I thought that New Jersey had a cap on property taxes. The WW-P school district does not seem to agree. In 2010-’11 our property taxes went up by 6.5 percent, versus a cap of 4 percent. For the upcoming year, the cap is 2 percent, but the proposed budget is a 2.7 percent increase. What happened?
First of all there are exceptions to the cap, for enrollment, health benefits, and a couple of other things. The district claims that based on those exceptions the cap is really 2.24 percent.
The second reason is that the local taxpayers pay for both the general fund and debt service. The cap only applies to the general fund. Since taxpayers have previously approved the district debt, they can not revoke those commitments in future years.
So while the general fund has stayed within the cap, the debt service tax has gone up significantly, 111 percent in 2010-’11 and 11 percent for the proposed budget.
Wait a minute. The district claims that they have maintained the debt service to be flat since the facilities referendum. How can it have doubled in the past two years?
To get the answer, you have to turn the clock back to the 2009-’10 budget year. At that time, due to increased state aid, higher fund balances, and low spending increases, the district was well below the cap. That would have constrained future tax increases.
To avoid that situation, the district created a “Capital Reserve” of $6,220,829 within the general fund. This reserve was then immediately used to pay debt service. The simple result was to increase the general fund tax levy and decrease the debt service tax levy. The net impact for that year was a wash for the property taxes.
So why did they bother? This shift allowed the district to bank the cap for future years.
With this higher base, the allowed increase in later years is bigger. Plus, the district is allowed to increase the debt service levy up to the full amount required to fulfill the debt obligations. This is why the debt service levy doubled in 2010-’11.
This is more creative accounting that allows the district to keep raiding the taxpayers. It is time to tell the district that our taxes are too high. Vote no on the bloated school budget. Quentin Walsh, CPA
Petty Road, Plainsboro
Editor’s note: Walsh is married to Ellen Walsh, a school board member, and his letter is intended to represent only his own views.
