Confusion over the actual impact to taxpayers took center stage on June 28, when it came time for the West Windsor Township Council to adopt its budget. When the smoke cleared, the measure translates into a municipal tax bill of $1,845 for the owner of a home assessed at the township average of $534,782 — a $75 increase.
Even though they ultimately adopted the budget, with a 3-1-1 vote, with Charles Morgan voting against it and Diane Ciccone abstaining, council members said they were “disheartened” by the mix-up. At the center of the issue was the amount of increase in the tax levy versus the overall percentage increase in the tax rate.
The tax levy is the portion of the overall budget that will come from taxes. So, in West Windsor’s case, of the total $37 million budget, $20.97 million is the tax levy — or the total amount of money that will be raised through taxes.
The tax rate, on the other hand, is the amount per $100 of assessed value that is used in the calculation to figure out what portion an individual homeowner owes. In West Windsor’s case, the tax rate is 34.5 cents per $100 of assessed value.
In this year’s budget, the tax levy will increase by 2 percent over last year’s levy, but the tax rate itself will go up by about 4 percent. Council members said they thought the 2 percent increase was referring to the tax rate increase.
The numbers in the $37 million budget show a 1.4-cent tax rate increase — from 33.1 cents to 34.5 cents per $100 of assessed value. That would mean a percentage increase of 4 percent. However, the tax levy portion of the budget represents an increase of 1.9 percent over last year’s tax levy amount.
It was that 1.9 percent increase in tax levy that some council members thought applied to the percentage of increase in the tax rate. The issue was brought to light by resident Bob Akens, who commented about the perceived “disconnect” during the public hearing before the vote.
“If you go back to the tax rate that will apply to someone whose valuation has not been adjusted down, you move from 33.1 to 34.5 cents, and that’s a 4.2 percent increase,” he said. “At the last budget meeting, all that was said was a 2 percent budget increase. For some reason, I’m going to pay a 4.2 percent increase in my taxes. That’s a long way from what was being talked about before. It is better than the 5.8 percent first proposed, but it sure is not the 2 percent.”
Members of the administration maintained, however, that the tax levy — and not the tax rate — was the source of discussion all along, even when the council came up with an 11th-hour proposal to cut the budget even more to bring it within a 2 percent tax levy increase.
“The tax levy itself has been the number that has been discussed at various council budget work sessions,” said Chief Financial Officer Joanne Louth. “The adjustments that were made in the works sessions brought the levy to a 1.9 percent increase. However, when that is distributed among the tax base — the tax base that has declined because of market conditions and the like — there is less of a base, so the rate is a 4 percent increase.”
To sum it all up, the township’s expenses increased by 1.5 percent this year. However, revenues to offset those expenses — other than property taxes — decreased. Therefore, the tax levy, the total taxes raised, went up by 1.9 percent. However, the total assessed value of all the properties declined, and the tax levy is distributed over a smaller base. This caused the 4 percent increase in the tax rate.
At the introduction, the council cut $800,000 from the budget. The first part of savings came from about $200,000 in cuts to overtime and nonessential part-time staff. The second part of the savings came from the $600,000 taken from $1.3 million in liquor license sales this year. The cuts were approved 4-1 prior to the special session on May 28 specifically for introduction of the budget.
The $1.3 million in revenue from the liquor licenses was originally to be used for renovating the an office trailer attached to the municipal building that houses the Health, Recreation, and Emergency Services departments.
Ciccone said that at the time of the vote, she was clear in asking whether the 2 percent increase applied to the tax rate. “I am deeply troubled,” she said. “I had always said I wanted to see a zero percent increase. I did not want to go to four, and when it was suggested it was going to four, I said no. What I thought I was agreeing to now has doubled. I am very troubled, extremely troubled.”
“This entire council had the understanding that it was going to be a 2 percent increase,” she added. “Not once did anyone tell us the difference. This is the very first time I’m hearing you put the two together. It’s very disheartening to hear that, when I was led to believe it was going to be a 2 percent increase.”
Councilwoman Linda Geevers echoed the sentiment. “When we introduced the budget, we talked about the 1.4-cent increase, a $75 increase on an average assessed home,” she said. “It was supposed to be a 2 percent increase.”
“I don’t know what we were missing in that discussion that evening, and why that didn’t come out, or why it wasn’t communicated to us,” she added.
However, Business Administrator Robert Hary maintained that the discussions from the beginning referred to the tax levy. He referred to an early budget session in which the tax assessor explained why the tax base had a lower value.
“In order to ensure we don’t come up against tax appeals that will hurt us, he takes a look every year and adjusts the values accordingly to market rates,” Hary explained, referring to a program the administration said the council had a approved after the last town-wide revaluation. “In these times, when valuations in our entire community have gone down, it has resulted in the reduction of the value of a penny” on the tax rate.
“We said that all along,” Hary added. “The issue is that those people who were re-adjusted will actually pay less because the cost of their assessments is lower.”
Mayor Shing-Fu Hsueh suggested that before next year’s budget process, the administration will provide a breakdown of the terminology involved with the budget, including explanations of the tax levy, tax rate, and fund balance (surplus), to name a few.
Morgan said the discussion demonstrated a flaw in the process, mainly with insufficient information provided by the administration. Morgan referred to his criticisms of the mayor and Hary, which he made earlier in the meeting, for mailing him a response to a request for information he sent on May 1, but received at his home on June 26.
“My concern here is we are passing this budget in the dark,” he said. “We don’t know the answers to questions we’ve asked. The few answers we do get are misleading numbers.”
He also maintained that the township was still holding far too much money in its fund balance, or reserves. “I think none of us are happy with this budget, and as small as the increase is this year, it should be zero, and that is still an outrageous fund balance.”
The council used $200,000 more in surplus than it did last year — for a total of $4.4 million being used from surplus to offset taxes. But the council wanted to avoid dipping further into the surplus for tax relief, as Morgan had proposed.
“This administration and this chief financial officer make it a big point about the AAA bond rating and the savings it brings to the community,” Morgan added. “I have a detailed analysis as to how it is not a savings, and I cannot get them to sit down and look at my numbers.”
Not all council members were as critical. “When it’s all said and done, we are below the cap, we did not lay off anybody, and also, we did not cut any services,” said Khanna. “I was not happy in taking money from the capital improvement projects or taking money out of the fund balance, but at this point, I support the budget as is because I feel that the services should not be disrupted.”
Khanna mentioned the comprehensive efficient study the township is planning to conduct to find areas of savings and mentioned the work he and Ciccone would be doing with the business owners in town to make the township more business-friendly.
“We could have done more work, better work, but the budget that we put forth addresses the concerns of the community,” said George Borek. “We have a lot of hard work ahead of us.”
Ciccone also called for the township to begin “doing things differently.” She said the township could not keep going to its residents with any amount of increases. “It still hurts our residents. We need to work together. I would hope going forward, we would have a better dialogue.”
Geevers also called for the council and administration to work together, especially to resolve questions. “Get them answered in a timely manner,” she said. “It’s going to be a very busy year with contract negotiations.”
“We just can’t keep moving at the pace we’re going.”
