CAPE MAY — City Manager Bruce MacLeod presented a $16 million budget to City Council on Tuesday that would increase the tax rate by 1.5 cents for each $100 of assessed valuation.
MacLeod said the city is in “a sound financial position” with a budget that includes no layoffs and provides the same services as 2012. The tax-rate increase follows a 1.1-cent jump last year.
“A property with an assessed value of $500,000 will pay an additional $75 for the year in local purpose taxes based on a 1.5-cent increase, or $6.25 per month,” MacLeod told council.
MacLeod said the budget would raise the tax rate from 29.4 cents for each $100 of assessed valuation to 30.9 cents, or 5 percent. That means a $100,000 home would see the tax bill go from $294 to $309.
But the average residential assessment here is $628,863, which results in a tax bill of $1,940. The average assessment in 2012 was $630,337 and it carried a tax bill of $1,853, for an increase of 4.6 percent.
It could be a lot worse, as MacLeod said about 47 percent of the budget is paid for by revenues mostly funded by tourists such as room taxes, parking meters, traffic tickets, mercantile licenses and the like.
The budget would rise from $15.6 million to more than $16 million, or about 2.5 percent. The increase is fueled by higher taxes. At $8.6 million of the budget, the increase in taxes is $432,054. Every increase in taxes of $280,000 adds 1 cent to the tax rate.
The manager prepares the budget, but now it is in the hands of City Council, which can make changes before the budget is introduced Feb. 19. A public hearing and vote on the spending plan is slated for March 19.
MacLeod said his budget is $636 below the state-mandated cap that limits tax levy increases to 2 percent per year. MacLeod said room tax, parking-meter and beach-tag revenue rose in 2012, while construction fees and investment income declined.
Borough Auditor Leon Costello called it a very sound budget that could help improve interest rates this year when the city goes to permanent financing for the $10.5 million convention facility.
Mayor Ed Mahaney said the large surplus, leaving behind $1.4 million while using $2.1 million, also will help bond rates.
“That $1.4 million will be a major criteria in getting us an improved rating,” Mahaney said.
Salaries and wages make up $6.3 million of the budget, an increase of just $13,555. MacLeod noted attrition has been used to cut labor costs, with a 5 percent reduction in the full-time work force since 2008.
The largest increase is in nondiscretionary spending line items that include debt service, pensions, insurance, payrolls taxes and many others. They rose by almost $450,000 to $7.7 million, a 6.2 percent increase.
Discretionary spending that the city has control over rose by only $45,751, to just over $2 million. MacLeod said this is up 2.2 percent.
The city has a healthy surplus of more than $3.5 million. MacLeod proposes to use $2.1 million to fund the budget. The city would also garner almost $693,000 for supplying police serves to West Cape May and Cape May Point. State aid remains stagnant at $337,632, less than 3 percent of the budget. The tax collection rates remains strong at 98.1 percent.
“This represents the 15th consecutive year with a 98 percent or better collection percentage,” MacLeod said.
The city budgets a number of operations separately, including beach operations, water and sewer, and tourism. These are designed so users pay the costs. All four budgets combined total $26 million.
MacLeod’s Beach Utility Budget funded by beach tag sales totals almost $2.3 million, which is a $42,500 or 1.9-percent increase. The city sold just over $2 million in beach tags last year.
Council, however, has already approved a $1 increase for daily beach badges and $3 in-season seasonal tag increase. Added revenue, up to $142,000 a year, will go partly to constructing new restrooms on the beach. Salary and wages at $1.35 million of this budget are up $30,595, or 2.3 percent. The utility has a surplus of $309,532.
The Water & Sewer Utility Budget is almost $6.6 million. It rose by $126,685, or 1.96 percent. The sewer budget makes up $3.9 million of this budget and 68 percent of it goes to the Cape May County MUA. Salary and wages are $901,800, up 1.6 percent. MacLeod said no water or sewer rate increases are expected this year.
The Tourism Utility Budget that was set up last year so expenses at the new Convention Hall are paid by users of the building totals just over $1 million, down 1.38 percent. This includes almost $300,000 for salary and wages, down $26,000.
MacLeod also announced capital budgets, including $1.5 million for the city, $1.1 million for water & sewer, and $600,000 for the beaches. This includes money for road work on Hughes Street, a new bulkhead at Harbor View Park, a new floor at Lifeguard Headquarters, seawall improvements, and many other projects.
Budgets anticipate revenues similar to what was received the previous year, so these highlights are somewhat indicative of a chaotic year. The highlights include:
n Parking meters last year collected $1,085,000, $125,147 more than projections.
n A total of $1 million was anticipated from room taxes and $1,122,478 was received.
n Construction fees were $55,000 under projections at $179,887.
n Beach tags revenue was up, but only by $3,750.
n Interest income dropped to just $5,366 while $15,000 was expected.
n Court revenue was projected at $230,000 but only $217,000 came in.
n Delinquent taxes were expected to bring in $303,000 but $376,000 was received.
n Roller skating just started at the new Convention Hall and is expected to generate $40,000 in revenue and almost $50,000 should come in from weddings and banquets.
n The budget includes $120,000 for Convention Hall flood insurance.
Contact Richard Degener: