Take It With A Couple of Pounds of Salt

Trenton’s City Council is scheduled to meet this evening. There are no items on tonight’s docket related to the proposed budget introduced last week for the current 2012/2013 Fiscal Year, but that budget is on the minds of Trentonians all around the town. Especially the part of the budget where Property Taxes are due to rise. Again. That part isn’t sitting well with people, as evidenced by this morning’s Trentonian article by Sulaiman Abdur-Rahman.

The budget as presented by the Mack Administration includes an increase in the tax rate of 19-cent per $100 of assessed valuation, or $190 more for a house assessed at $100,000. A lot of money, at any time. But more so now, as several people quoted in the article express a great deal of skepticism in the necessity for such a raise. Considering all the shenanigans that the Mack Administration has been involved with over the last two fiscal years, I can understand such skepticism. Oh, yes I can.

So even though tonight’s docket has nothing connected with the budget or the tax increase, expect several public comments about the proposals. Expect some folks to take these proposals with a grain of salt. In my case, a couple of pounds. A lot of the detail from the budget has not yet been released, but a lot of it seems kind of suspect to me.

We already saw last week that the proposal for the Recreation Department is up by 10%, including several lines for very financially-questionable activities such as Heritage Days and the Thanksgiving Parade. Rec is the only department for which we have seen any detailed cost items, but it’s likely there are other questionable expenses buried elsewhere. I certainly agree with Council President Phyllis Holly-Ward who is quoted in today’s Trentonian as saying “I don’t agree with the tax hike. I don’t have a problem of paying taxes if you are getting a service, but we are not getting the services that match the tax increase. Hopefully we’ll dig through some things and find some money.”

While she and her colleagues are looking at the Expense side of things, may I also suggest they look very carefully and skeptically at the Administration’s Revenue projections? Some things don’t look right to me.

Since we only have a summary version of the proposed budget at this point, there’s not a lot of detail. But one revenue line, on Page 11 of this presentation, jumps out at me. “Receipts from Delinquent Taxes” is budgeted for this year at $1,250,000 even. This represents an increase of $643,908 from last year’s budget, more than double! Is this a realistic projection?

I highly doubt it. Over the last five years, the City has budgeted much more conservatively for this line, and still has had trouble making its target. This line item, by the way, accounts for successful collection of property taxes that had been billed in previous years but were not paid by property owners and have become delinquent.

This little table, taken from the City’s own budget data,  shows how this line has been budgeted for the last five years, and how the actual receipts have tracked against the budget.

As you can see from this table, the City has been receiving progressively less money year on year since FY 2008 (when the national economy was crashing), except for one blip in FY 2010. And again, except for that year the City has fallen way short of its projections, usually meeting only around two-thirds of its goals.

What makes the City think that it can budget double the amount of delinquent taxes this year, and actually collect three times the amount it collected in the last year for which we have public data? Because I sure don’t think that can happen.

So why would the City do this? Perhaps because they think that if they budgeted this line more conservatively, the proposed 19-cent tax increase would become a 21-cent increase. $600,000 of revenue against our ratables base of $2.742 Billion is a 2-cent increase in the rate. That’s the kind of politically-charged threshold that the Administration surely would not want to cross.

So did the Administration deliberately manipulate their budget proposal with unrealistic revenue numbers to make a huge tax increase a wee bit smaller? I don’t know. I can’t say that.

But what I can say is that seeing that one entirely unrealistic budget number in the summary would lead me to look at the whole damned thing a lot more closely.

I wish Ms. Holly-Ward and her Council colleagues a lot of luck as they move through the budgeting process. Ask questions, challenge assumptions, and take anything that comes from the other end of City Hall’s Second Floor with a couple of pounds of salt.