Pensions, health care drive municipal tax rate increase in Pennington

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Pennington property owners may face a 4-cent municipal tax rate increase.

The Pennington Council introduced its $4.43 million municipal budget for 2023 at a meeting on March 6. A public hearing on the budget is scheduled for April 3.

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“I don’t like presenting a 4-cent increase in taxes, but you know what with how our budget is made up, we are skimping and there is no room to move,” Councilman Charles Marciante said. “The state mandates this and mandates that, pensions went up and healthcare went up.”

In 2023, the municipal tax rate is projected to rise from 50 cents to 54 cents per $100 of assessed valuation. The owner of an average home assessed home at $487,000 will pay $2,629 in municipal taxes, a $194 increase from 2022 municipal taxes.

Municipal taxes are one item on a property owner’s total tax bill, which also includes school taxes and Mercer County taxes.

The amount an individual pays in taxes is determined by the assessed value of his home and/or property, and the tax rate that is set by each taxing entity.

Pennington’s municipal appropriations are expected to increase by $300,000 from $4.13 million appropriated in the 2022 budget to $4.43 million for 2023.

“Salary and wages are up about $58,000 that is for adjustments for both the bargaining unions and non-contractual employees,” said Pennington CFO Sandra Webb. “Other expenses are up roughly $242,000 that is related to health benefit costs, liability insurance, pension costs, costs for providing for first aid, and also gasoline costs.”

Webb noted that some of the things that are driving the municipal tax rate increase is a decrease in revenues from the uniform and construction code, decrease in receipts from delinquent taxes and the less use of the American Rescue Plan (ARP) funding, which is being used in the water and sewer utility.

“When we go through the budget process, we talk about the things we have no control over. That for us comes to $1.7 million of this budget,” she said. “That accounts for things like utilities and debt service, money we provide for the library, and of course insurance and pensions. [Insurance and pensions] are what go up historically every year for us.”

The borough’s residential and commercial owners support the municipal appropriations through a tax levy.

In 2023, the tax levy is projected to be $3.05 million, a $229,683 increase from 2022’s $2.82 million that residential and commercial property owners paid in 2022.

On the revenues portion of the 2023 budget, Pennington will use $496,084 from the surplus as revenue in the budget. In the 2022 budget, officials used $492,299 from the surplus funds as revenue in the budget.

Other projected revenues in the 2023 budget include $197,365 in state aid; $82,000 in uniform construction code fees, which is a decrease from $110,00 in 2022; $62,000 in trash collection fees and $57,500 in reserve for liquor license.

On the appropriations side of the budget for 2023, the budget will fund $753,000 in police salaries and wages, which is a $72,000 increase from 2022; $327,000 on municipal debt service; $292,000 in road repairs and maintenance salary and wages; and $255,000 on payment of bond principal.

Gasoline and lubricants increased by $20,000 for a projected expense of $46,000 in 2023, $219,814 is projected be spent on shared service agreements, and $231,118 on employee group health.

“We have looked at alternatives to reduce the cost of health insurance and other items in this budget, but this is a prudent budget not only for 2023, but looking forward to 2024, so that you are not in a dire situation requiring you to make very difficult decisions,” said Donato Nieman, interim borough administrator.

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