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Mayor, Council Not Seeing Eye-To-Eye On School Tax Deferral Plan
By Catherine Snipe
School tax deferment is a complicated math problem to explain, unless you describe it as a subtraction problem to taxpayers. It goes something like this: let the township defer school taxes in its budget and it will mean saving several cents on the new tax rate.
Faced with the mayor's proposed 12-cent tax increase, the council unanimously decided to defer school taxes again this year.
It's a move that could save taxpayers as much as four cents on the tax rate when the municipal budget is approved, township Administrator Scott Pezzaras said.
However, the deferment would come against the mayor's wishes. Mayor Dan Kelly said the deferment can weaken the township's credit rating, and does nothing to solve the real problem of funding in the township's budget. He recommended not using a school taxes deferment in the coming budget.
Council President Stephen Acropolis disagreed. "We either defer school taxes or we raise taxes, and I would rather defer school taxes," Acropolis said.
This action could allow the proposed tax rate hike to fall from 12 cents to 8 cents. Acropolis said this tactic has been used to offset a tax increase several times in his years of service as a township official.
"In my 12 years, we've probably done this half the time," Acropolis said. "It gives the governing body the opportunity to use funds to smooth out tax increases."
The deferment is allowed by the state, because school districts and municipal budgets use different calendars: school budgets begin in January and municipal budgets are a fiscal year beginning July 1.
One budget is six months ahead of the other. Because of this, taxes the township collects on behalf of the school district can be pushed forward into the coming year's budget. That would put $1.9 million more toward the Brick budget, a total $39 million in deferred school taxes.
State regulations provide for the deferral of not more than 50 percent of the annual levy when school taxes are raised on a fiscal school year.
Kelly, in his budget presentation last week, said school tax deferments are less than ideal ways to continue to fund an ever-increasing township spending plan.
"Spending what you don't have is not the way to do business," the mayor said. "I also know that when you are in a hole, you have to stop digging. This budget stops the digging."
Councilwoman Kathy Russell reminded council members that the deferment is not in the mayor's plan. However, she doesn't want to see a double-digit tax increase, either.
Considering that it will decrease the tax burden and is a state-approved way of doing business, what are the negatives associated with deferring school taxes?
Pezzaras said a problem could arise if the state gives more money to the school district. The state money would mean the school would lower its tax burden, meaning less money given to the township. The township would then somehow have to make up the money it planned to receive from the schools.
"That's happened once in 15 years," he said.
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