Wednesday, November 12, 2008

Guesswork on Next Year's Property Taxes

Aberdeen’s taxpayers are naturally concerned about next year’s property tax rates. This year, the township had its largest ever tax increase. Next year, about a third of homeowners will see their property taxes readjusted upwards from the revaluations. And the township will need to, once again, raise its annual contribution to the state’s pension funds (sheet 20). Excluding those people who will be devastated by their property revaluations, we should be relatively okay. Property taxes will be going up again next year but probably not more than 5%.

There are several elements that contribute to tax hikes but the two items that differentiate this year from prior years are 1) the biggest stock market collapse since the great depression and 2) a parallel drop in commodities (i.e. oil). For local government, that means an increase in pension contributions (to offset the dramatic losses in pension funds), a drop in utility costs, and reduced state aid (because of lower tax revenue).

To do the math, we need to engage in a bit of fudging since we won’t begin seeing the numbers until February or March but I don’t believe we’ll be off by that much.

Two-thirds of property taxes are taken by the school district. In contrast to the township, the school district strives to remain within the 4% CAPs set by the state because they otherwise risk review by the county superintendent. The school district also has a tendency to work backwards – raise spending by the legal limit and then determine how to spend the money. Still, the proposed budget will grow 4% but given the township’s history of rejecting the school budget, which is then cut by the township council, the final budget should be slightly less than a 4% increase.

Since daily operations are growing faster than the 4% limit and the capital budget has nearly disappeared, expect reduced maintenance and growing class sizes but not much higher taxes. One wildcard – New York Governor Patterson today announced a plan to reduce spending growth in education. If Governor Corzine does the same, the school may be forced to break CAPs or borrow more money.

Monmouth County, about 11 percent of the property tax, will probably raise taxes due to pension liabilities and reduced state aid. The county had no tax increase this year and modest tax increases during the prior two years. Monmouth County will likely restrain any tax increase and look to service cuts to meet budget constraints.

Given the drop in utility and fuel costs, tax hikes for smaller budget items such as sanitation, sewer, and library, should also be modest.

Last on the list is Aberdeen Township. Before looking at 2009, let’s review 2008. Municipal taxes, this year, jumped 12%. Some of the big ticket items included an additional $279,000 in pension contributions, another $275,000 for health care, and a $210,000 cut in municipal aid from the state.

In 2007, the state pension fund lost 3%. So far, this fiscal year, the state pension fund has lost about 9%. We can expect at least another $250,000 increase in pension contributions.

In 2001, after the dot-com bust and 9/11, New Jersey income tax revenue dropped a billion dollars. If even a quarter of that is passed along to New Jersey’s 566 municipalities, we could be facing another cut of $400,000 in municipal aid.

Healthcare costs will jump again but should be partially offset by a $100,000 drop in utility expenses. (Sheet 15C)

I guesstimate that municipal taxes could increase by 10% next year except for one thing – elections. It’s highly unlikely, especially considering the blowback from the property revaluations, that the township will risk double digit tax increases during an election year. By simply scaling back some capital expenditures and postponing other purchases, they can roll back the tax increase to 6%.

This is obviously all guesswork but it’s nice to know that, unless you’re hit by the revaluations (mostly older homes and condos), you won’t have to worry about monster property tax hikes for next year. Anytime taxes rise faster than wages, we’re heading for big trouble but, in the meantime, it’ll just be the slow bleed that’s endemic to New Jersey.
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19 comments:

KimsMoms said...

What is going on with Councilwoman Gallo?

Anyone hear the rumor my husband and I heard while picking up our son from school yesterday.

These two women said she was pushed out. Not long ago there was another rumor that she dared to ask very serious questions about Aberdeen finances and those questionable Aberdeen bills for our supposed professional services and that angered Norman Kauff.

Sounds like asking questions is something leaders should be doing but if the rumor is true Councilwoman Gallos only mistake was getting between Norman and his money. So if the rumor is true and it cost her a council seat, we taxpayers have lost a questioning voice looking into corruption in Aberdeen is forced into silence. Norman wins again and we taxpayers lose.

Who will the democratic leader Bill Shetton, what am I saying, I mean Norman Kauff puppet next onto the council.

Thanks for trying Mrs. Gallo.





















Anyone else not surprised?

Forget the taxes going up as it is obvious that Norman has the keys to the bank of Aberdeen and he and his close personal friends have free and total access.

Aberdeener said...

I believe she is resigning her seat. Her family has some serious medical issues and I don't think she is able to battle the town council and care for her family at the same time. I don't know who could.

Aberdeener said...

It's confirmed. Councilwoman Gallo has submitted her letter of resignation.

JsecSammy said...

The last time this happened was with the republicans. I think it was with Councilman McKay. They will be maneuvering and it will be interesting to see what Kauff and crew will pull off now. Whomever is the weakest link for the next election cycle will probably be put into Gallos slot to ensure Kauff control. Then they will find someone popular in the community or already in place on Kauffs boards, or hand picked for their community involvement and built in support that makes it easier and less expensive. Kauff did the same thing with Gallo as she already had a huge group behind her from the PTO groups and soccer moms.

