Tax Group Sounds Alarm on Borough Spending

Dilshanie Perera

At last week’s Council meeting Members of the Citizen Finance Advocacy Task Force warned that continuing to spend at the same rate could lead to dire consequences for the Borough.

The ad hoc citizens’ group cautioned elected officials on the municipal tax rate and government spending, with task force member Nick Karp noting that “the bottom line is, the Borough has a big and growing problem that applies to homeowners, taxpayers, businesses, public employees, and the university.”

Statistics compiled by the task force and recent Princeton University graduate Scott Weingart revealed that “the average real estate tax bill for a homeowner in Princeton Borough rose from $8,114 in 2000 to $14,562 in 2008.”

Borough property taxes have also increased vis-à-vis other New Jersey municipalities. In 2000, “residents paid the 21st highest tax bill of all municipalities with at least 500 residents; and by 2008 the Borough had climbed to 12th in that category,” Mr. Weingart observed in a document analyzing employee benefits.

Mr. Karp warned that if such trends continue, residents gradually will be forced out of the community, and “the diversity that so many people in Princeton respect and value just won’t be possible.” Given the “rapidly rising health costs, backloaded pensions, the likely cutbacks in state funding, and increased expenses going forward,” he predicted that the burden on Borough taxpayers would be even greater over time.

“We are looking for a shared solution to a shared problem,” Mr. Karp said, noting that local businesses, as well as municipalities around the state, are also hurting. “We want to have Princeton continue to be a desirable place, and one that is economically feasible.”

While municipal taxes comprise approximately 25 percent of all the local taxes, with the rest dependent on cost increases in other areas like the school district, open spaces, and the County, Mr. Karp noted that municipal taxes have seen the greatest rate of increase.

Praising the Borough for its successful 2009 efforts to pass a budget with a zero-cent tax increase, Mr. Karp offered suggestions for scaling back spending.

Reporting that over half of the municipal budget goes to workforce expenses, of which two thirds are wages and one third are benefits, Mr. Karp said, “Borough workers have served well and deserve reasonable compensation,” while also noting that “salaries are consistently generous.”

Certain Borough employees, like custodians, arborists, and mechanics are better compensated than their unionized counterparts at Princeton University, Mr. Karp said, adding that police in New Jersey are the highest paid in the nation. “These costs are exploding, and they set the standards for many non-union employees.”

“Since 2000, the police have averaged increases of 4.3 percent … and multiplied by overtime, longevity, and other factors, it’s more like six to 10 percent, which is unsustainable,” Mr. Karp reported.

Mr. Weingart’s analysis of employee benefits noted that “in 2009, Princeton Borough spent $1.9 million to provide healthcare to its employees through the State Health Benefits Plan,” with healthcare premiums increasing more rapidly than employee salaries. Mr. Karp pointed out that the benefits of the state plan are “much more generous than the plans available at the University or by private employers.”

“Pensions are similarly generous,” Mr. Karp said, adding that Borough and joint agency overtime expenses are approximately seven percent of the total salaries for those agencies, as opposed to 1.3 percent of total salaries for the average public sector employee.

As for what is to be done, Mr. Karp suggested that the Borough implement a policy of zero percent raises with some exceptions. “Given the history, it is a little extreme, but is equitable.” He also called for a “more accessible budget document,” with discretionary and nondiscretionary spending items clearly marked. Negotiations with unions, including determining Borough leverage in each situation, and reviewing the process itself were also put forth as ideas.

Borough Council member Roger Martindell acknowledged that over the years of his tenure on the governing body, he had voted against many budgets because he felt that the tax increases were unsustainable. To some extent, state mandates regulate some costs, like police salary spending, he noted, saying that “there is not much we can do about it other than changing the state law … frankly, I’d love to do it.”

Acknowledging that Council does have “some latitude with not keeping administrative staff on par with the police,” Mr. Martindell expressed concern that “if you disjoin the two groups, pretty soon you would have a gap … which can affect labor relations, morale, and productivity.”

“I don’t think it’s reasonable that every Borough employee should have their benefits tied to the most expensive group,” Mr. Karp responded.

For the Citizens Finance Advocacy Task Force analysis, visit cfatprinceton.com.

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