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Borough Proposes 7% Tax Levy Increase

Increase remains within allowable exceptions.

Amid concerns that taxes will continue to rise while its revenue sources continue to freefall, the presented its 2012 budget, with a proposed seven percent increase to the tax levy, on Monday night.

The increase will raise the amount of funds collected from taxes to $8,078,374, compared to the $7,578,339 collected in 2011.

The annual increase for the average home in Chatham Borough, assessed at $658,500, will be $172 for the year.

The state allows for exceptions to the mandated 2 percent tax levy cap for expenses beyond the borough's control, such as pension increases, debt service, capital improvement increases and new ratable adjustments to the tax levy.

The tax rate will increase from 0.367 in 2011 to 0.393 in 2012, an increase of seven percent.

Overall Look at the 2012 Budget

“We wanted to give as clear a picture as we can (tonight) to the residents of the opportunities and challenges that we face,” said Borough Council President James Lonergan.

The main challenge among those is the rapidly declining amount of revenue being generated by the borough. Since 2008, the amount of revenue generated by the borough from things like taxes and usage fees has declined 24 percent from $7.2 million to this year’s budgeted amount of approximately $5.3 million.

Despite the increase, taxes in Chatham Borough remain among the lowest in Morris County.

“Taxes have generally been moving up and rising, and that’s simply a case of our revenues are going down, and going down significantly,” said Lonergan. “It’s a fairly simple game. Revenues plus taxes equal the budget.”

Shared Services

Lonergan and the rest of the council noted that the borough is doing all it can to keep taxes as low as possible during tough financial times. Much of this is being done through shared services. The borough currently has 14 shared service agreements, most of them with Chatham Township, that have made taxes and the final budget number lower for 2012.

Lonergan stressed that, without the shared service agreements that are currently in place, this year’s budget would have totaled nearly $15 million. Instead, the final number is around $13.4 million. By sharing services and reducing non-key personnel, the borough also avoided a 23.2 percent tax increase, in favor of the current 7 percent figure.

“Now we’re starting to see the benefits of (shared services),” said Lonergan, who noted that some of the borough’s shared service agreements have existed for years. “I think some of the early movement on shared services had a big impact on keeping that (tax) revenue down.”

Looking Ahead

Still, this does not change the fact that the borough needs to act fast, lest it ends up in a position where more cuts—including personnel—need to be made to keep the borough operating smoothly.

“I think the whole town, the borough and everyone lives in it really has to understand that we offer a high level of services,” said Councilman James Collander. “All of that, as we all know in life, comes with a price tag. We can continue to offer that level of service, but it comes at an ever-increasing cost.”

In the end, that cost may prove to be too high if another revenue stream is not found soon. Despite this outlook, Lonergan and the council seemed fairly confident that they were ready to find a solution.

“With that declining economy, the budget is getting challenged greatly,” said Lonergan. “That’s our challenge as a town: how much can we increase taxes, versus how much can we increase usage fees to make up that gap that we have in revenue?”

Lonergan's presentation on the budget may be found attached to this article.

kjchat March 05, 2012 at 02:43 PM
Frankly I don't see how this endless stream of tax increases is sustainable... soon we will be like the west orange where the property tax burden exceeds the monthly mortgage payment, and we all know what has happened to property values there..
jlonerg March 05, 2012 at 03:20 PM
If you look at one slide on the attached presentation, view slide #8 and the story is clear. The budget i.e, our costs continue to drop below prior years by managing expenses tightly, but revenues are dropping faster i.e state aid is down 35% from a few years ago and residents have challenged their home assessment values, which further reduces town revenue. Hope that provides clarity.
Tom M Riddle March 05, 2012 at 03:49 PM
Changes in assessed value does not change revenue, just the tax rate. What is the reason for the serious drop in revenue? The explanation given in the article is laughable. It's also disingenuous to say that you are "well withing the 2% cap," when you are presenting a 7% tax increase. It just proves why the cap law is full of holes.
kjchat March 05, 2012 at 06:49 PM
Not sure I buy that home assessment challenges have resulted in what looks like a 28% decline in revenue on the page you cite... if that's the case I should be challenging my own, since I'm probably in the top 5% property taxes in the town... by way of example, my taxes are up almost 19% since I moved here in 2008. As I said, this is not sustainable and will drive people out of the town. and now with the sharp increases in water/sewer, and train parking fees there are "hidden" taxes that essentially amount to a much higher increase in taxes than is being portrayed. It seems the township was able to hold the line on their budget... why is that?
Tom M Riddle March 05, 2012 at 06:56 PM
Home assessments have nothing to do with Revenue or state aid or the Property Tax Levy, they only impact the Tax Rate. The borough needs to explain why there is such a tremendous drop off in borough revenue the past few years (~$2.2M annually), because that is what is driving the large tax levy increases. A drop in overall property values increases the tax rate, even in a year when the tax levy remains the same.


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