The North Bergen commissioners introduced the town’s $86.7 million budget on Feb. 25, which will not cause a municipal tax increase in 2015.
A homeowner with a property value of $140,000 will pay approximately $3,444 to the town. That amount will be added to school and county taxes, which are determined by separate budgets.
“The tax rate remains unchanged,” said Town Administrator Chris Pianese in detailing the annual tax proposal.
“The fact that this budget proposal includes a zero percent tax increase is a tremendous accomplishment that could not have happened without years of careful financial management, conservative budgeting practices and innovative new revenue strategies,” said Mayor Nicholas Sacco. “It is a solid, gimmick-free budget that not only keeps taxes flat, it also reduces our debt and maintains our surplus. The taxpayers of North Bergen deserve nothing less and the commissioners and I are very proud to deliver this zero tax budget proposal for consideration.”
Numerous factors went into the calculation of the budget, as detailed by Pianese in a PowerPoint presentation now available on the town’s website at www.northbergen.org.
For one thing, North Bergen has seen cogent signs of the national financial recovery.
“If anything really hurt in the last three to four years, it was the decline in our ratable base and values of properties being appealed,” said Pianese in a conversation with the North Bergen Reporter.
When the financial crisis initially hit, property values plummeted and tax appeals from residents skyrocketed. This year the township experienced an increase in total assessed valuations for the first time since 2011. This increase resulted in a ratable growth of more than $52 million or 2.1 percent compared to last year.
“Municipal government financing is similar to a company generating profit. You’re hoping to end with a surplus.” –Chris Pianese
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In addition, he said, “More promising news is when you see the construction department receiving more requests for permits. That’s a sign that the economy is turning around.” Based on current data, the town anticipates receiving over $1 million for construction permits this year, up nearly $200,000 over last year.
PILOT properties are also seeing an increase in income for the town. PILOT (payment in lieu of taxes) properties receive tax abatements from the town, with alternative compensation negotiated. The purpose is to entice companies to locate or build in the region.
“A lot of development wouldn’t be here [in North Bergen] if we didn’t offer that, especially with the down economy,” said Pianese. “Those abatements are starting to mature. They’re now in their second or third year. The group collectively will earn $230,000 more this year than in the previous year.”
Another contributing factor to the flat property tax rate is that the town’s overall health benefit plan is remaining the same, with no cost increase. This represents the town employees’ health benefits as well as liability insurance. Insurance accounts for 12 to 15 percent of the overall budget.
“We’ve been working for six months with our brokers to try to find a way to pull that cost down,” said Pianese. “If we went traditionally we’re probably looking at a five to 10 percent increase. We modified the plan to some extent. It’s a creative combination. We self-insured some of the stuff because we built reserves to deal with that.”
In other words, the town has set aside funds to cover certain claims. The health insurer will continue to administer the program and pay all claims not covered by the township.
Year-end surplus is up
“Municipal government financing is similar to a company generating profit,” explained Pianese. “You’re hoping to end with a surplus. In the end of the day all revenues come in, you pay all your bills, and hope for a surplus as opposed to a deficit.”
“Every year for the past four years we’ve generated a year-end surplus,” he continued, with that amount increasing each year. For 2014 the year-end surplus was over $4 million.
The surplus is partially a result of town revenue coming in higher than expected in 2014, for the second year in a row. Factoring in the increases detailed above, the town received excess revenues of more than $1.65 million in 2014, up from $1.16 million in 2013.
Added to existing funds, that gives North Bergen a balance of nearly $9 million in reserve.
“That covers cash flow,” explained Pianese. “You should always have some cushion.”
A portion of the surplus is traditionally used to balance the budget. In 2014 the town used $2 million to balance the budget, down from $5 million in 2011, leaving more in reserve.
“This is the biggest issues for rating agencies,” said Pianese. “They look at what your balance is.”
And that money is generating even more money. In 2014 the town negotiated with numerous banks and wound up moving its funds from TD Bank to Oritani Bank. “Oritani came in at five times what we were earning in our previous relationship,” said Pianese. “That generated an extra $100,000.”
Capital budget debt is down
“Every year in addition to operating budget most towns have a capital budget,” explained Pianese. The capital budget is a separate amount, funded through notes and bonds and long term debt.
At the Feb. 25 meeting a bond ordinance was adopted authorizing the issuance of bonds in the amount of $2.66 million, down from almost $4 million in 2011.
“In 2000 our total debt outstanding was $60 million,” said Pianese. “In 2014 it’s below that level, at $58 million. The goal is to pay off more debt than we take on.”
The capital budget is used to pay for items outside the operating budget. Among the items purchased in North Bergen under the capital budget was a new senior bus to replace the previous bus, which was costly to repair. Once the new vehicle is in operation the old one will likely be auctioned off.
The town also purchased a new ambulance at a cost of $150,000 to $200,000.
Additional new costs this year included the maintenance of the waterfront park shared with Guttenberg. Construction of the park was completely funded by grants but the ongoing operations are paid for by the township.
Art Schwartz may be reached at arts@hudsonreporter.com.