OK, So How High Might Taxes Go?

Yesterday, I speculated that the 30-cent tax increase being proposed by the Administration – from $3.33 per $100 of assessed value to $3.63 seemed very low when viewed against the city’s persistent gap between its projected revenues and expenses for the current fiscal year ending June 30. It seemed awfully low to me, given all the adverse financial circumstances facing the City, and all the fuzziness in the City’s financial and public statements to date.

For instance, there is the vast difference between the number of employees the City said it laid off over the last few months versus the number of employees who actually did get laid off, and the impact of that difference on driving us further in the hole. There’s also the postponement of layoffs for 61 firefighters for an additional month while we wait on word of a Federal grant; if that grant falls through we will have to absorb that additional month of payroll for those five dozen (the grant is not included in the budget projections to date, so if we do receive it, that will be a big budget plus).

Finally, today’s Times gives us another example: the contract for 300 Police officers and detectives expired on December 31, and awaits negotiation. The Mayor and his administration has publicly stated they expect concessions from new labor contracts to provide savings to the budget that will help balance it, but it is very premature to count on any such savings yet, at least with this police contract.

So, with all of the above as context, plus any number of additional items you could think of yourselves, it strikes me as highly unlikely that a 30-cent tax increase – which translates to about $6 Million in additional revenue – will do the trick. OK, so what might a more realistic tax increase look like? Back in November, when the State awarded Trenton its Transitional Aid for FY 2011, I did a back of the envelope calculation of $1.15, given the available numbers at the time, which would generate around $23 Million.

In the intervening months, the Fix Trenton’s Budget Committee (of which I am a member) has had opportunity to work the numbers a little more comprehensively than I did in November. Members of the Committee, specifically Dan Dodson, Bob Lowe and Carlos Avila worked with the more recent publicly available numbers and calculate that the budget is balanced with a rate a little lower than my estimate, yet much higher than the one the Mayor is proposing. FTB’s calculation is that a tax rate of $4.10 is required to balance this year’s budget, an increase of 77-cents, without any more massive layoffs or other significant expense cuts. This increase would generate in the neighborhood of $15.2 Million. Given our realities, this number seems more accurate to me, even though it was calculated before the news a few days ago about the inaccurate layoff numbers; if there are more people on the payroll than planned for at this point, we are even further in the hole to pay for them than FTB calculated.

Make no mistake, this would be a huge increase, far higher than the 55-cent increase imposed at the end of the last fiscal year. A 77-cent rise would be retroactive to last July 1, so the tax bills from the city from now until June would need to reflect the higher amounts not billed from the first months of the year. Remember the huge bills you got this past Spring? This would be worse. The bottom line is that an increase of this size, while something to avoid at all costs, seems more realistic than the 30-cent increase proposed by the Administration.

As I said yesterday, I still don’t get why the Administration would present such unrealistically low numbers at this point. The Mayor and his colleagues do no one any favors, least of all the poor taxpayers of the City, by trying to present this kind of increase now if they possess anything like the same numbers that FTB is looking at, which lead to the inescapable conclusion that if a 30-cent increase is approved by Council now, another big increase will come down on us in the Spring.

I hope these discrepancies are publicly examined and reconciled in the weeks to come. The FTB Committee has asked the Mayor and his people to help reconcile these differences.

Council, this is your cue to do your part to review and approve an updated accurate budget, with updated and accurate requirements for what kind of tax increase we will have to endure to get through this fiscal year. Time is a-wasting!