The following is a letter from West Windsor Mayor Shing-Fu Hsueh to Governor Chris Christie regarding a proposed Tool Kit of Reforms and Proposition 2.5.
As requested I reviewed the proposed “Tool Kit” of reforms and your proposal to implement a 2.5 percent hard cap on municipalities.
Please note that West Windsor is a full service municipality. That means that we provide trash removal, brush removal, snow removal, and recycling to our residents. Under the Kelly Bill, we reimburse private communities based on their costs for the same services. We also provide fire and emergency services with a combination of paid and volunteer professionals without the need for separate fire districts. In other municipalities some of these services are paid for through means other than municipal taxes.
More importantly, we are a growing community. More residential development is being planned and actively built, including affordable housing units. Salaries, health care costs, and pensions, even with the proposed “Tool Kit,” will not go down. Utilities like gas, electric, and sewer will not go down. A tax cap won’t make government services cost less. Tax caps can be harmful if adopted during a weak economy.
The “Massachusetts Miracle,” Proposition 2.5 took effect during a period of extraordinary economic growth. State revenues were rising, which allowed the State to boost aid to municipalities, not cut it. With the proposed New Jersey plan to cap increases to 2.5 percent, the only choice may be to cut services that will cost the individual resident more than if the municipality provided it collectively to all.
This year our municipal operating budget would have had a nominal increase if the State did not cut the Township’s energy tax receipt funds that are collected by the state but owed to the municipality. If the state continues to take the revenue owed to townships, then there is less and less revenue on which municipalities can rely except property taxes. The state appears to be balancing its budget on the backs of municipalities by keeping the revenues due to them.
This is also true for unfunded mandates. While you have stated your commitment to stop unfunded mandates, there are still numerous mandates already in existence that continue to strain municipalities, i.e. NJDEP storm water regulations.
Standard & Poor’s (S&P) Rating Services has assigned its ‘AAA’ bond rating to West Windsor Township’s general improvement bonds. This rating did not come easy. It was assigned in part due to conservative financial management and predictable taxation on the part of the Township since I became Mayor in 2001.
In the current climate it is not irresponsible to have small increases in taxation. The 4 percent levy cap, with exclusions, has already caused significant hardship to many growing communities. The proposed 2.5 percent cap, if enacted, may cripple the financial management of local communities.
According to the Trenton Times (dated May 18, 2010) you were quoted as indicating, “for a constitutional amendment that would put a 2.5 percent cap on local property tax increases, exceptions would be permitted only for debt payments or to adjust for expansion and growth.” This sounds more flexible than what I understood from your earlier position about the hard cap.
The other issue that I would recommend that you consider is the option to provide for inflation-adjusted modifications to the cap when appropriate, based upon the Consumer Price Index or other similar criteria.
In closing, I would like to further explore this process and proposal before I can fully support the proposed 2.5 percent cap. I remain skeptical that we can use the same tool kit to serve both urban and suburban communities municipalities that are growing versus those that are at buildout, etc. There cannot be a “one size fits all” solution to the property tax problem. I look forward to working with you and the other elected officials in the State of New Jersey to implement true property tax reform in a long-term and sustainable manner.
Shing-Fu Hsueh
Mayor, West Windsor
