FH Budget Talk: The Price of Taxes

"Nobody wants their ox gored."

It's what Fair Haven Councilman Jonathan Peters, finance liaison, said about people protecting their interests when it comes to the municipal budget and its cuts and/or funding.

The bottom line: Like it or not, taxes fund services that residents usually want, and each has his own favorite. That's what Peters meant when talking about budget woes. Other officials agreed.

And, all six council members concurred that they're dealing with a tough call to make: deciding whether or not to strain an already nearly drained surplus to keep taxes level and municipal services at a premium; or break a five-year record of no municipal tax increase and enter a danger zone of depleting surplus to prevent any hike.

Either way, Fair Haven's roughly $8.2 million municipal budget is only in its preliminary phase. It's a draft that was up for discussion starting last night, Administrator Theresa Casagrande stressed.

She also cautioned, that despite the rough figures, there is no ironclad tax increase to report yet, as the budget will be refined and rethought several more times before adoption.

"We can keep cutting the spending, and that's a good thing to do," she said. "But we're running out of surplus fuel in the tank. The surplus has diminished (because of taking from it to stave off tax increases) and (bond/credit) rating agencies are saying 'Don't go any lower.' It's not a spending problem, it's a tax levy problem. We haven't had a tax increase in five years."

However, Casagrande reitrated

If the draft budget were to stay as is, Casagrande offered the following facts:

• the average homeowner's property in Fair Haven is assessed at $550,678;

• as is, the draft budget proposes a 1.1 cent per $100 of assessed property value annual tax hike, or $62.17 a year for the average homeowner;

• one penny on the tax rate represents $116,000;

• $150,000 would need to be cut to get to a zero tax hike;

• currently there is $950,000 left in surplus, using $450,000 less surplus in this budget than last year's;

• projected spending is down 130,000 from the 2012-13 budget;

• this budget accounts for a 9.2 percent rise in employee health benefit packages, which is already offset by employees' contributions to benefits, which has been in effect for the second year;

• interlocal agreements with Rumson have saved on spending and brought in revenue.

With the governing body basically split on any tax increase at all, all agreed that there would be a search for cuts in spending. Casagrande asked that council members discuss the matter and advise her where to make cuts to the draft budget to get closer or at a zero hike.

Councilmen Robert Marchese and Rowland Wilhelm rallied for a zero increase, saying that they don't want to ask for anything more from residents, especially considering that the Fair Haven Board of Education's budget and increases have not yet come to fruition.

"A mess," is what Marchese called that potential tax increase and potentially prohibitive expense to residents in a bad economy. Schools taxes account for more than 60 percent of the total tax bill. The municipal portion is significantly lower.

Councilman Eric Jaeger disagreed, saying that digging too deep into surplus is a longterm mistake.

"The reality is that council has done a tremendous job keeping taxes flat in a recession," he said. "But there comes a time that we just have to stop taking from the surplus."

The budget is slated for introduction at the next council meeting at the end of the month.