School, city taxes to jump again

Increases blamed on state cuts, charters, health costs

Hoboken property owners are set to pay more in taxes to both the city and the public schools under proposed budgets for the two entities introduced this past week. If maintained in the final budgets adopted later this spring, the property tax increases will be the second consecutive hike for the city and the third consecutive for the schools.
The proposed city budget is $104 million, and the proposed school budget is approximately $68 million.
Homeowners in Hoboken pay property taxes to the city, county, and public schools, along with small taxes to fund open spaces and the public library. The county budget will likely be introduced in May or June.
Last year, the average Hoboken residential property owner paid $7,456 in total taxes, just below the Hudson County average of $8,161 but higher than property tax bills in many communities nationwide.
The City Council will hold a special public hearing to discuss the budget on April 15 at 7 p.m. in Council Chambers at City Hall.

Between a rock and a hard place

On Tuesday, March 17, district business administrator William Moffitt presented the preliminary $67.99 million budget for the 2015-16 school year to the Hoboken Board of Education.
The new budget is 4.8 percent higher than the current year’s budget total. Of the full 2015-16 budget, $53.47 million will cover the district’s general operations, a 2.36 percent increase from the current budget.
The district is proposing a 4 percent increase in its local tax levy, from $39.4 million to just over $41 million. Moffitt could not provide exact numbers, but he estimated that the average assessed property in Hoboken would see a $75 increase in school property taxes if the budget proposed on Tuesday is adopted without changes.
The school board has raised taxes every year since it voted in 2012 to do away with the public’s right to vote on the school tax levy unless it grows by more than the state cap of 2 percent. In the five school budgets before the change, the school tax levy was maintained or reduced.

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“With flat funding, the state continues to push the cost of running the school system onto the property tax.”—William Moffitt
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According to Moffitt, Hoboken Public Schools’ 2015-16 tax levy increase is allowed to exceed 2 percent because the district had banked $696,000 worth of flexible cap space by not taxing the maximum increase in recent years. As such, the budget should not have to be approved by a citywide referendum.
Moffitt said the tax increase was necessitated by a combination of stagnant state funding and rising costs across the board.
Since Gov. Chris Christie took office, explained Moffitt, the state has not funded local school districts up to the level mandated by a 2008 funding formula, keeping aid levels mostly flat. When school choice aid cuts in last year’s budget are taken into account, the amount of state aid projected for Hoboken this year increased by only $80,000.
“With flat funding, the state continues to push the cost of running the school system onto the property tax,” said Moffitt.
At the same time, costs are increasing, salary and wages foremost among them. Over the past year, the Hoboken school board approved a new contract with the local teacher’s union that raised salaries and a 1.5 percent raise for non-unionized contractual employees.
The district also expects to see its payments to the city’s three charter schools rise by $524,956 to a total of $9.02 million. The district is required to provide 90 percent of the funding under a state formula for each child living in Hoboken who attends a charter school.
The projected enrollment of all three Hoboken charter schools is expected to grow by 79 students. All told, the increase in charter school payments amounts for 43 percent of the increase in the school district’s general appropriations.
Hoboken Dual Language Charter School (HoLa) is slated to grow the most, by 44 total students, as it expands to seventh grade this coming year. The school board has challenged HoLa’s expansion in court.

Calm before the storm?

The 2015-16 proposed budget does not contain any major cuts to faculty or staff, although plans to hire four new teachers have been scuttled. However, Moffitt warned that next year could be very different.
With all of its banked tax cap expended and another $691,000 of the surplus drawn down to cover this year’s budget, said Moffitt, the district will have little to no latitude to absorb further increases in salaries and charter school payments, raising the potential for more painful cuts.
Moffitt stressed that the all of the preliminary budget presented on Tuesday was subject to change. Once approved, it was submitted to the New Jersey Department of Education, which can suggest or require changes.
The school board will hold a public hearing on the budget on May 5 at 7 p.m. in the Demarest Auditorium.

