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Cape May Taxpayers Assn.: Change Budget Process

By Vince Conti

CAPE MAY – Cape May City Council’s Dec. 3 meeting began with a presentation by the Taxpayers Association. Dennis Crowley prepared and presented almost 60 PowerPoint slides (http://bit.ly/36gA75B).
The thrust of the presentation was to demonstrate the “impact of Cape May’s budgeting process on the property taxpayer.” The conclusion drawn in the presentation is that inequities exist in the processes, which allow many expenses, which might be accommodated in other ways, to default to the property taxpayer instead.
Crowley demonstrated, with data from 2001 to 2019, that city government costs not only represent the largest component of the property tax bill, but also that they have escalated more rapidly than all other components, with a cumulative increase of 140% over that period.
Crowley then showed that the ratable base of $3.3 billion rests most squarely on the residential homeowner, with 78% of the taxes collected coming from the resident homeowner. He also argued that the total ratable base loses 13% of its value to tax-exempt properties, increasing the burden on the taxpayers.
Having demonstrated the escalating burden and where it most lies, Crowley moved to an analysis of municipal services. Showing a municipal budget, which has grown from 2009 to 2018, from $23 million to $30 million, Crowley’s data demonstrated that the city’s three utilities, meant to transfer expenses to the actual users of service, cover no greater portion of the total expense today than they did a decade ago.
Appropriations, in the decade from 2009 to 2018, rose by 30%, with the bulk of the increase in the general operating budget. The problem is that the local revenue stream, dependent on local property taxes, becomes the default funding source for the escalating costs.
For Crowley, part of the reason for the default status, which allocates most new expenses to the property tax revenue stream, is the lack of effective cost-center budgeting. Cost-center budgeting would aggregate expenses in terms of core municipal functions, analyze the beneficiaries of those functions, including both resident and external beneficiaries, like visitors and tourists, and attempt to allocate those costs based on that analysis. 
In effect, Crowley argued that a large part of the burden of a tourist-based economy is passed on to the property taxpayers almost by default, without effective analysis and public debate about how other revenue streams might be used.
One example, presented by Jules Rauch, would be to have the city take advantage of a state allowable maximum municipal occupancy tax as a user revenue stream to offset tourism costs.
Crowley never argued for a specific alternative. What he did was demonstrate a bias in the system that bypasses debate and consideration in favor of the easiest alternative, allowing new expenses to be part of general operations, and fund it with property tax revenue.
Looking at the city’s demographics, Crowley’s presentation showed how the city’s resident population is declining, and simultaneously aging. With 21% of the city’s housing units owner-occupied, the property base is largely non-resident owned, with over 50% owned by individuals residing elsewhere in New Jersey or Pennsylvania. The property tax burden on the aging permanent resident population is a serious problem.
That returns the discussion to the core issue of the cost of municipal services. The presentation states the belief that the scope of municipal services expense is driven largely by the tourism industry “and its 50,000 daily customers.”
The message of the presentation is that is not fair and equitable to have a budget process in which “the costs of those services are largely borne by the 3,800 local property taxpayers.”
Crowley concluded by reminding council of pending new expenditures that “we all know” will have to be addressed. In that list are projects currently being debated before council, including the proposed public safety building and the transformation of the Franklin Street School into a branch of the county library system.
Other items on his list have not made it that far, but loom as major near-term expenses. These include water system repairs and beach and Promenade improvements.
The presentation could have named items other county communities are wrestling with, including effective responses to sea-level rise and new efforts to enhance flood mitigation results.
The presentation ended with a call for the creation of a Municipal Taxation and Revenue Study Committee composed of a broad array of city stakeholders, committed to transparency through public hearings, and charged with a “comprehensive analysis of our current budget practices, and the community it serves.”
The ultimate goal for Crowley: “A fair and equitable revenue plan for Cape May.”
To contact Vince Conti, email vconti@cmcherald.com.

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