June 26: Weekly Message from Mayor Madden
Weekly Message from Mayor John L. Madden
With residents receiving their third quarter estimated tax bill, I have received many calls and emails from upset, angry, and concerned residents demanding answers as to why their tax bill increased so much. Many people took the amount of the increase in the Estimated Tax Bill (Third Quarter) and multiplied it by four to come up with an annual increase for the new tax year.
Using the Third Quarter amount and multiplying by four is not the correct manner to figure out future taxes. First and Second Quarter are always half of the prior year’s taxes and will always be lower than Third and Fourth. Upon receipt of the new tax rate each year, generally in July, the Third and Fourth Quarter amounts will be the remainder due for the year.
Property taxes increase each year as the tax rate is computed based upon the budgets of the county, the school and the municipality. Generally speaking, taxes go up $150-$500 a year for most homeowners depending on the amount of the current assessment. When comparing the tax amounts, please compare Third Quarter 2019 to Third Quarter 2020. When the certified tax rate for 2020 is received, the amount for Fourth Quarter will be the new rate multiplied by assessment less the First, Second and Third Quarter amounts already paid.
Having said that, taxes are going up this year. I wish more of you have been attending our meetings this year as you would have been aware of the tremendous budgetary shortfalls we are facing due to the way prior year’s budgets were handled.
Under the “leadership” of the previous mayor, Borough budgets were crafted by him. There were few or no budget hearings; staff was not invited to provide input, including our Treasurer and CFO; the Council was not provided with budget documentation including back up support to the budget and, due to the Borough by-laws, they were denied access to the staff by the former mayor. The first action I took as Mayor in January, 2020 was to amend the by-laws and put the power of the Budget back to the Council and out of the hands of only the Mayor. The former mayor designed the budgets to provide taxpayers very small increases while using and depleting our once healthy surplus instead. For several years, homeowners had tax increases of approximately $65 to $80 per $100,000 in home value, while surplus was making up the difference in budget increases. Spending increased in every line item and programs were increased including Senior programs, Recreation programs, Community Policing programs, and more. Had either spending been slowed or taxes simply increased by an additional $15 to $20 per $100,000 in valuation, our surplus would have been sustained and the Borough would be in a much better financial situation.
A healthy surplus for a town our size would be about $1 million at the end of each year. Last year, our surplus balance was only $326,000. A surplus this low not only puts the town at risk of running short of operating funds, but it also affects our bond rating. This means when the Borough needs to raise money for long-term capital projects, it costs more money caused by higher interest rates because we are not seen as a good fiscal risk.
Costs always rise – if you look at your cable bill or food bill between last year and this year, you will see that they have gone up. The cost of government also goes up as our costs rise as well. Whether supplies, utilities, insurance or uniforms, costs go up. The 2020 Budget took a red pen to almost every line item and severely cut them.
To put this budget in perspective over past years, the total appropriations (expenditures) increase over 2019’s budget is $86,709. This is the smallest budget increase in at least a decade, with a budget increase of .42% -- less than a half percent. The 2020 Budget eliminated over $350,000 in spending compared to 2019 and debt service decreased by an additional $140,000 due to prudent debt payment by our Acting CFO.
And yet, the 2020 Budget includes a $130,000 increase to our Recycling contract; $115,000 for LOSAP which the voters approved last year; a $100,000 payment to make up a payment deficiency to the Middlesex County Utilities Authority for our sewer; and a pension payment increase to the Police and Firemen Retirement System of $100,000 – a total of approximately $445,000 in additional appropriations.
We have had multiple retirements, resignations and promotions within the DPW and the 2020 Budget includes replacing and re-staffing these positions. From a monetary standpoint, the positions are being filled at a lesser cost to the Borough than the total cost of the former personnel who held those positions.
The 2020 Budget also includes 6 new police vehicles to replace the current aging fleet of police cars.
Our real issue in the Borough is revenue (income). Revenue remains an issue due to the lack of surplus. We are determined to build this number back up as quickly as prudently possible.
Even though the 2020 Budget only increases MUNICIPAL spending by $86,709 over last year, please remember that the Borough has NO control over the County or School Budgets. Consequently, due to a Revenue shortfall, the amount to be raised by taxes for the Municipal Budget is $689,500. Although the overall increase from 2019 to 2020’s Budget is less than one half of one percent (.42%), the impact to the taxpayers due to Revenue Shortfall is about five percent (5.2 %) increase to taxes.
Had prior budgets seen tax increases of just an additional $20 per year, our surplus would be financially healthy and the tax increase would be about half of what it is.
We are working hard to get our fiscal house in order and our finances back on track. As a taxpayer myself, I am keenly aware that our taxes are increasing at a higher than normal amount and that it is always harder and harder to live in New Jersey. I love our town and know that, as painful as it is, fixing our surplus issue is the right thing to do for the long-term financial health of Middlesex. My predecessor kicked the budget can down the road and bled surplus rather than cutting programs that made him popular. This Council and I are willing to do the right thing even if it is not popular and that means fixing the finances of our borough.
Be safe,
Mayor John L. Madden
This Week’s Positive Covid 19 Cases
Saturday, June 20: 1
Sunday, June 21: 0
Monday, June 22: 1
Tuesday, June 23: 0
Wednesday, June 24: 0
Thursday, June 25: 1