City proposes maximum tax increase

The administration of Mayor Dawn Zimmer introduced its 2015 budget for the city of Hoboken this past Wednesday. The total proposed budget, excluding grants, amounts to $103,974,447, a 1 percent increase from last year’s approved budget minus grants.
The resolution introducing the 2015 budget was passed unanimously. The budget covers the city’s spending for the 2015 calendar year.
Until the official budget is passed, the city’s operations are covered by temporary appropriations. The City Council approved $38.5 million to cover the first three months of 2015 on Jan. 7, and added another $18.3 million to cover April on Wednesday.
In the proposed 2015 budget, the Municipal Purpose Tax levy, which provides most of the funding required to operate Hoboken’s city government, is set to grow by 2 percent, the maximum allowed increase under state law, from $51.79 million to $52.84 million.
As a result, the municipal portion of Hoboken’s tax rate will rise to $4.75 per $1,000 of assessed value, an increase of 0.9 percent. For the average residential property in Hoboken, which currently has an assessed value of $518,000 according to the city presentation, the municipal portion of its total tax bill will increase by $21 to $2,461.
In addition to the tax levy, Hoboken’s 2015 spending will be supported by $13.1 million in PILOTs and abatements (payments from developments in lieu of property taxes), $4.1 from Parking Utility proceeds, $11.1 million in state aid, $5 million in court fees, $1.7 million in parking taxes, $1.5 million in construction code fees, and $1.2 million in FEMA reimbursement, according to city spokesman Juan Melli.
In her March 13 memo to the City Council, Zimmer blamed the proposed municipal tax increase largely on growing health insurance costs for city employees. “While we are pursuing cost-saving initiatives when it comes to health care,” she wrote, “this year, the cost of group health benefits increased by $1,183,000.”
In an email, Zimmer explained that employee health benefits were the same as last year, but that “actual benefit utilization of the pool of individuals covered by Hoboken’s plan” has increased.
In addition, said Finance Director Linda Landolfi in her presentation to the City Council, Hoboken had to account for a half million dollar increase in pension payments and the loss of a $540,000 agreement to provide police officers for security sweeps in Hoboken’s public housing projects.
The contract was cancelled last March by the Hoboken Housing Authority, which is dealing with its own budgetary issues. Landolfi said the city was in talks with the HHA to sign a new deal for above baseline security services.

Saving surplus, but for what?

To balance its 2015 proposed budget, the city plans to use $8.8 million of its surplus as revenue, down from $9.8 million last year.
Councilman Michael Russo questioned why additional surplus money could not be devoted to the budget, allowing the city to lower or cancel this year’s proposed tax increase.
Landolfi cautioned against drawing down the budget surplus aggressively to fund normal budget expenditures, saying that credit rating agencies liked to see cities maintain their surpluses over time. Since 2013, Hoboken has maintained the second highest possible bond rating from Standard & Poor’s.
“I don’t like to see individuals spend their savings for their bus fare or their food for that month or their mortgage,” said Landolfi. “It really should be saved for…a terrible occurrence.”
However, Russo pointed out that most of the emergency spending after Superstorm Sandy was covered by bonds.
“We never seem to use [the surplus] for a rainy day,” he said, “we always just use that money to fill little gaps that we have in our budget…we always bond for that rainy day.”
Councilman Tim Occhipinti also argued that the city should reconfigure its 2015 budget to include a flat tax levy.
According to Landolfi, the city plans to pursue $18.4 million in new capital projects this year, of which the 2015 proposed budget only covers $167,000. The rest would be covered by new bonds, but only if they are approved by the City Council at future meetings.
Those potential bond ordinances include $14.5 million to fund the construction of a planned Southwest Park and the purchase of land for a planned Northwest Park, both through a state loan program. The debt service on those bonds would be covered by the city’s special Open Space Tax, which pulls in around $2.2 million a year.

Carlo Davis may be reached at cdavis@hudsonreporter.com.

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