Stable taxes, or election year gag?
Mayor, rival trade barbs over new $486M budget
by E. Assata Wright
Reporter staff writer
Mar 03, 2013 | 2370 views | 0 0 comments | 6 6 recommendations | email to a friend | print
Mayor Jerramiah T. Healy presented the 2013 municipal budget to the City Council last week. The spending plan currently includes no tax increase. Political rival Councilman Steven Fulop insists that taxes could rise nevertheless.
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The $486 million municipal budget presented by the administration of Mayor Jerramiah T. Healy for 2013 currently does not include a tax increase. But the mayor’s critics say that he may still intend to raise taxes next year. They also note that many residents could see a tax hike this year thanks to a property revaluation that could significantly readjust the tax bills on thousands of homes and commercial spaces.

Property taxes and the revaluation are expected to be among the top issues of significance to voters in this year’s municipal elections, which will be held Tuesday, May 14.

In recent years, property taxes in Jersey City have spiked and have led to protests, a failed effort to recall Healy, and a movement led by Councilman Steve Fulop to defeat Healy at the polls.

The Healy administration unveiled the 2013 municipal budget on Feb. 27 at the City Council meeting, two days after the mayor gave a brief budget presentation to the council at its biweekly caucus meeting.
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Taxes and the reval are expected to be among the top issues of significance to voters in this year’s municipal elections.
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At the caucus briefing, Healy said his administration plans to keep taxes stable this year thanks to increased and unexpected revenue from various sources. The city, for example, expects to generate $7 million more in tax abatement payments this year than in 2012. (Abatements, also known as “payments in lieu of taxes,” are payments from developments that have a separate tax agreement with the city rather than paying regular fluctuating taxes.) In addition, a recent audit of tax-abated developments found that some abated properties were paying the city less than they owed, and as a result, those developments will have to pay an extra $3 million this year.

The city also expects to get increased revenue from hotel and parking taxes, although Healy did not specify how much, and from the sale of municipal property and taxi medallions. A new vacant property registration program will add another $250,000 to the city’s coffers.

But Fulop, who is running against Healy, called the administration’s budget an election year ploy. Fulop noted that the property revaluation – or “reval” – could have significant consequences for many property owners.

In a reval, all homes in the city are reassessed according to the current market value. Owners of older homes may be paying lower taxes than they should be, so after a reval, they often have to pay more. But in an economy that recently went downhill, owners of newer homes may be paying more than they should be, because they bought the property before its value dropped. Cities are supposed to hold revaluations every 10 years, although most delay them for as long as possible.

The City Council formally introduced the 2013 budget by a vote of 8-0-1, with Fulop abstaining.

Fulop: Beware

Healy and Fulop are the top two contenders running for mayor, although four other people have declared their candidacies: Jerry Walker, Dwayne Baskerville, Cynthia Chandler Johnson, and Abdul Malik.

Fulop said the Healy administration has a history of keeping taxes stable in election years – then raising them in subsequent years. He points to FY2006 when property owners saw a 19 percent tax increase and FY2010 when a 22.3 percent increase was passed. (The Jersey City budget currently operates on a calendar year. In the years Fulop cites, the city was still operating on a fiscal year.)

The years 2005 and 2009 were election years when Healy ran for mayor.

“In the last two elections when he was running for mayor, Healy kept taxes flat, only to clobber residents with a massive increase after the election,” Fulop said. “The last time Healy used this smokescreen, people nearly lost their homes. This is just another sad example of Healy putting his own interests ahead of the residents’.”

Fulop further argues that the reval will raise taxes on properties whose values are readjusted upwards.

As a rule of thumb, about a third of property owners will not see a tax increase as a result of the current reval, which was started in 2011. About a third of property owners will actually see their taxes drop slightly from the reval. But another third of property owners will see an increase – and the increase could be significant.

However the revaluation turns out, the Healy administration has decided that it will not go into effect until the second half of this year – a move Fulop said was politically motivated.

“The Healy revaluation that he postponed until after the election will kick in [later this year], resulting in even higher taxes,” Fulop said.

However, Healy responded that the City Council – whose majority is now allied with Fulop – tried to “force” the administration to raise taxes.

“We have a $9 million liability for our retirees that goes back more than two decades. We had an opportunity to fund that over five years [through borrowing] with an interest rate of, I think, 1.2 percent, rather than hit the taxpayers with one bill this year,” said Healy. “The City Council, with Steve Fulop leading the charge, said, ‘No, we don’t want to pay this down in five years. You have to do it in three years.’ We came back two weeks later with another plan that would have paid this off over the course of three years. Then they said, ‘Oh, no, you have to pay it down this year.’ The thrust of that whole initiative was to force me to raise taxes this year by adding $9 million to our city budget that we had no need to add.”

Fulop abstained from the budget introduction vote, arguing the council should be given up-to-date appraisal figures for city-owned property the Healy administration plans to sell.

Public hearing later this month

Before the budget is passed by the City Council, there will be a public hearing, which will give residents an opportunity to weigh in on the 2013 municipal spending plan. At present, the public hearing is scheduled for Wednesday, March 13 at 6 p.m. at City Hall, 280 Grove St.

The current budget, as last week, is likely to be amended several times before it is finally passed by the council. In previous years some budget amendments have included slight tax increases that were not included in the original budget that was introduced. If the budget is amended, residents will be given a second opportunity to speak out on the revised spending plan.

E-mail E. Assata Wright at awright@hudsonreporter.com.

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