The Hoboken City Council is scheduled to vote on a resolution tonight that would approve a 5 percent total tax levy increase.
The New Jersey Division of Local Government Services (NJDLG) issued a Local Finance Notice which recommends that municipalities issue estimated property tax bills for the third quarter installment of 2020 taxes. This, because the NJDLGS may be delayed in reviewing the city’s budget, which is scheduled to be introduced in June, prior to final adoption because of the COVID-19 pandemic.
The Hudson County Board of Taxation may also be delayed in certifying the city’s 2020 tax rate once the city’s budget is adopted. But without a certified 2020 tax rate, the city’s tax collector can’t prepare and mail property tax bills by the statutory deadlines for this year’s third quarter installment of taxes.
The city recommends that the council adopt an estimated tax levy for 2020 which would be a total of $196.6 million.
The total tax rate in Hoboken is made up of five components: municipal tax; county tax (including county open space tax); school tax; library tax; and municipal open space tax.
According to a memo sent on May20 from Acting Business Administrator Jason Freeman to the council, estimated tax billing is a municipal finance tool to help defray spikes in costs to the taxpayer.
Each year, the first and second quarter property taxes are due prior to adoption of a budget based on the prior year’s final tax rate.
The remaining two quarters are generally billed based on the actual tax rate, including any necessary adjustment to “catch up” the first two quarters, because the budget is typically adopted by the council in May, according to Freeman.
“The Administration recommends that the City Council approve an increased estimated third quarter tax bill based on a 5 percent increase in the total levy to mitigate the possibility of an out-sized bill for taxpayers in November 2020,” Freeman states. “By passing this resolution, the City Council allows for flexibility and less pressure to be put on the taxpayer come November 2020.”
Freeman said the city plans on introducing a municipal budget to the council in June, but there is still uncertainty “surrounding different decision points to be able to present as accurate as possible budget at this meeting.”
“Our goal is to introduce a budget that is not only based in sound financial principles, but also to have as much accurate and up-to-date information as possible,” Freeman said. “As we continue to finalize the figures and the budget totals, an estimated tax bill for the August 2020 cycle will begin to right-size the taxes based on potential and actual increases in the five components of a tax bill. It will also enable the City to have sufficient cash flow to pay the taxes to these other entities and to continue to operate our essential functions.”
Hoboken faces a multi-million-dollar budget gap this year which could be as much as $20 million, according to Councilwoman Tiffanie Fisher who sits on the council’s finance subcommittee.
The city faced an estimated $14 million budget gap due to anticipated increases in personnel costs, revenue shortfalls, and a decrease in the city’s surplus account before COVID-19 struck the city, further exacerbating the gap.
Now, given the pandemic, estimated revenues could be down an additional $5 million, according to Fisher.
This $5 million includes reduced parking revenues, court fees, and construction fees.
The 5 percent tax increase would only provide the city with another $2.8 million in funding, according to Fisher.
“Even if this was the $5 million equal to our revenue loss, and although we will still try to find additional cost savings, especially in unnecessary overhead, I am confident that the tax increase for this year will be much greater than 5 percent,” Fisher said in an email to constituents. “So the question is, do we take this 5 percent increase now to lessen the pain later in the year, or kick this one more quarter with the potential for a greater impact later.”
Tonight’s council meeting
The Hoboken City Council meeting will convene at 7 p.m. tonight using Zoom.
To join the zoom meeting go to https://us02web.zoom.us/j/83025219057 or call 1-646-876- 9923 and enter the meeting ID 830 2521 9057.