Slight tax increase
North Bergen introduces $84.4M budget
by Art Schwartz
Reporter staff writer
Apr 06, 2014 | 1802 views | 0 0 comments | 32 32 recommendations | email to a friend | print
APPROVING THE BUDGET – Commissioner Frank Gargiulo, Mayor Nicholas Sacco, Commissioners Theresa Ferraro and Hugo Cabrera. (missing from photo: Commissioner Allen Pascual)
APPROVING THE BUDGET – Commissioner Frank Gargiulo, Mayor Nicholas Sacco, Commissioners Theresa Ferraro and Hugo Cabrera. (missing from photo: Commissioner Allen Pascual)
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At an open meeting on Wednesday, March 26, Mayor Sacco and the Board of Commissioners of North Bergen announced the new annual budget of $84.4 million. The overall tax rate will increase by 2.54 percent, raising the tax amount for an average homeowner by $85 per year, from $3,359 to $3,444.

The total budget amount represents a spending increase of 1.53 percent from the 2013 budget of $83.1 million.

Town Administrator Christopher Pianese presented a detailed report on expenses and adjustments and answered numerous questions from the public.

Pianese stated that one of the greatest challenges to the municipality is the decrease in state funding. “State aid once again, for the fourth year in a row, is flat,” he stated. “We’re getting 47 percent less than we did seven to eight years ago. We had over $13 million in state aid at our peak, and right now we get $7.1 million.”

“It’s like if you got your paycheck cut by a certain amount,” added Mayor Nicholas Sacco.

Another factor negatively impacting the municipality was the current economy, which continues to hinder growth. As a result, the township’s total assessed valuation, including commercial businesses and residential property, has decreased by $47 million since 2011.

“We continue to deal with the stagnant rating pool. We saw a considerable decrease last year,” said Pianese. “It’s down but not as dramatic as last year.”

In addition, the cost of dealing with this winter’s storms was up significantly from prior years. This season the cost of snow removal (including salt and overtime expenses) was more than $900,000, as opposed to $473,000 last season.

“We’ve really made an effort to deal with this pothole problem by buying a new piece of equipment,” said Pianese. “We’ve already dealt with in excess of 700 potholes, 225 of which came in through the hotline.”

The good news

On March 19, less than a week before the committee meeting, Moody’s conducted their annual assessment of North Bergen. “We were reaffirmed at an Aa3, which is not easy in this market,” said Pianese. “We feel we had a positive result in 2013, as did Moody’s. They gave us a positive outlook.”

Moody’s ratings are designed to provide investors with a gauge of future creditworthiness. An Aa3 rating is Moody’s highest rating for ability to repay short-term debt, making North Bergen an attractive borrower, resulting in lower interest rates from lenders.

Following the Moody’s rating, North Bergen received bids from three lenders. The township was hoping for an interest rate below 1 percent, which is typical for municipal rates, according to Pianese. “We had three bidders. The successful bidder, TD Securities, bid 0.206 percent for a year,” he said.
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State aid to North Bergen is down more than 47 percent since 2005.
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“That is a result of the Moody’s rating. If we got 1 percent it would be five times [more], so we’re saving over a hundred grand by getting the rating.”

The municipality sold $21 million worth of notes in the sale, representing all its short-term notes.

In answer to a question from the public, Pianese reported that North Bergen’s current debt stands at $59.5 million, including the $21 million of short-term notes. “It’s the same amount that was outstanding about 10 years ago,” he said.

North Bergen is legally allowed a debt of about $160 million.

Pianese pointed out that North Bergen has lowered its annual payment of debt by 27% since 2005. For 2014, that amount is $6.1 million, up from last year’s $5.6 million.

“Another real positive is the tax collection rate,” he said. The North Bergen tax collection rate in 2013 was just under 98 percent, the highest rate in years.

At the same time, tax appeals are down. “Last year and the year before we dealt with a considerable amount of tax appeals. That peaked in 2013,” said Pianese. Successful tax appeals in 2013 totaled $3 million. For 2014 Pianese projected an amount of $750,000.

The township will rely on about $2 million in surplus to balance the budget in 2014. That’s the lowest amount in 10 years. In 2011 North Bergen relied on $6.35 million in surplus to balance the budget.

In summarizing North Bergen’s revenues, Pianese stated that North Bergen had over $1 million in excess revenue as of Dec. 31. “That’s the highest it’s been in a number of years,” he said. Anticipated revenues for 2013 were $83.1 million, while actual revenues were $84.3 million.

Challenges

Among the residents requesting further information was Larry Wainstein of the North Bergen Concerned Citizens Group, who challenged many of the line items in the town budget.

Wainstein questioned why the cost of insurance had risen by $500,000 each year for three years in a row.

“This is our liability insurance, not our health benefits,” said Pianese. “In the past we had decent reserves.” Those reserves were getting low, he stated, and the increases were a one-time infusion of money to build them up in the event of “an extreme liability situation” involving accidents or auto insurance.

Wainstein also questioned the efficiency of spending money on a central purchasing agent rather than allowing each department to handle its own purchasing using the state vendor list.

“Actually the reason we do that is because when we purchase in bulk on behalf of all the departments we save money,” responded Pianese. “So there are decreases in other lines as a result of that line going up.”

Pianese pointed out that the budget reflected an increase in police officers for 2014, which raised the budget amount. “The total police force is back at its peak of 120,” he said. “We’re committed always to be above 115.”

Other recent town improvements that cost money include the new fitness center and the new library annex downtown.

Several state amendments impacted the budget. Although state aid remained the same in total, the amounts allocated for certain individual programs decreased or were reallocated, resulting in changes to the way some things were categorized.

Mayor Sacco concluded by thanking everyone who worked on the budget.

Art Schwartz may be reached at arts@hudsonreporter.com.

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