the municipal government receives $500,000 and the schools receive nothing. With the addition of a PILOT property, the certified true valuation of South Orange's real estate has increased, meaning that other taxpayers in the village, primarily residents, pay the portion of the schools tax burden that is not picked up by the developer. There are often good reasons to do a PILOT, but the property should provide benefits beyond tax revenue replacement or it is a net loss to the community. | ||
| doublea Citizen Username: Doublea Post Number: 25 Registered: 3-2003 |
Brian: If I understand it correctly, the value of Gaslight Commons is added to the taxable base of South Orange properties in determining the allocation of the school budget between South Orange and Maplewood, thereby increasing the total amount of South Orange's share of school costs and therefore each property owner's individual share of school taxes. If this increased amount of school tax borne by those property owners who pay school tax is not offset by a similar amount of municipal tax picked up by the PILOT, it is a net added burden to South Orange taxpayers. | ||
| Brian O'Leary Citizen Username: Brianoleary Post Number: 1247 Registered: 3-2002 |
Thanks.. yes, that's my understanding. | ||
| doublea Citizen Username: Doublea Post Number: 26 Registered: 3-2003 |
Very troubling. | ||
| Brian O'Leary Citizen Username: Brianoleary Post Number: 1249 Registered: 3-2002 |
To be fair, some of the village staff involved in this matter feel that the tax share allocation does not change. I disagree with that interpretation. To my understanding, the allocation of school taxes is based on an assessment of market value (not assessed value). | ||
| jimmurphy Citizen Username: Jimmurphy Post Number: 112 Registered: 5-2001 |
How could it be based upon an assessment of market value? Who would make such an assessment? Jim | ||
| mrosner Citizen Username: Mrosner Post Number: 234 Registered: 4-2002 |
Only with Gaslight Commons the village was going to receive less than $300,000 and now it gets over $500,000 when you factor in the increases each year. Also, it does not count in the formula for school taxes. What that really means is that Maplewood and Essex county are helping to subsidize the PILOT and S. Orange taxpayers come out ahead. So far, not one school age child is residing in the building. We did agree to use a portion of the money to help subsidize the S. Orange taxpayers if it turned out there were going to be a large number of students. Remember that Maplewood pays 58% of the school budget so for each student we only need a payment of $4,000 for each student. Since the village is receiving extra money that might have gone to the schools, but instead goes into our muncipal budget helping to stabalize the taxes (this is the first year we receive any money). $200,000 extra equals almost a 2% increase in municipal taxes. The real issue here is that the zoning for that property was changed to residential in the early 1990's becaue the residents of the village mews and church street led a protest against a commercial development (a large shoprite supermarket). That limited what could be built there and because of the location there was little else that could be built other than apartments or condos. The only way a developer could afford a project of that size was with a PILOT. I know we did not need another empty auto dealership. For those who argue that we should have purchased the property for open space or recreation, the cost was prohibitive. The village staff involved feel that the tax share allocation does not change because that is exactly true. Unless the school budget increases because of the project, why would the allocation differ? In fact, since the allocation of school taxes is based on the assesment of market values, and this propery is not included because it is part of a long-term PILOT, then each S. Orange taxpayer is not hurt at all. As for Mr. Ryan's post a few months ago stating that the property would count in the formula, that is only true for short-term PILOT agreements. |
