July 15, 2020: Metuchen borough staff took an ax to the budget this year to control costs as revenues dried up in the pandemic downturn.
A budget was ready in March, but once covid-19 hit, it had to been done over, and over again. The result was cuts of $8,000 from Metuchen Media, $14,000 from the fire department, $25,000 from the police department, $10,000 from streets and roads and buildings and grounds, $16,000 from sewers and $11,200 from forestry.
Ultimately, the borough cut about $94,000 from the original budget to adjust to the battered economy.
In the end, Metuchen staff presented its 2020 fiscal year budget at the council meeting this week that calls for a property tax increase for residents of 4.5 to 4.6 tax points. For a property valued at $200,000 in the borough, the tax increase, including borough and school taxes, would be $284, according to Borough Administrator Melissa Perilstein, who made the budget presentation Monday.
(County, municipal and school budget costs determine the amount of property tax to be paid. A town’s general tax rate is calculated by dividing the total dollar amount it needs to raise to meet local budget expenses by the total assessed value of all its taxable property. An individual’s property taxes are then calculated by multiplying that general tax rate by the assessed value of his particular property. Because of New Jersey’s strong “home rule” concept of government, the State does not participate in the making of local budgets, nor does it receive any of the property taxes collected.
From Borough Finance Officer Rebecca Cuthbert: To calculate a tax point: Municipal total rate x total ratables /100 as compared to municipal total rate + .01 x total ratables /100. A tax point is the amount that a .01 increase in the tax rate equates in dollars.)
The budget is proposed at $22.25 million, a decrease of $492,784 from last year. Borough Council will hold a public hearing on the budget at the Aug. 24 meeting.
“This was collective effort,” Perilstein said. “We went back to everyone and said, ‘please look at your budgets another time and let [us] know what you can do without. We’re lean and mean for sure.”
The tax increase will be offset by the borough using $1.6 million in surplus funds, the same amount of money used last year. This will leave the borough with about $3.5 million in surplus, said Cuthbert.
Metuchen also is getting an infusion of $500,000 from the Parking Authority, down from $1 million last year. The borough is budgeting $1.4 million in state aid, which is still a question. “From everything our CFO is hearing … the state is not looking to touch aid at this point,” Perilstein said.
Revenues are also being anticipated in the form of $662,264 for fees, permits and licenses, $600,000 in delinquent tax collection and $368,148 in grants and other sources of funding.
The borough, like probably every municipality in New Jersey, was hit with unanticipated pandemic-related costs, Perilstein said. Metuchen spent around $102,000 on covid-19 related expenses for things like building sanitization, cleaning products and infrastructure upgrades to better protect employees such as plastic partitions. The borough is hoping for reimbursement from Middlesex County for such pandemic related costs, Perilstein said.
Municipal Court revenues are expected to decrease $175,000 to $200,000, according to the budget document.
The largest slice of the budget flows to salaries and wages for police and public works. Money also flows to things like debt service (15 percent of the total budget), sewage treatment, pension costs and professional services.
“We were very cognizant of the fact [that] these are tough times, we wanted to maintain services, maintain what people have come to expect … and be cognizant of the fact there was a major economic event that occurred, which impacted our revenues,” Perilstein said. “That was a big piece of how do we maintain this equilibrium with appropriations versus revenues, because you’ve got to come out even somehow, costs are still increasing even though our revenues decreased.”
Updated July 16 with information about how tax points are calculated.