I cannot wait to see what Soble will say. Will he wish her well or just kick her to the curb. We shall see.

Anonymous said...

Gallo resignation letter in Asbury Park Press today,

Predictable comment from Mayor Sobel who says "he is disappointed that she did not give it more time". Does this ass *Mayor Sobel* ever tell the truth? They ridiculed her and worse when she dared to ask questions. I can only imagine what Gallo has endured from the Norm allegiant these past several months.

The pressure tactics or ignoring her seems to have worked. Brown doesn't do what Norm wants and now Gallo gets kicked to the curb.

F N K

Anonymous said...

This Kauff must have some power. Two people who were not willing to stick around and fight the fight. Janice was a fighter and for her to walk away after such a short time is a suprise. The corruption must run deep and I hope she talks about it, more than the vague comments in the paper. I hope people don't have short memories. Sobels comments are a joke, what a puppet.

Driver8 said...

Did she not know what she was getting into when she decided to run last year?

What would have been the worst case scenario if she just kept voting NO on everything? 6-1 votes?

However, all she needed to do was hold on until Nov 2009, when 3 new NON KAUFF people get elected to council to turn the tide!

Anonymous said...

I am new to this.... how does a township lawyer - Norman Kauff have so much power and is the root of all the corruption in this town as some of you post?

If this is so, why can nothing be done about it?

Thanks

Anonymous said...

So, Sobel said the council is compiling a list of names of people to replace Gallo. That list should be submitted to the appropriate parties at the county level within a week. Where does he get the list of people from? This is how it's done?

ATrealdeal said...

LETS MAKE IT REAL SIMPLE.

THE ONLY ONE LEFT WHO DOES NOT ONE THING KAUFF TELLS HIM TO DO IS COUNCILMAN TOM PERRY.

ONE MAN WITH ONE VOICE THAT GETS DROWNED OUT AND VOTED ASUNDER EVERY WEEK.

ALL THE REST ARE SCUM AND VIOLATE THE PUBLIC TRUST AND THIER SWORN OATH TO GOD EVERY SINGLE DAY.

JUST ANOTHER DAY IN NEW JERSEY POLITICS.

Anonymous said...

at real deal--- i agree 100% but you forgot to include that besides violating their oath to GOD the Aberdeen Council (excluding Mr. Perry) also violate their oath to every resident, taxpayer, and business owner every time they do Kauff's bidding.

How can they sell themselves so cheaply?

Anonymous said...

They sell themselves so cheaply because they are Norm Kauff's whores. Sobel, Drapkin, Gumbs, Raymond, and Vinci are all cheap whores who have prostituted their principals to Pimp Kauff.

Anonymous said...

I am so glad the comment guidelines are being followed. Calling these men whores, what are we in high school again. I thought these comments were no longer going to be tolerated. All they do is bring the validity of this blog down. I enjoy reading this blog and agree with most of the comments but these type turn me off. This is not a place for personal attacks. I know many people who read this blog and many of them have stopped reading because of such childish posts. If Mr. Warren won't stop them then the blog will lose even more readers. This site should be used to enlighten the public not sling such personal attacks.

Aberdeener said...

Though I don't think the above comments have crossed a line, I too would like to see a more elevated dialogue. However, since I can't strike the perfect balance between allowing too much and allowing too little, I've chosen to be lenient wherever I can. I'd rather err on the side of too much speech so long as it doesn't go beyond the pale.

Anonymous said...

But tell me honestly what that comment adds to the blog. If it adds no value it shouldn't be allowed.

Aberdeener said...

I believe, in this instance, the speaker seeks to give voice to the frustration and anger shared by many of the residents, to let others, who share similar feelings, know they are not alone, and, hopefully, dissuade our elected officials from engaging in activity that is detrimental to our community.

Though it may not be elegant or high-minded it is political speech.

By the way, I am guilty of using similar language. I once wrote "For less than $8,000 a year in political contributions, CME Associates gets to take over a million dollars a year from the township. Looks like Mayor Sobel has pimped out the township for 'professional services' in a no-bid contract."

I'm also cognizant that the last time I restricted comments (albeit not for content but against total anonymity), both the number of comments and traffic dropped dramatically.

I do hope readers will be able to differentiate between my posts and other comments.

Anonymous said...

Sir please do not think I am attacking you. I am merely looking out for the validity of the blog. This blog is very informative and a great service. I just merely want its posters to know that suck childish comments do have an adverse effect on the average citizen who enjoys reading and mostly agrees with YOUR blog. It is your blog and you can do with it as you see fit. I enjoy your postings but people need to realize that childish name calling does nothing for the cause.

Anonymous said...

Should be "such childish" sorry

Aberdeener said...

No offense taken. I appreciate the feedback and am very thankful to have readers keep me in line.