Posts Tagged ‘taxes’

A neighbor pointed out that Trenton has the highest effective tax rate in Mercer County and another neighbor blamed Governor Christie for it while also suggesting that Princetonians shouldn’t complain about their taxes because Trenton’s tax rate is so much higher.  Rather than tie up the neighborhood e-group I thought I’d comment further on Reinvent Trenton.

Trenton has had the highest effective tax rate in the entire State of NJ (not just Mercer County) for a long time.   Trenton’s rate is 4.753% and Princeton’s is 2.031%.
Mercer County Tax Rates by municipality

Despite any partisan claim that this is somehow the current Governor’s fault, we’ve had the highest rate since as long as I’ve been tracking it which goes back to Corzine and McGreevy.   If one wants to assign blame, we’ve had Democratic Mayors for the 24 years it took for our tax rate to climb to where it is.

And while we’re on the subject, let’s not forget what the situation would be if we weren’t an Abbott school district (that’s what you are if you’re so destitute that you can’t pay for education), our tax rate would be double than what it is now.   The State pays for our public schools.

However, The comparison to Princeton is correct.   People are generally oblivious to their tax “rate” and instead focus mistakenly on absolute value of the tax bill.   It’s our tax rate (in some cases higher than mortgage interest) that scares away new investment.

We do not have a cost problem.

Our costs are comparable to similar cities.  Politicians like to suggest to citizens that they are cutting costs but in a city like ours, that’s like cutting bone, a bad idea. Even our wasteful spending on parades and festivals is just a drop in the overall budget.

One notable exception is that Camden’s (a city with slightly lower median income than Trenton) policing costs are now much lower than Trenton’s and for what appears to be a superior level of service.  Camden’s solution was drastic and many people (mostly those in police unions) deride it.  Nonetheless regionalization (whether its union busting or not) should be considered.

While we can certainly be smarter about our spending, it’s not the big problem.

Our Big problem is revenue!

Hopefully everyone in Trenton is up to date on the drivers of our municipal and school budgets and the actual structural problems as they relate to State payments to Trenton (CMPTRA formulas, Energy Tax Receipt formulas, State PILOT payments, Transitional Aid and Abbott funding).   All of these sources measure in the millions.   Our immediate problem with the state is that the formulas are either incorrect, not being maintained or both.

Federal law prevents Municipal governments from taxing State governments.  That hasn’t prevented other state capitols in this country from being successful cities.  If one investigates some of those cities (“Fix Trenton’s Budget” did a few years ago) they find that NJ’s compensation package to Trenton is on par or better than most.  It’s what we’ve done with our limited resources that has caused the problem.

Trenton has been shortchanged on CMPTRA (includes taxes on business that the state collects on our behalf) and Energy Tax Receipts (state collects money from for energy companies on our behalf).   The previous administrations (Mack and Palmer) were asleep at the wheel on these issues.  We’ve forfeited millions of dollars (at last count over $20M as I recall).  Meanwhile the league of municipalities has spearheaded an effort to fix this.   Our current admin and council are somewhat more familiar with the subject and will hopefully lend Trenton’s weight to the effort to overhaul this payment system.

The fundamental problem revenue side of the equation.   Not one single policy has been enacted to drive investment in Trenton since I’ve lived until this week.  The “Vacant Property Registration Fee” measure is the first policy I know of in the last 14 years that seeks to stimulate an increase in our tax base.   The proposed property revaluation would be another and if we get our act together on use of the Abandoned Properties Act and Homesteading (buying City owned houses for $1) those will be 3 more.

We’ll continue to have the highest tax rate in the state until we straighten out our revenues.   Cutting costs is easy, anybody can do that and then not take blame for the results.  Fixing a city’s revenue picture takes imagination and thought.

This report was produced by The Fix Trenton’s Budget Committee and is reposted here
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As part of a broad Priority-Based Budgeting exercise initiated jointly between the Fix Trenton’s Budget Committee, Beautiful Trenton and Trenton Council of Civic Associations with support from The City of Trenton, an in depth survey on budget priorities has been conducted amongst city residents.

Over the last four months 202 Trentonians have completed a comprehensive budget survey either participating in person at Ward budget forums or online through a specially designed survey tool. The survey was unique in that it used actual budget numbers and asked respondents to make forced choices between taxes and spending increases or decreases in levels of service. For instance, if citizens wanted to increase the number of police on the street they had to either increase their own property tax or reduce service in other areas such as recreation or public works. It mirrored the tough choices elected officials have to make when balancing the budget.

“This is the first time such a large and in-depth survey of Trentonians has been conducted about the budget and how their tax dollars are spent”, said Carlos Avila of Fix Trenton’s Budget. He added,
“Other cities such as Philadelphia and San Jose, CA have successfully used citizen input like this to help make hard choices in spending.”

