The Township Committee released the preliminary 2020 budget for Harding on March 9. Budget approval is expected April 13.
Remember, this budget only covers Harding municipal government (police, administration, DPW, Open Space, etc) – about 28% of your property tax bill. It does not cover Harding School and Morris County – about 46% and 26% of your property tax bill, respectively.
The bottom line is that the budget calls for a 1.7% increase in spending (“appropriations” in government-speak) to $9.6 million. To pay for this spending, property taxes are pegged to increase 1.8%. However, because the assessed value of all property in Harding increased by 5.64% (as a consequence of the recent town wide re-assessment) the tax RATE will actually fall by 3.5% from .288 mils to .278 mils.
Though the tax RATE is down 3.5%, an individual homeowner may have a higher or lower property tax bill depending on how much his or her home’s assessment changed.
Let’s focus first on the Harding Township debt. HT debt peaked at about $14mm in 2009 and has been falling ever since where today debt stands at just over $4.1mm. The debt originated from affordable housing (44%), open space (27%), wild life (18%) and Glen Alpin (11%). HT is a AAA credit so it has ample ability to issue debt if needed in the future. With no more borrowing, Harding debt will be extinguished in 2029.
Now let’s examine spending. Fully 59% of municipal spending is for employee compensation including salaries & wages, health insurance, social security and pensions. Non-police employees were awarded a 2% cost of living increase while the police contract called for a greater increase. There was no increase in total municipal headcount and some positions were changed to part time from full time. Surprisingly, health insurance cost actually decreased 1% as some employees declined the plan in favor of their spouses’ plan. Taking all the factors into consideration, compensation expenses are forecast to rise 2.2% to $5.475mm.
Health Insurance of about $1.3mm covers both active (about 60%) and retired employees (about 40%). Contract negotiations a few years ago decreased the promised post-retirement benefit for newly hired so the expense for retirees has begun to decline.
Non-compensation costs are forecast to decline 0.4% led by a 3% decline in the largest line item “Other Expenses” which includes Building/Road/Park Maintenance, Miscellaneous, Utilities, Insurance, Legal, Technology, Engineering, Library (same $40K as it’s been for 20 years), audit, snow removal. The “Miscellaneous” line item of “Other” is $609K and is unclassified expenses from the police dept (113K), solid waste collection ($90K), general administration ($54K), Planning Board ($52K – decrease as the Master Plan was completed in 2019), etc.
The budget allocates $625,000 to the capital improvement fund, an increase from $616,000. Much of this goes to road maintenance, an expense that peaked 3 years ago in an effort to catch up on some neglected projects that required outsourcing to tackle.
By NJ statute, the budget must balance so that Harding has to raise revenue from taxes (63% of the budget in 2020), Surplus (23%), Construction Fees (3%), “Energy Tax Receipts (5%) and Municipal Revenues (5%). The budget is keeping the Surplus level at $2.1mm – a conservative practice rather than eating into it. The budget also anticipates a payment from the sale of “The Farm at Harding” (our low income housing project) in approximately May of 2020. The sale of The Farm has an estimated $70K positive impact on the budget.
At this point in our review of the budget we would, in past years, show the change (generally an increase) in the tax bill for the “average property” in Harding (value about $1.05mm). However this year it is not possible to show that figure because of the re-valuation. Readers will just have to look at their own bill to see the net result of the re-assessment and decrease in the tax rate.