Hoping for tax relief

By Ron Leir

Observer Correspondent


With its back against the wall, Kearny’s municipal government is poised to go with hat in hand to the Christie administration and beg for financial help.

Mayor Alberto Santos said he’s asked the town auditor and CFO to draft an application to the state Local Finance Board for “transitional aid” by the March 14 deadline, conditional on first getting Town Council approval.

The council was expected to consider the matter at its next regular meeting on Tuesday, March 11. Reportedly, the mayor can count on at least four members’ votes which, combined with his own, would provide the required authorization to file.

How much the town will be asking for was still up in the air, as of last week, but one insider reported that it could be as much as $3 million – less than 5% of its $75 million municipal budget.

Even if Kearny manages to persuade the state’s fiscal overseers to hand over the cash, it would still mean that local property owners would face a tax increase – the owners of a house assessed at $10,000, for example, could expect their 2014 tax bill to rise by about $70 for municipal purposes, according to Santos.

And it could be even more, the mayor acknowledged, depending on spending blueprints of the local school system and the county for this year.

But without an infusion of state aid, the outlook will be grimmer, Santos said, with financial experts projecting a 10% municipal tax increase based on current spending levels.

That’s an alternative that Santos said he finds unacceptable because it would force Kearny to “slash municipal services, which I would oppose.”

Asked about the possibility of asking voters to allow the town to increase spending above the state-mandated 2% budget cap, Santos said: “I don’t want to go to referendum. We can’t afford an increase.”

Santos said his administration has done everything it can to keep a lid on local property taxes by effecting municipal cutbacks through attrition, by hiring only part-timers to fill vacancies and by negotiating employee contracts with minimal raises, extended salary guide steps and reduced longevity pay.

With personnel levels in the Police and Fire Departments well below what’s permitted by town ordinance, “we can’t go any lower” without compromising the expectations of residents and business owners to public safety protections, the mayor said.

And, even though – as a condition of getting transitional aid – Kearny would have to accept being under the thumb of a state fiscal monitor who could veto any hirings, purchases or any significant spending proposed by the town, Santos said that restriction is preferable to “undergoing further costs.”

To be eligible for transitional aid, under rules set by the state Division of Local Government Services, a municipality must, among other things, submit its budget to the state for review; show that it achieved savings via “limited increases” in pay scales, reduced staffing levels, modified work rules and benefits; and “must demonstrate severe fiscal distress that will result in a constrained ability to raise sufficient revenues for meeting budgetary requirements.”

Santos said the state has “reduced to zero” the money Kearny was supposed to get in annual Consolidated Municipal Tax Relief Aid and has “frozen” the amount of annual utility revenues at $18 million “when we should be getting $24 million a year.”

Council President Carol Jean Doyle, who chairs the council finance committee, said she supports the application. “We’re in a position where we don’t have a lot of options,” Doyle said. “I think this is the best way to go for the taxpayers of Kearny – we owe that to the residents. It’s so difficult now to keep taxes as close to flat as possible. We’re doing everything we can to control costs, I don’t know what else we can do.”

Doyle acknowledged that Kearny may just be going through an exercise in futility. “I don’t think the governor is a friend,” she said. “I don’t see any help coming from him. I’d rate our chances as slim to none.”

“But this is the prudent thing to do,” Doyle said. “I can’t see us raising taxes any more than we have and nobody is in favor of laying anyone off. … The finance committee talked about making this application four weeks ago. But well before that, we knew this day was coming.”

Asked about regionalization as a money-saving strategy, Doyle said the town tried to negotiate a deal with its neighbor Harrison to consolidate municipal Fire Departments but couldn’t come to an agreement on dollars.

Neither Santos nor Doyle had any answers to what the town would do if its application is denied.

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