By holding forums in familiar neighborhood locations, each sponsored by a City Councilperson, the organizers were able to reach a large cross section of Trentonians. In addition, the web based survey allowed a broader response. Our sample size of 202 was enough to provide 95% confidence that our results were representative of the 37,479 registered voters in Trenton with a 7% margin of error for each answer. Nevertheless, we hope to every year improve the methodology of this exercise and attract more participation from residents.

We’ve tallied the results and found that Trentonians favor lower spending. Of the $92,000,000 in departmental spending included in the survey, respondents voted to trim the amount by $7,000,000 to $85,000,000, a reduction of 7%. The total city budget for 2011 is $205,490,000 which also includes debt payments and benefits. The survey showed that Trentonians expected this savings to result in an 8.5% decrease in property taxes or roughly $400 per $100,000 in assessed value.

The following chart shows the weighted results of departmental budgets if left to all 202 respondents.

In particular Trentonians favored less spending in the following areas.
The following chart shows the percentage of respondents who voted to increase, maintain or decrease spending by department.

Perhaps as a hint of dissatisfaction with the current political climate, 64% of the survey takers favored reducing the administrative budget which includes the Mayor’s salary, his aides and City Council. However this cut amounts to only $1,000,000. Respondents also voted overwhelmingly to withhold pay raises for city employees.

Survey takers put Fire and Police spending under pressure as well. A surprising 38% of respondents favored decreasing Fire spending and only 7% voted for an increase. Trenton Police did a little better with 35% supporting reduced police protection and 15% hoping for increases. This is significant as Fire and Police make up one quarter of Trenton’s total city budget. While roughly half of the survey participants voted to keep spending the same, the downward pressure on spending is at odds with the administration’s past priority of maintaining current levels. The study shows that the recent realization that budget levels may have to be reduced will not meet as much resistance as expected. According to comments in the survey, the “4 on, 4 off” police scheduling policy was unpopular among respondents.

Public Works showed weak support as 42% of survey participants wanted to decrease spending while only 13% favored an increase. Health and Human services also had weak numbers with 49% of respondents calling for a decrease. Several respondents commented that the County should take over Health and Human Services.

Several departments attracted pleas for increased investment.

Inspections and Economic Development received support for increased budget by 32% of respondents. This is attributed to the belief that spending in this area will lead to increased levels of investment in the city and better quality of life. Many respondents wrote in comments such as “limit affordable housing to 20% of total”, “Kill off the Miller Homes project”, “We need more market rate housing” and “Focus redevelopment in a few areas”.

A substantial 31% of survey participants favored reopening all of the Library branches. However, 51% were OK with just the main branch being open and just over 17% favored closing down the entire library system. Similarly, 39% of respondents favored increases in Recreation spending and 11% favored eliminating the department.

In addition to concerns about departmental functions, respondents left a large number of other comments about the budget.

Survey participants seemed anxious for a new relationship with the State “The state should pay its fair share” was a popular sentiment. Others felt that Trenton should “discontinue police protection in the State House district”.

Respondents were not short on additional ideas for raising revenues. Parking taxes and improved violation enforcements topped this list. Privatizing trash collection and charging more for pick-up was a popular idea. Trentonians especially wanted to tax non-residents by way of “commuter taxes” and increased fees on non-resident landlords. Enforcing laws was also seen as sources of income through fines for loitering, increase court fines and using drug seizure money for community benefit. Other ideas included running a Police Academy for profit, an entertainment tax, a wage tax on non-profits and selling the Marriott.

The results of this survey are illuminating. They show a willingness to sacrifice but more importantly show that Trenton residents have specific priorities in how they would like their government to invest its scarce resources. Both the Mayor and City Council have supported this effort so Fix Trenton’s Budget and Trenton citizens look forward to the incorporation of these results in the 2012 budget.

In normal times, in normal cities, budget prioritization isn’t really a big deal.  Political factions will scream and yell for their interests to be accommodated.  In a complicated dance of political give and take eventually budgets get done.  

For the most part, even if budget items don’t yield their promised results no one really cares because the basics were covered.  The trash still got picked up, schools didn’t close, the police responded to calls and property taxes are still a fraction of the cost of home ownership. Read the rest of this entry »

The theme for last night’s City Council Special Session on the budget was, “The mess we’re in isn’t my fault”.

The administration officially proposed a budget that raises property taxes by almost 20% which would make Trenton’s rate by far the highest in NJ.

The Mayor spoke first.  Let me summarize. Read the rest of this entry »

This article was originally published in the August 2008 edition of the Trenton Downtowner – D. Dodson

Trentonians pay for only 14% of the cost of running the city. If our external funders get tired of it, we’re in big trouble.

It isn’t clear how a city goes bankrupt. Technically bankruptcy occurs when an entity can’t pay its debt obligations. But a city can raise taxes and cut city services to the bone well before bankruptcy. In this case, the city simply ceases to be livable (e.g. Camden) Read the rest of this entry »