Posted on Sat, Jan. 3, 2009

Delay in aid sending some N.J. towns for a fiscal loop

By Matt Katz

Inquirer Staff Writer

The Corzine administration's decision to delay municipal aid has left a handful of towns reeling because local officials don't know how much to tax property owners.

The holdup in releasing numbers for one specific kind of funding - extraordinary aid - "literally freezes everything" for the small percentage of towns statewide that operate on a July-to-June fiscal year, said William G. Dressel Jr., executive director of the state League of Municipalities.

Five such towns, all in Camden County, are scrambling to manage their fiscal year, which is half over. Most towns budget on a calendar-year basis and will be able to deal with any adjustments later in the year.

Cherry Hill, which asked for $800,000, will send out tax bills later than usual.

In Berlin Township, which requested $900,000, Mayor Phyllis Jeffries-Magazzu is choosing between delaying road improvements and borrowing money before levying a tax.

And in Gloucester Township, where officials don't know whether they will get the $1.5 million requested for their $45.4 million budget, the Township Council has authorized the unusual step of sending out estimated tax bills.

The administration of Gov. Corzine, a Democrat, said it was delaying aid because it is waiting for a legislative vote on a controversial plan that could affect how money is distributed. The proposal, stalled in the Senate, would let towns defer $1.3 billion in pension contributions for local government workers from their current budgets.

"We certainly understand and appreciate the situation this is creating for municipalities such as Gloucester Township; however, there is little we can do at this time," said Chris Donnelly, a spokesman for the state Department of Community Affairs, which oversees such funding.

Gloucester Township has collected taxes for the first two quarters of its fiscal year. So the brunt of the financial pain will be felt in this third quarter, when the town sends out a bill that prepares for the worst-case scenario of $0 from the state.

"We're in a predicament that if we do not send bills out, we will not be able to continue to keep the doors open, because we're cash-poor," said Dorothea Jones, township finance officer.

The hope is that the fourth-quarter bills could be reduced when state aid comes through.

If not, taxpayers are looking at an 18 percent tax increase, or a $600 hike for the year on a home assessed at $200,000. About $420 of that would be due over the first half of 2009.

The local budget suffered a reduction in construction revenue collected this year, and it lost out on $1.2 million anticipated on a sale of the township-owned former Nike missile base, which fell through.

"We've cut as much as we can, and we're trying to maintain those level of services," said Mayor Cindy Rau-Hatton, a Republican. "I'm not going to cut police, because we have to provide health and safety."

Councilman Dan Hutchison, also a Republican, doesn't think more money is coming from the state, so "you've got to make cuts across the board; every single department in the budget - everything - must be affected."

Making things worse for Gloucester Township will be added administrative costs. Normally, the last two quarters' tax notices are sent out at once. Because of the estimated tax bill, the township will have to pay for two mailings and an extra explanatory note, costing as much as $50,000, the mayor said.

"The state is putting us in this position. It's costing us money and it's making things confusing," said Rao-Hatton. "I think what the governor is doing is so dead wrong, because it's just filtering down the burden."

Even if Corzine's pension-deferral bill is approved, Dressel thinks Corzine will reduce the amount of municipal aid.

"Which means the only relief that a town is going to get is from the pension deferral, and that is bad news," Dressel said.

Two other municipalities on a fiscal-year budget cycle are Camden City, which by state law cannot raise taxes, and Lawnside Borough, which is awaiting a request for $550,000 in extraordinary aid toward its $4.4 million budget.

"The harsh realities of 2009 are just settling in," Dressel said. "When people get back from the holidays and look down the barrel at what we're looking at, it's going to give everybody a headache, a big headache."

Contact staff writer Matt Katz at 856-779-3919 or mkatz@phillynews.com.

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