’21 Budgets Explained

COURT HOUSE – The 2021 budget cycle was one characterized by delay, confusion over how federal funds could be used, and coming to grips with the harm done by the pandemic. 
One way to compare the county municipal budgets is by looking at the local purpose tax rate.
Across the county’s 16 municipalities, four – Avalon, Cape May, Dennis Township, and Woodbine – held the line and adoptedbudgets that called for no tax increase. 
Two others – Sea Isle City and Wildwood Crest – adopted rates that increased by under 1%. 
Three others –Lower Township, Middle Township, and Wildwood – kept their increase to under 2%. 
Three municipalities – North Wildwood, Ocean City and West Cape May – exceeded the 2% increase line, but remained below 5%. 
Two – Cape May Point and West Wildwood – were at or just above 5%.
That leaves two communities – Upper Township, which has the lowest rate among mainland communities, and Stone Harbor, which had the highest tax-rate hike of all the municipalities in 2021.
Comparing budget size is not informative since at least five of the 16 municipalities do not use self-financing utilities for activities, like sewer and water or beach tasks. This makes the general fund budget larger than those that do.
One needs to consider the communities separately.
Mainland Municipalities
Upper Township has a unique budget structure due, in large part, to the $6 million-plus the municipality receives each year because it hosts the B.L. England generating station. 
The money comes in the form of energy receipts collected by the state from public utilities in the towns and passed to the municipalities by euphemistically calling it state aid. For now, the money is still flowing, despite the plant being decommissioned.
Upper lost almost $500,000 of its surplus funds in the 2020 pandemic year. 
The municipality has a budget of $15.5 million, with no utilities. Its tax rate reflects the fact that the budget only relies on property taxes for 27% of its revenue. The tax rate rose by 1.7 cents per $100 of assessed value in 2021, an increase of 8.46%.
Dennis Township also does not make use of utilities. It has a budget of just under $5 million and property taxes represent around 42% of municipal revenue. 
In 2020, Dennis controlled expenditures in ways that allowed the municipality to post the highest percentage increase in its current fund surplus of all county municipalities. 
The municipality avoided a tax increase, in 2021, while still using a modest 36% of its surplus as anticipated revenue. Dennis benefits from $1.6 million in state aid, most of it being the energy receipts tax.
In Woodbine, Mayor William Pikolycky announced the borough’s 31st year in a row with no tax increase. The $2 million borough general fund budget is expected to increase, as Woodbine receives grants throughout the year. 
The property tax revenue to the borough is a modest $412,467. Woodbine used 43% of its surplus as anticipated revenue in the 2021 budget. 
There are two self-financing utilities: A water and sewer utility, budgeted at $565,000, and an airport utility, budgeted at $383,000.
Middle Township held off adopting a 2021 budget until the last possible moment. The introduced budget contained a 2-cent increase in the tax rate. By waiting, the municipality was able to make use of nearly $1 million in American Rescue Plan funds, reducing the tax increase to less than a penny. The rate went from 0.484 to 0.4920, an increase of .008 cents, or 1.65%. 
Middle lost almost $500,000 in anticipated revenue, in 2020. This had the effect of drawing down on its current fund surplus. The federal funds helped hold down the tax increase and replenish that surplus. 
The municipality has a $22.8 million operating budget and a $5.1 million sewer utility. 
The municipality has the largest land area of any county municipality and must provide services with a relatively modest $2.8 billion ratable base. Local tax represents 60% of the current fund revenue.
Lower Township has almost $1 billion more in ratables than Middle Township. Lower’s ratables stand at $3.7 billion. 
The municipality increased its local tax rate by 1.7%, in 2021, moving up one full cent in the rate. 
Lower had a difficult 2020, when it lost almost $1 million of its current fund surplus. The surplus remains healthy, at $7.5 million, of which the municipality used $3.5 million, or 47%, as anticipated revenue in the budget. 
The local tax rate supplies $21.8 million in revenue for the $30.9 million budget, or 71%. The municipality also has a solid cap bank, with a balance of $2.5 million.
Resorts
Eleven of the county’s 16 municipalities are considered resort or island communities. They tend to be smaller, with shrinking permanent populations. 
Their budgets are complicated by beach and bay issues and flooding events. Many are confronted with the prospect of spending tens of millions of dollars in the struggle with sea-level rise.
Ocean City is the big exception to many of the rules concerning the island communities. It has the fourth-largest population among county municipalities, exceeded only by Lower, Middle and Upper townships. 
The city has over $12 billion in ratables, which is over 20% of the county’s total. 
In 2021, the municipal budget is $87 million, up from $82 million in 2020. The budget reflects an increase of 1 cent in the local purpose tax rate, up from 0.461 to 0.471 per $100 of assessed value. 
Roughly 66% of the revenue supporting the budget comes from the property tax. 
The city started the year with healthy balances in its current fund surplus, which stands at $6.6 million, and its cap bank, with a balance of $5.6 million. 
The budget makes use of about 48% of the surplus as anticipated revenue. In 2020, the city lost $1.5 million of its surplus due to a drop in miscellaneous revenues.
Sea Isle City’s $26.8 million budget calls for a small quarter of a cent rise in the property tax rate, from 0.3800 to 0.3825. The city also has a $10.2 million budget for its water/sewer utility.  
The general fund depends on taxation for 68% of its revenue. The city’s surplus came into 2021 with a strong $6.9 million balance after a pandemic year, in 2020, in which it managed to add half a million. The 2021 budget uses about half of that surplus as anticipated revenue.
Avalon had no tax increase for the thirdconsecutive year. With a $9.3 billion ratable base, it has the second-highest valuation total in the county. Taxes support about 67% of the budget. 
