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© Tim Hawk | NJ Advance Media for NJ.com/Tim Hawk | NJ Advance Media for NJ.com/nj.com/TNS Liberty Kocis, a health educator with the Cape May County Department of Health, hands a bag to Suzanne Krebs, of Highland Park, while working on the Cape May Promenade for the Six Feet Saves campaign in May. Public awareness messaging was one of the county's COVID-related expenses last year.
It’s budget season in New Jersey, when county and municipal officials incorporate aid figures based on the state budget unveiled last month by the governor, incorporating them into fiscal year spending plans they’ll adopt before July 1, or calendar-year budgets they hope to finalize and adopt by March 31 while operating under temporary appropriations for the first quarter.
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March also marks the first anniversary of the coronavirus’ eruption, with 2021 budgets the first to follow a full year of the pandemic’s impact on lives, the economy, and the revenues and expenses of local governments. Some have predicted tax hikes as a result of increased expenditures or revenue declines resulting from the virus.
But the impact of the virus on local governments has been varied, with some hit harder than others. And in a brief survey by NJ Advance Media, officials of several individual counties and municipalities, as well the statewide associations that represent them, say that the overall impact of the virus on local budgets has not been as dramatic as initially feared.
“I think the counties are in relatively solid shape,” said John Donnadio, executive director of the New Jersey Association of Counties, which advocates for New Jersey’s 21 county governments.
Despite COVID-related expenses that have included setting up testing and vaccination sites and overtime spending to cover for sick employees, officials say that revenues have held up thanks largely to stable property tax collection rates that some feared with decline with business closings and high unemployment.
“That was something we were very concerned about,” said Mike Cerra, executive director of the New Jersey League of Municipalities. ”But it held a lot better than we thought, and hopefully it will continue to.”
In Lakewood, Ocean County’s most populous municipality, Mayor Ray Coles said the 2020 collection rate was 96.58%, less than one quarter of one percent below the 2019 rate of 96.72%.
The collection rate for the previous year is significant because it dictates the rate that can be anticipated in the current budget, which in turn influences whether a tax hike is needed to meet expenditures.
“We are incredibly lucky that our tax collection rate was virtually the same,” Coles said.
Coles said it was too early to say how much taxes would rise under Lakewood’s proposed $109 million Fiscal 2021 budget, which will be adopted sometime before July 1.
But, he added, “We are in much better shape than we thought we would be.”
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To be sure, some local governments have been hit harder than others, with potential consequences for the taxpayers who support them.
In announcing Cape May County’s $181 million 2021 budget, the Board of Commissioners told property owners that, due in part to COVID-related expenses, they should expect to pay an additional $10 per $100,000 of their property’s assessed value this year on their county tax bill alone.
That’s $50 more for a home assessed at $500,000, a substantial increase for the county portion of their overall property tax bill, which makes up a much smaller share of the bill than municipal or school taxes.
“The loss of loved ones from this pandemic lays heavy in our hearts and minds,” the Cape May commissioners stated in a Feb. 23 message on the budget, which could be adopted following a public hearing on March 23. “There is ($1 million) included in the 2021 budget for COVID-19 related expenses, including operation of the vaccination clinics (in Avalon and Lower Township) which will provide the resources necessary to vaccinate every willing resident in Cape May County.”
For some municipalities, Cerra said hotel taxes and parking fees are also substantial revenue sources, and those did decline in 2020 as a result of COVID-related curbs on travel and tourism. Cities like Newark, Jersey City and New Brunswick all saw declines in those columns, Cerra added, as businesses curtailed face-to-face meetings and parents cancelled accommodations after in-person graduations were called off.
Like tax collection rates, those and other types of prior-year revenues have a similar carry-over effect from one year to the next.
For Cape May County, pandemic-related revenue declines last year that contributed to this year’s proposed tax hike included a decrease of $630,000 in sheriff’s sale fees as a result of the statewide moratorium on mortgage foreclosures; $500,000 less in investment income due to falling interest rates; and even a decline in optional entry donations to the Cape May County Zoo.
And, of course, the pandemic’s impact on local governments was not only financial. Public employees have been among the nearly 24,000 New Jerseyans confirmed or likely to have been killed by COVID-19, along with more than 800,000 sickened by it.
In Montclair, to name just one recent example, curbside recycling pickups have been halted because too many public works employees have fallen ill or have to quarantine because of exposure to it, forcing residents of the Essex County township to haul their paper and plastic to a central drop-off location.
But overall, officials said the reliance of cities and towns on property taxes as their chief source of revenue, along with stable collection rates, has insulated them from devastating losses that otherwise might have been wrought by the pandemic, at least so far.
In Sussex County, taxpayers will see a relatively small increase in the tax levy — slightly under 1% — to fund the county’s $115 million budget for 2021, said Grog Poff, the county administrator.
This year’s budget does have to account for $150,000 in non-tax revenue declines Sussex experienced attributable to the pandemic in 2020, including a decline in foreclosure-related fees similar to Cape May’s.
In addition, Poff said revenues from traffic stops were also down — though he could not say for certain whether that was due to fewer cars being on the road — and that, as in Cape May, interest on investments was also down. But Poff said the county’s principal spending increases were unrelated to the pandemic, and instead involved contractually obligated employee raises and mandatory pension contributions.
But fortunately, Poff said, those losses have been largely offset by a substantial increase in tax ratables, or taxable properties, led by a commercial and residential building boom in Sparta unrelated to the pandemic.
Donnadio and Cerra acknowledged concerns that tax appeals by business owners hurt by the pandemic could eventually reduce the overall value of taxable property and force county and municipal officials to raise tax rates. But so far, they said, that situation had not materialized.
Federal stimulus money has also helped local governments.
Donnadio noted that every New Jersey county was the recipient of CARES Act funding last year, including the state’s nine counties with populations of at least 500,000, which received a total of $1 billion directly from the federal government, while their dozen smaller counterparts divided $60 million distributed by the state.
Looking ahead, he and Cerra noted that counties and municipalities would also benefit from $350 billion in state and local aid contained in the $1.9 trillion COVID relief package, known as the American Rescue Plan, now awaiting President Joe Biden’s signature.
Paterson Mayor Andre Sayegh said he was hoping for just that.
Sayegh said he was waiting for state aid figures to apply to his proposed $270 million budget for the state’s third largest city — now on a calendar year for the first time — before determining what this year’s tax impact will be. Like other local governments, he said Paterson’s finances were relatively positive overall thanks to last year’s stable tax collection rate. But he said the city could always use more help.
“The collection rate, yeah,” Sayegh said. “But, again, I hope Congress does right by our city and approves the America Rescue Act.”