CAPE MAY — The city has a plan to solve its budget problems — one quarter at a time.

Other New Jersey towns struggle to deal with cuts in state aid, rising police salaries, skyrocketing pension costs and state-mandated budget caps. This city by the sea simply adds more parking meters.

City Council voted Tuesday night to add more than 400 new meters. Each will eat a quarter for every 15 minutes of parking time.

“We have to keep our revenue streams up and create new revenue streams because we won’t be able to go to taxpayers for increases,” Mayor Ed Mahaney said.

The city actually has been doing it this way for years: Using parking meters, traffic tickets, beach tags, room taxes and other fees to create a system in which tourists fund more than half the municipal budget.

“We have the best situation in the county, but it’s taken us 25 years to get to this point,” Mahaney said.

It means the city is somewhat insulated from what is going on in Trenton. It gets only $433,000 in state aid for an annual budget of $15.2 million.

The biggest problem for most towns these days is the state cap on spending and tax levies. The tax levy cap limits increases to 4 percent per year, but there is talk in Trenton of reducing it to 2.5 percent. That would mean towns would not be able to raise taxes every time more money is needed.

The answer this year in Cape May was to go to parking meters, a source of revenue that pulled in $965,000 last year.

The proposal approved by City Council on Tuesday night adds more meters and more spaces by replacing parallel parking on Beach Avenue and Gurney Street with angled parking. The city would pick up 334 spaces along Beach Avenue and Gurney Street and an estimated $150,000 in additional revenue.

A separate ordinance adds 80 more spaces on the east side of the city that Mahaney said would generate $70,000 to $80,000 per year.

A third ordinance picked up a few other meters around town, including 20 at the Cape May Welcome Center on Lafayette Street that will be turned on only in the evenings when the Welcome Center is closed. There were no revenue projections for that area.

Council also introduced a $15.2 million budget at the meeting that is under both state caps. It does raise the tax rate from 27.6 cents to 32 cents for each $100 of assessed value, but the budget does not even anticipate the new meter revenue, which Mahaney said will go into surplus to help next year’s budget. Borough Auditor Leon Costello said local taxpayers would fund only 42 percent of the budget this year, while the average in New Jersey is more than 66 percent.

Costello said he agreed with what Gov. Chris Christie is trying to do to control spending, especially possibly reducing tax levy increases to 2.5 percent. He also noted the city is in good shape because of its other sources of revenue.

“This is a caution for everyone. Without your own local revenue, you’ll have a hard time making your budget work. Financially, your future looks good, but you need to keep your revenue stream going,” Costello said.

It was done this year with quite a bit of opposition. East-end property owners did not want meters on their residential streets and hired attorney Sanford Schmidt to fight it. One argument is that meters are supposed to be in business areas to keep traffic flowing.

“There’re no commercial businesses in the zone. Just because tourists visit the area does not change the area to commercial,” Schmidt said.

Other arguments include the destruction of the historic character of the area, threatening the city’s National Historic Landmark status, pushing more motorists to other neighborhoods in search of free parking, adversely affecting property values, hurting tourism, destroying the quality of life and several others.

Council voted for the east end meters 3-1, with Councilman David Kurkowski voting no. He said the meters would be inappropriate for the area. Mahaney, Terri Swain and Neils Favre voted for them.

“Parking is one of the conundrums we have constantly wrestled with. However, there is a new 700-pound gorilla we’re wrestling with, and that’s the fiscal situation in the state of New Jersey. We need to raise revenues,” Favre said.

Schmidt termed the plan “possibly open to legal attack.” Historic preservationist Joan Berkey said meters would bring a “jarring level of inappropriateness” to the east side of town.

Some residents supported the new meters. Arlene Wilkie, who lives on the west side of town on Patterson Avenue, said her street has meters and the east end should, too.

“My objection is that one end of town is privileged over the other end of town. If the city determines enough revenue can be made, they should be put in,” Wilkie said.

Hughes Street resident Heather Furlin warned the city not to go too far or the tourists will stop coming.

“They’re providing the revenue we need to live here. You can’t price them out of the market,” she said.

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