The task of putting together a 2021 budget is about to begin in earnest. School boards, municipal bodies and county officials will all start trying to gauge expected revenues and match them to necessary expenses. It’s an annual cycle made all the harder this year by the uncertainties of a pandemic that is showing no signs of leaving anytime soon.
We made it this far with a combination of expense controls coupled with minimal federal and state emergency funds. We have also benefited from federal forbearance programs that have shifted the burden of paying property taxes to services even when the homeowner is delinquent and the escrow account is empty.
We know that many businesses are operating with revenue streams at only a fraction of their normal level. We hear regularly from landlords about their pain as a number of tenants fall significantly behind on rents but are protected from evictions by health emergency measures. How many county homeowners would be facing foreclosure if not for federal forbearance programs is unclear, but we know they exist.
The protections put in place to deal with the economic fallout of the health emergency don’t always allow us to see clearly the extent of economic damage that’s out there. Those protections will expire at some point.
As we look to local government budgets in the next year, we see state aid to municipalities that is likely to remain flat and school funding that is scheduled to continue to decline based on decisions that predate the pandemic.
An economy built around small businesses has been severely damaged. We know a number of businesses have already closed for good. Others remain on life support as a new surge in COVID-19 cases brings with it more threats of business restrictions and unemployment.
The danger is that property taxes become the most available source of new revenue to close local government budget holes. We hear frequently that property taxes in Cape May County are among the lowest in the state. That is little comfort in a state that has the highest property tax burden in the country.
There is no silver bullet for solving what will undoubtedly be a significant budget challenge in 2021.
As we peel back the onion on the damage caused and still being caused by the pandemic, the financial harm done to county families will become increasingly apparent. Property tax increases merely push the burden of adjustment elsewhere.
In the short run municipal and county officials must look to cuts in expenses, greater dependence on shared service agreements and reductions in staffing. Property tax increases in this uncertain environment are a road to more economic harm. Every business and family in the county have had to adjust to the economic hardship caused by the pandemic. However difficult the task, government must find ways to adjust to the new realities.
This is also the time to seriously engage the community on measures that will reduce the duplication of expenses associated with the county’s myriad of municipalities and school districts. The concepts behind our successful move to central dispatch need to be applied broadly if we wish to bend the curve and potentially achieve property tax reductions.
The budget challenges are likely to continue as COVID-19 ushers in a second wave of economic dislocation and uncertainty. Certain steps must be taken in the short term. This is the best time to begin a serious dialogue on restructuring the expenses that drive the property tax rate.
Adversity may open our eyes to possibilities that we choose to ignore in more settled times.
