Cape May Proposes 2.5 Cent Tax Increase

CAPE MAY- The City Manager’s proposed 2010 budget here includes a 2.5 cent increase in the local purpose tax rate.
However, following a revaluation of properties in Cape May, that increased the assessed value of properties from $2.2 billion to $2.7 billion, the local purpose tax rate will reflect a 4.3 cent decrease, lowering the rate per $100 of assessed value from 32 cents to 27 cents.
A property with an assessed value of $500,000 will pay $138.50 in local purpose taxes to the city. The local purpose tax will raise $7.7 million or about 50 percent of the city’s budget, a figure considered low among municipalities in this county.
A continuing decline in tourism and the national recession has impacted Cape May’s budget for the second consecutive year. The city saw a 3 percent decrease in room tax revenue, down $37,000 to $1, 064,987 and a 3 percent decrease in parking meter revenue down from $993,000 in 2008 to $965,000 in 2009.
The city’s construction office saw a decrease in income from building, plumbing and electrical permits from $341,000 in 2008 to $222,000 in 2009.
Beach tag revenue increased from $1,745,000 in 2008 to $1,915,000 in 2009 due to a price increase.
The city’s total budget is $14.9 million of which $6.3 million covers salary and wages. Other expenses total $8.6 million.
The city ends the year with $3 million in its surplus account of which $2 million is used for the 2010 proposed budget leaving $1 million in the fund.
In his annual budget message, City Manager Bruce MacLeod said Cape May must increase revenues to maintain its current level of services to residents and visitors. One suggestion has been increasing the number of parking spaces and meters. (See related story).
MacLeod said controllable city government expenses increased $37,000 over 2009 from 41 departments or appropriations.
Of uncontrollable city expenses such as insurances, Social Security taxes, pension obligations, capital improvement fund, debt service, cost of a revaluation and master plan expenses is increasing $456,000 over last year. MacLeod said health insurance costs were increasing by $168,000 with a $69,000 increase in retirement payments.
The police department has 29 full time personnel and 10 seasonal. The police budget is increasing $66,000 to $2 million.
The fire department has 14 full time employees and six part time. The water/sewer department has 10 full time employees.
In all, the city has 108 full time employees, 13 part time and 145-150 seasonal employees. Total wages for all city employees are proposed to increase by $145,000.
The city received $75,000 less on its investments and anticipates $150,000 less from rentals of city-owned properties on the Promenade due to the impending demolition of Convention Hall which terminated three leases: Pete Smith’s Surf Shop, the Oasis and Tish’s.
The second year of declining water use, a result of fewer visitors to the city, will necessitate another increase in water/sewer rates, expected in February. The city water/sewer utility budget totals $6.2 million with $934,000 earmarked for salaries and wages.
The city pays the county Municipal Utilities Authority $2.5 million per year for sewage treatment which represents 69 percent of the sewer budget. Last year, council doubled the facilities charge on water bills.
With water consumption continuing to decline, the water/sewer budget is short $282,000.
The city’s beach utility budget totals $2.1 million with salaries and wages totaling $1.2 million, up $74,528 from 2009.
Mayor Edward J. Mahaney Jr. said the city needed to review and revise its priorities for programs and services keeping in mind changes in customer patterns and trends and changes in technology,
Auditor Leon Costello said the Cape May was “very sound financially.”
The mayor and city council will have at least two months to suggest changes to the proposed budget.