Englewood's preliminary budget shows a 7.5% tax hike
ENGLEWOOD — As the council prepares to introduce its budget on Tuesday, the city faces a potentially steep tax increase as a result of declining revenues.
In a memo sent to the City Council earlier this month, City Manager Tim Dacey said spending is up in the preliminary budget by 1.74 percent, to a total of $63,449,317, but revenues declined from the previous year by 19.85 percent.
"As pointed out in the past, we have a revenue issue in 2017, not a spending issue," Dacey said in the memo.
Though the city has had tax increases of less than 2 percent consistently for the last six years, Dacey said, this year the city must increase taxes to meet its costs, and the preliminary budget has a municipal tax increase of 7.47 percent, which amounts to $365.72 on a home assessed at $461,978, the city average.
"Michael and I feel that while this is a large percentage increase, if it is done, we can go back to increases at or below 2 percent for the next three years," Dacey wrote, referring to Michael Kauffman, the city's chief financial officer. He added that a four-year plan to rebuild the surplus, plus added revenue from new development, will help eliminate large tax increases in the future.
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Council President Wayne Hamer said the 7.47-percent increase was a "starting point" in the preliminary budget, and that the council will continue working on it to bring it to a reasonable number.
"We're still early in the process and we have a ways to go yet," he said, adding the council has had conversations with several city departments, including the police, recreation, the library and the courts, and will speak to the rest of the departments.
"We have to look at common-sense approaches to our current situation," he said.
"I do not believe that there is any doubt amongst the majority of the council that the proposed budget and tax increase is completely outlandish and entirely unacceptable, and we are working tirelessly to cut any non-essential spending," Councilman Michael Cohen said.
Dacey said he and Kaufmann are trying to lower the increase to 6.9 percent by the time the budget is introduced on Tuesday.
Mayor Frank Huttle sent a letter to council members last week requesting that they cut spending, issue a hiring freeze and halt capital improvements and bonding to bring the tax increase down. He said that last year, the council, except Councilman Marc Forman, made "ill-advised" budget decisions and used one-time "revenue gimmicks" to keep taxes down without cutting spending, "and now those consequences have come back to haunt us."
The one-time revenue items, he said, were the reason for the apparent decrease in revenues, but tax revenues are consistent. There is not a revenue decline, he said, because those items should not have been considered revenue in the first place, adding he warned against their use to fill budget gaps last year.
"You cannot pay your bills from the sale of your house," he said.
Councilman Eugene Skurnick said the council, in its budget hearings, has already instituted a hiring freeze, and the city is reducing its capital budget to $5 million, which he said was the reason the budget is increasing by only 1.74 percent. He cited Dacey, saying the city's problem doesn't lie in spending but in revenues. He added there is no way to cut more unless the city starts laying off employees.
Huttle said he was glad to see the council is of like mind in regard to the hiring freeze and cutting the capital budget, but added he has seen no action or declaration of the hiring freeze.
In recent months, Skurnick has been vocal in advocating for new ratables in the city, such as turning Liberty School into a housing development that would not have any tax abatements. With new ratables, Skurnick has said, the city will have more revenue and be able to keep taxes down and improve its services.
Skurnick blamed Huttle and the cancellation of several Planning Board meetings throughout last year for the lack of ratables, saying it tells others the city is closed to business. Huttle said the Planning Board hasn't delayed a single application and has worked as efficiently as possible, adding meetings are canceled when there are no applications to hear.
He said development now rests on the council's action in following the 2014 Master Plan, not the Planning Board's, and that there are several projects coming to fruition now and in the coming year that will bring millions of dollars in ratables and tax assessments to the city.
Huttle urged the council not to spend more money until a balanced budget is reached, and to begin preparing budgets with future years in mind, saying the high tax increase could have been avoided. Like a business, he said, the council should work to adopt a budget before the year starts.