Avalon has a water/sewer utility budgeted at $7.7 million, and a beach utility at $2.2 million. The budget uses 63% of an $8.1 million surplus as revenue. 
The borough did not lose surplus dollars during the 2020 budget year. 
Part of the budget includes a $2 million Open Space grant from the county, inflating the budget totals over 2020.
Stone Harbor had a difficult time formulating its 2021 budget. The problems began with an error in the 2020 budget that forced the borough to do an emergency appropriation of $350,000, putting the 2021 budget in the hole at the start. 
The move from an all-volunteer fire department to one that now also contains paid career firefighters added stress to the 2021 budget. The borough ended up with the county’s highest tax rate increase, at 8.58% on a $19.4 million general fund budget.  
There is also a water/sewer utility budgeted at $4.4 million. 
The tax rate moved from 26.8 to 29.1. The increase would have been higher if the borough did not use 73% of its available surplus as revenue in the budget. 
In 2020, the borough lost 20% of its surplus to unrealized revenue projections. It entered 2021 with a surplus of $2.5 million. The budget for 2021 also required the borough to dip into its cap bank, using 60% of the balance. 
North Wildwood uses no utilities in its $33.3 million 2021 budget. The budget required an almost 3-cent increase in the tax rate, moving from 0.7750 t0 0.8034, up 0.0284 or 3.66%. 
The city pointed to the need for large capital projects for which there would not be associated bond ordinances. The city saw a $26 million increase in ratables, the highest one-year increase in a decade. 
The budget used $3 million of the $6 million available balance in the general fund surplus.
Wildwood Crest had an increase of three-tenths of a cent, from 0.679 to 0.682, or 1.2%. The $25.75 million budget is lower than 2020 by $800,000. 
With a very sturdysurplus balance, $10.2 million at the start of 2021, the Crest used only 3.3%, or $3.4 million, as revenue for the 2021 budget. 
The borough does not make use of any utilities. 
Revenue from taxes, $15.9 million, is 62% of the total expected revenue. The cap bank provides a solid cushion, with a balance of $1.2 million.
Wildwood increased the local purpose tax rate by 1.9 cents, going from 1.540 to 1.559. The city has both a water utility, budgeted at $9.5 million, and a sewer utility, at $6.0 million. 
This year saw a small increase of $3 million in new ratables, which represents a positive change from a decade of annual losses in property values. 
The $31.2 million budget is supported by $22.8 million in tax revenue, or 73%. The city had a 2021 surplus balance of almost $4 million, of which it used 58% as revenue in the budget. Its cap bank is healthy, with a $1.5 million balance.
West Wildwood’s new commissioners did not inherit a strong financial position for the borough. The tax increase, in 2021, was 5.54%, going from 1.084 to 1.144, up 6 cents. 
The borough has a dedicated sewer utility budget, at $680,000. 
In 2020, the borough couldn’t control expenses in a way that would offset lost revenues, so the current fund surplus lost 32% of its value, down from $488,975 to $333,673. Of the remaining balance, the borough used 63% as revenue in the budget, putting a high premium on this year’s budget to return the surplus at the end of the year. 
The balance without what was used in the budget is down to $40,000. 
The borough had to make use of cap bank flexibility in the 2021 budget, leaving the balance at only $19,428. 
The $2.9 million budget depends heavily on taxes for 84% of its revenue. Grants that come in over the course of the year could lower that percentage.
Cape May had no increase in its local purpose tax. The city maintains three self-financing utilities – water and sewer, beach, and tourism – that are paid for through rents and user fees, which add to $11.14 million in combined budgets. 
The general budget without these utilities is $20.8 million, supported 51% by tax revenues. 
The city used 44% of its $7.8 million surplus as revenue in the 2021 budget. The city’s track record is strong on replenishing the surplus dollars used at the end of the year, even in 2020. 
Major expenditures loom, as the city must deal with the expansion and modernization of its water system, which supports most of Cape Island.
West Cape May saw a nearly 5% increase in its tax rate, in 2021, moving from 0.3720 to 0.3900, up nearly 2 cents, at .018. The borough has a $3.2 million current fund budget, with a little over half a billion dollars in ratables. 
Tax revenues fund 63% of the adopted budget. 
The borough used 54% of its $1.1 million surplus, or $540,000, as revenue in the budget. There is a dedicated water/sewer utility budgeted at $1.3 million. 
The borough is a customer of Cape May’s water system and uses the city department for policing. In 2021, the borough used a small amount from its cap bank, which has a balance of $179,000.
The  county’s smallest municipality, Cape May Point, has a 2021 budget that calls for a 5.76% rise in the local purpose tax, which moved from 0.2950 to 0.3120, or just under 2 cents. 
The borough has a water/sewer utility budgeted at $850,000 and funded by $755,000 in rents. 
The Point, like West Cape May, uses a shared service agreement with Cape May for policing and is also a customer of Cape May’s water system. 
The 2021 budget used 39% of the current fund surplus as revenue. The borough entered 2021 with a $617,000 balance in the surplus account. The total operating budget of roughly $2 million is supported 75% by tax revenues.
County
Cape May County approved a $182 million 2021 budget that includes a 3% tax increase. The county tax rate moved from 0.2270 to 0.2340, up 0.007. 
The county credits funds from the American Rescue Plan as the way it was able to lower the full 1-cent increase  in the introduced budget. 
The county budget depends on tax receipts for 75% of the adopted budget’s revenue. The budget makes use of 52% of the $25.4 million surplus balance.
To contact Vince Conti, email vconti@cmcherald.com.