Independent Article On $1.2M Increase In School Budget Gives Potential Insight Into This Year's Municipal Budget

Last week's Independent had an article about the Middletown Board of Education's budget introduction for the upcoming 2013-2014 school year," Decline in property values drives M’twn school tax hike; $78M loss in property valuations contributes to $1.2M tax levy increase", this article may give us some insight into what this year's municipal budget may have in store for us. I recommend reading the article, it went into great detail explaining how the budget for the upcoming school year was put together and what were the priorities. You can then take a look at the Budget Presentation that the school administrators put together for its introduction that took place back on February 27th.

On Wednesday night this week (March 20th), the Middletown Board of Education will hold a public hearing on the budget, after which a vote will take place for its adoption.  

 Here's a snippet from the Independent article:

MIDDLETOWN — Declining property values throughout Middletown contributed significantly to the tax levy increase in this year’s district Board of Education budget.

Proposed at the Feb. 28 board meeting, the $147,856,250 budget represents a tax levy increase of $1,250,042 over last year, which would account for a $68.90 annual hike for residents with a home valued at the township average of $375,500.

That increase is offset, however, by a decrease in the district’s annual debt service payments caused by recent refinancing. The total taxpayer increase would stand at $53.24 per year, or $4.44 per month.

According to board professionals, much of the increase is due to the loss of $78 million in township tax assessment valuations throughout the past year....

The only issue that I have with this article and the budget presentation is it states that the tax levy will increase by $1.2M  due to the loss of $78M in property values caused by Hurricane Sandy. However, it does not give us the exact percentage of the increase, only saying that it keeps this years tax levy below the state mandated 2% cap. Based on my calculations that's correct, I figure the increase to be ~ 1.5%, which is fine. I just wish that the people putting this stuff together treated their intended audience as grown-ups and not children, you'll see what I mean when you examine the presentation.

The presentation goes to great length to explain how well the administrators have done over the past 3 years staying within the parameters of the mandated cap, using that argument to justify this years increase. I find this type of justification nauseating. I'd feel better about it if the school administration just stated the facts and not try to tippy-toe around the truth of the situation, which is, thanks to the damage caused by Hurricane Sandy throughout the township, property values are down and the school district can't make any further cuts to  the upcoming budget without severely effecting the education of our kids.

Knowing that the loss of  township property values is now at $78 million (as per the school budget) and the costs to clean up after Hurricane Sandy is in the millions of dollars, some of but not all of which, will be reimbursed at some point by the federal government and knowing that this years municipal budget should still be in the neighborhood of $65 million as in previous years, supported by a tax levy of nearly $45 million, I don't see how this year's budgeted tax increase will be below the state mandated 2% cap on property taxes.

Last year's tax cap increase was 1.97% and seeing how nothing significant has changed, we can use that as the baseline for this year's increased. Add to it an increase in the cost to health-care and other benefits along with all the clean-up costs associated with Hurricane Sandy and the $78 million hit taken from lost property values, I'd say that Middletown is looking at a budget increase of nearly 5% or more on top of our baseline, making this years increase in the neighborhood of 7% or potentially greater.

If this year's increase to the tax levy is going to be greater that 2% we should know within the next month or so. Middletown will need to ask its residents to approve the budget increase on Primary Day, June 4th.