Daily Archives: August 24, 2010

>Middletown’s Hearing With Local Finance Board Scheduled For August 26th

>Middletown is one step closer to finalizing it’s 8+ months over due budget.

It looks like the Township’s hearing in front of the Department of Community Affairs Local Finance Board has been rescheduled for August 26th, two weeks after the original date was cancelled for the lack of a quorum on the part of the LFB.

According to the LFB website Middeltown will be participating in two meetings that day, one a teleconference that will deal with the Townships plan to bond $955,000 in order to finance tax appeals and the second to decide whether or not Middletown can exceed the State mandated 4% cap on property tax increases. It seems that Middletown is asking the LFB to approve an additional $2.68M over the 4% spending cap.

Now I am not exactly sure how this works but I figure there could be two ways in which to figure it out.

Last year, Middletown raised $40M from property taxes, if the amount raised by taxes exceeds the 4%cap ($41.6M) by only $2.68M, then the resulting increase to the municipal tax rate will be 10.7% (3.17% below the initially proposed tax rate) which would bring the amount raised through taxes to $44.28M ($1.27M less than what was originally proposed).

The other way to look at it would be, if the municipal budget for 2010 exceeds the cap by 4% over the 2009 budget which was $61.8M, the increase would bring the budget to $64.27M. And if then Middletown gets the approval to exceed this by $2.68M above the cap, the budget would be $66.95M, which amounts to an 8.33% tax increase. If this turns out to be the case then who knows what the amount raised by taxes will be. It will depend on what is cut and what is bonded for.

Is your head hurting yet?

The bottom line on all of this however happens to be that given the current economic environment and Governor Christie’s desire to control spending, it would seem unlikely that the LFB would agree to exceed the 4% cap by such a large margin anyway. Therefore the Local Finance Board will do for Middletown what Gerry Scharfenberger and those in the majority have been unwilling to do, reduce spending, by ordering Middletown to do so, which in turned would lower the proposed 13.87% tax hike to some more manageable number.

Where will an additional $2M in spending cuts come from is anyone guess, but I wouldn’t be surprised if the township eyed the use of furloughs or additional layoffs (it was announced that 4 new police officers have recently been hired) along with reducing the budget surplus further from the proposed $4M target for the year in order to make it happen.
We’ll all just have to wait and see what the LFB dictates to Middletown.

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Filed under 4% budget cap, Budget, budget cuts, Gerry Scharfenberger, Local finance board, Middletown, tax increase

>It’s Your Town Newsletter Volumn 2, Issue 17, 8/16/10

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Get it while it’s hot, the latest edition of It’s Your Town Newsletter has just been released!

This edition of the newsletter contains information about the Middletown Township Committee meeting of Monday August 16,2010.
This was suppose to be the meeting in which the Township budget was to be adopted but because of the cancellation of the Townships meeting with the Local Finance Board in Trenton the adoption of the budget had to be put off until some other time.
Due to this reason estimated taxes had to be sent to Middletown residents, many of which were not happy and a few of those attendened the meeting to voice their displeasure with the big tax increase that they noticed in their 3rd quater bills.
Also of note, this edition of the newsletter contains the Township bill list for the month. The bill list is nearly 100 pages and shows you how and where your tax dollars are being spent, with engineering costs seeming to be the big ticket item this month.
If you would like to have the newsletter sent directly to your in box, send an email to itsourtown@yahoo.com

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Filed under bill list, estimated taxes, Its Your Town, Local finance board, Middletown NJ, Middletown Township Committee, Newsletter

>NJPP Monday Minute 8/23/10: Extending Bush Tax Cuts for Top 2% Shortchanges the Economy

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When Democrats in New Jersey raised the top rate on the state income tax last year, it was billed as a one-year, temporary increase on millionaires. When it expired this year, Democrats voted to renew the increase for another year. Republicans, emboldened by Gov. Christie’s veto threat, said “no.” They reasoned that Democrats purposefully wrote the expiration into the legislation, and so it should be allowed to expire.

In Washington, D.C., the partisans argue opposite sides of the “expiration” debate.

Republicans a decade ago enacted what came to be known as the Bush tax cuts, the signature domestic policy legislation of the Bush Administration. That legislation enacted tax cuts with an expiration date at the end of this year. Republicans want to renew the legislation. Democrats in Congress (echoing Republicans in New Jersey) argue the bill was written with an expiration date, and so it should be allowed to expire.

If it feels a little like a funhouse mirror, well, there’s a reason.

None of the partisan back-and-forth is about good fiscal policy or philosophical differences. It’s entirely about gaining political advantage.

But it should be pretty clear by now tax cuts haven’t spurred the nation’s economy. In fact, the worst economic collapse since the Great Depression happened on the heels of deep federal tax cuts. It makes almost no sense, from a policy perspective, to continue such cuts.

A study earlier this year by the non-partisan Congressional Budget Office of 11 options for stimulating economic growth placed tax cuts dead last in effectiveness. Top among the options for creating jobs and jump-starting the economy: job-creation tax credits; extended unemployment benefits and funds to help states balance their budgets with fewer cuts in services.

A proposal by President Obama would allow the tax cuts to expire for the highest-income taxpayers while temporarily extending the cuts for the other 98 percent. Effectively, the plan would restore taxes on households with incomes of $250,000 or more to the same levels as ten years ago, except for tax cuts enacted as part of the American Recovery and Reinvestment Act.

This chart from the Center on Budget and Policy Priorities uses the CBO analysis to break down the cuts by income category:

The CBO study found that allowing the tax cuts to expire for those earning $250,000 a year or more – the wealthiest 2% of all taxpayers – would provide $40 billion in public funds over the next two years to invest in economic programs to boost the economy. Extending the cuts for the high-income earner would likely spur after-tax investments that would increase the GDP by about $10 billion, the CBO said. By comparison, the Center on Budget points out using the economic multipliers in the CBO analysis, investing $20 billion into state fiscal relief and $20 billion in job-creation tax credits would generate about $32 billion in GDP. That’s a tripling of the effect of extending the tax cuts.

For taxpayers in New Jersey, Obama’s proposal would mean an average federal tax cut of $2,245 in 2011 taxes over what would have been owed in 2001. For 80% of New Jersey taxpayers, that’s actually more than the Republican proposal for extending the tax cuts, according to a state-by-state analysis by Citizens for Tax Justice. Higher income households would still reap substantial savings: at least $10,000 for those with incomes of $350,000 or more.

It seems clear that given the anemic effect tax cuts have in stimulating the economy and the immediate impact of channeling those savings back into the economy, the Obama proposal is the middle ground that will provide revenue for improving the economy at the same time it provides relief for the greatest number of taxpayers who have been hardest hit by the economy.

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Filed under Bush Tax Cuts, Congressional Budget Office, economy, Gov. Chris Christie, Middle Class, Monday Minute, New Jersey Policy Perspective