BOT introduces $3.5M budget, votes down banked cap

Village stays under 2-percent tax cap for 7th straight year

SOUTH ORANGE, NJ — The South Orange Board of Trustees introduced the village’s proposed 2017 budget at a June 12 meeting. The 2017 budget comes in at $35,588,094.13.

The board voted unanimously, 6-0 to introduce this budget, which maintains current levels of service and budgets for agreed union contracts, village administrator Barry Lewis Jr. said at the meeting. According to Lewis, the budget is also in good shape due to a 12-hour police schedule that reduced overtime fees while providing better coverage to the village; funds from the Third and Valley redevelopment also aided.

The overall tax levy increase from this budget is 1.7 percent. The average assessed home is valued at $581,954.35, meaning the average taxpayer will pay $67.42 more than last year.

According to Lewis, it is misleading to look too closely at the tax rate, as the rates appear lower due to the reassessment, without actually being lower.

“It’s not really fair to try to present that,” Lewis said.

The village has stayed within the 2-percent cap, without exception, since 2011. According to Lewis, from 2000 to 2010, the average tax levy increase was 5.75 percent, whereas the average tax levy increase from 2011 to 2017 has been 1.6 percent. Lewis also said that the projected budget for 2018 currently also shows an increase to the tax levy of less than 2 percent.

“My sense is most residents are pretty happy with all the services we deliver,” Lewis said, adding that he thinks most residents would rather pay $67 more than see a loss of services.

According to Lewis, 65 percent of the village’s revenue comes from taxes. The second highest contributors are Payment in Lieu of Taxes program and sewer fees, which each contribute 7 percent.

During the meeting, the board voted down Ordinance No. 2017-16 to allow for banked cap. In a split decision, the board voted to strike an enacting clause that would have allowed the village to use banked capital. Using banked cap is a way for municipalities and school districts to get around the 2-percent tax increase cap. Banked cap is useful, however, in that it is a “rainy day” fund, should an emergency occur and a municipality needs extra funds.

Village President Sheena Collum was not in favor of the ordinance, as she sees it as a way to get around the 2-percent cap.

“Talking about 2-percent caps, (people say) ‘Oh, it’s the law of the land, you have to stay below 2 percent’ — not!” Collum said at the meeting. “There are several exceptions where you can go above 2 percent.”

But Lewis recommended approving the ordinance, saying both he and the village CFO, Chris Battaglia, support it.

“If you hit a year where you have some unforeseen expenses, you don’t have to go out to referendum,” Lewis said, adding that banked cap is merely “a cushion” that is available for towns that have been “prudent in past years.” “It’s something we’ve never used. Hopefully we never have to use it, but it allows you that flexibility.”

But not all board members were convinced.

“I strongly disagree with passing this ordinance. I don’t believe in capping. I believe we can manage our budget properly,” Trustee Howard Levison, who is known on the board for his fiscal restraint, said at the meeting. “If we need to, we can always have emergency appropriations.”

Trustee Mark Rosner, who said he was “ambivalent” about the ordinance, said that normally the village should not need banked cap. He did point out, however, the the surplus this year is bit lower than anticipated.

This swayed Trustee Deborah Davis Ford.

“The fact that our surplus is not where we want it to be, I think we need to support the CFO’s recommendation,” Davis Ford said.

But Collum argued back that they have rejected the ordinance in prior years and that the circumstances are not drastically different this year. According to Collum, the only misgivings she had were regarding whether the village might want to have that cushion should the Trump Administration follow through on its threat to cut federal funding to so-called sanctuary cities.

Ultimately, the vote was split with four against banked cap, two for it and one abstention. Trustee Karen Hilton abstained, while Davis Ford and Trustee Walter Clarke voted in favor of banked cap. Rosner, Levison and Trustee Stephen Schnall voted against banked cap, with Collum stepping in as the fourth person against it. The Board of Trustees requires at least four votes to carry a motion, such as striking an ordinance.

As for appropriations, 41 percent of the budgeted funds goes to public safety; 14 percent goes to debt service and capital projects; 9 percent goes to administrative costs; 9 percent goes to public works; 5 percent goes to recreation; and 4 percent goes to the library. The rest goes to reserve funds, utilities, sewers, insurance, court fees, building and code needs, and tax appeal refunds.

During his presentation, Lewis also reminded that only 25.4 percent of property taxes go to South Orange. The school district takes the lion’s share of the taxes, at 57.7 percent, and the county takes 15.4 percent; 1.5 percent is kept in reserve to make up for uncollected taxes.

“We have a limited piece of the pie in what we can control,” Lewis said, though he added that the village’s share in the schools’ budget did go down, while Maplewood’s increased slightly.

“It’s a responsible budget. I’m confident we can live within our means with this budget,” Lewis said. “I already forecasted out to next year and we should be in good shape.”

For a more complete breakdown of the budget, visit the village website at www.southorange.org. The board will hold a second reading for the budget and a public hearing on Monday, July 10, at 8 p.m. at SOPAC, 1 SOPAC Way in South Orange. In the meantime, anyone with questions about the budget can reach out to Lewis via email at budget@southorange.org.

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