NJ Towns Discuss Christie's Cap and Toolkit

As municipal and school governments across New Jersey prepare to adapt to a new 2-percent property tax cap signed into law last week, local officials are uncertain about the future of local budgets.

One exception to that uncertainty is Springfield, where the Republican majority government has endorsed Christie's budget measures and has already applied a similar approach to the Township's budget.

"On the Republican level, we support the cap," Springfield Mayor Ziad Shehady said. "And also, I introduced a resolution showing the town officially supported the cap that passed with bipartisan support."

The enthusiasm for tightly contained budgets is evident in Springfield's proposed municipal budget, which entails a slight tax decrease. The decrease is largely due to removing Rahway Valley Sewerage Authority fees from the property tax burden and charging it as a separate utility. But Shehady said he and his fellow Republicans Jerry Fernandez and Marc Krauss would work to have a zero percent increase in the following year's budget as well (Shehady is up for re-election this year) by taking an aggressive stance with union negotiations and reducing other costs.

"Two percent seems like a rough number for a lot of municipalities, but we know we can do it," Shehady said.

There are 34 bills in Gov. Chris Christie's so-called toolkit to change how local governments do business. That includes the one measure that's already passed, albeit in a form somewhat different than the governor originally envisioned — the 2 percent cap on year-to-year tax growth for local governments and schools.  It also includes a measure proposed after the package was first announced, to limit school superintendent salaries.

Not all local public servants share Shehady's enthusiasm for Christie's planned overhaul of the property tax system.

In fact, local officials scattered throughout New Jersey hold almost as many opinions as bills in the toolkit. However tempered responses from mayors, town administrators, school board members and superintendents may be, most officials sense the sea change and await the fate of the toolkit.

Montville Mayor Jim Sandham described the cap as a "line in the sand," but he would still like to see the state take further steps to limiting spending.

"'You know, you can say,  'I'm only going to spend $5,000 dollars,' and that's nice to say, but if you're still spending $8,000, you have to figure out how to get that back," he said. "We need to get there as a state. [The cap] doesn't change spending dynamics."

The line may be an apt comparison for the cap. Opponents say measures in the toolkit—like empowering county superintendents, instituting furloughs, and controlling superintendent salaries—are overreaching. While others argue the toolkit is needed to continue the standard set by the cap.

In Chatham, Council President James Collander said the borough will be less able to raise taxes in the past.

"The tax cap, as I see it, and I'm just an observer... is the beginning of the process. It's not the end of the process," Collander said. "There's a lot of policies and procedures in the state that have contributed to getting us to the point where we are."

Included in the cap are exceptions that allow towns (increased health insurance cost) and schools (increased enrollment) to raise property taxes above 2 percent.

Madison Board of Education President Lisa Ellis says the cap doesn't address the problem as a whole, especially by leaving health care and pensions out as an exemption.

"I think that it's dishonest to taxpayers," Ellis said. "I think a 2 percent property tax cap is not possible if these things are placed outside of it. They put healthcare costs outside of it—we've been seeing 20 percent increases—how is that going to fly? That is going to eat up our entire cap."

Hopatcong School District Business Administrator Theresa Sierchio opposes the cap, as there are "so many exceptions in that 2 percent cap that you can go around it and increase your taxes by 4 percent if you need something."

Westfield Board of Education President Julia Walker said she is unsure of the impact of the tax cap on the school budget going forward. She said the changing nature of the state proposals is behind this analysis.

"It is clearly a moving target," she said. "It has moved from a constitutional amendment to legislative action. From 2.5 to 2.9 to 2.o and the list of exemptions has changed as much as the percentage itself. At this juncture it is hard to comment on what the bills to be voted on are."

Others credit some of Christie's proposal for fixing a broken system, they say.

Westfield Mayor Andy Skibitsky rates the arbitration reform proposals as most important to him. As a part of the toolkit, Christie is proposing changes to the binding arbitration process utilized in negotiations between local governments and public employees unions. The governor's proposals include limiting any new contract to no more than the cap and requiring arbitrators to consider the impact of new contract costs on property taxes before making the awards.

Skibitsky noted that the current binding arbitration rules have hindered local governments by giving the arbitrators the ability to set contracts at rates higher than the rate of inflation. He said he hopes the governor's plan will be to deliver lower raises.

Millburn Township Administrator Tim Gordon said the arbitration reform was a necessity, "If we have the cap [on arbitrators awards], it will help," he said. "If they don't pass it and we have the 2 percent cap, there will be more chaos."

An opponent to many of the governor's reforms, Ridgewood Superintendent Dr. Daniel Fishbein does favor the ability for districts to impose a "last best offer" contract in the case of stalled union negotiations.

With such blanket reform emanating form Trenton, some officials feel the cap unfairly lumps efficient bodies with wasteful ones.

"It's a real tough thing for us to embrace because of how fiscally responsible we've been," Wyckoff Committeeman David Connolly said.

For example, the $16,647,957 Wyckoff budget, which raised property taxes by an average of $80.70 annually, increased spending by just 0.13 percent over the 2009 budget, although the township experienced rising costs and a steep cut in state aid—similar to many town statewide. Other factors complicated the budget process, such as a loss in revenue from construction code fees, a drop in interest income and a loss of fund balance.

Ridgewood Village Manager Dr. Kenneth Gabbert is unsure of the direct impact in town, but hopes to avert layoffs—unlike the about 30 position terminations this year.

"It is possible [to have further layoffs]; however, from January 2010 on we have sought to make decisions that will avoid or greatly limit layoffs in 2011," Gabbert said.

For towns to exceed the cap, residents must approve it in a vote.

"It returns control on spending to voters," said Wyckoff Committeeman Chris DePhillips.

Summit Councilwoman Ellen Dickson, a Republican nominee for county freeholder, has been one of the most outspoken supporters of the tax cap since the idea of one surfaced earlier this year.

"I'm solidly behind the governor in the tax caps," she said. "I think New Jersey is rapidly becoming unaffordable for many of its citizens."

Dickson also emphasized that the tax cap isn't cutting taxes, it's slowing the rate of increase.

The state legislature will continue to weigh the validity of Christie's 30-plus proposals through the summer. No matter what the final outcome, the 2011-12 budget process for local bodies will differ greatly from the past.

Patch editors Nate Adams, Rick Burchfield, John Celock, Heather Collura, Jen Connic, Shelley Emling, Kelly Feeney, Brendan Kuty, Nicholas Loffredo, Mary Mann, Zach Subar, and Marcia Worth contributed to this report.