News
Tax Nonprofits, Says Red Bank Councilman
By John Burton
RED BANK - An attempt by borough officials to enlist the aid of local legislators in challenging state aid cuts that will severely impact the municipal budget failed to garner any help.
Now, the councilman who first broached the idea of asking the state for special consideration due to the number of nonprofit organizations that hold tax-exempt properties in the borough has suggested asking legislators to introduce bills that would require nonprofits to contribute some money to their host municipalities.
Councilman Michael DuPont, a Democrat, who also chairs the council's finance committee, recently sent a letter to state Senator Jennifer Beck and Assembly members Declan O'Scanlon and Caroline Casagrande (all R-12), whose district includes Red Bank.
DuPont's letter suggested that the legislators and their colleagues in Trenton consider amending current law and allow municipalities to charge currently tax-exempt property owners an estimated one percent tax on those properties, or to require the owners to contribute a payment in lieu of taxes, as two not-for-profits in the borough now do voluntarily.
"I think our legislators in Trenton need to think of other ideas and ideas outside the box," DuPont said on Tuesday.
The borough is facing difficult financial times, which have been compounded by Gov. Chris Christie's announcement last month that he would strip the borough of as much as $517,000 in state aid. DuPont and others have predicted that the revenue shortfall and the loss in aid will require dramatic cuts in spending, the possible elimination of additional jobs and other cost-cutting measures.
DuPont and Mayor Pasquale Menna said they would call on the local legislators to seek their help in challenging the state aid cuts. The local officials' argument concerns the percentage of property owned by not-for-profits, and exempt from property taxes. According to DuPont, 16.6 percent of the borough's real property, equaling $320 million in assessed value, is exempt from property taxes. The borough's entire property assessment stands at about $2.3 billion, he has said previously.
That amount of tax-exempt properties results in an annual loss of approximately $1.7 million to the borough, according to DuPont.
The borough serves as a regional hub, hosting a medical center, numerous houses of worship, cultural outlets and community organizations, which receive borough services, officials have noted.
But out of that group only two - Riverview Medical Center and the Monmouth Boat Club - contribute any payment in lieu of taxes, or PILOT.
When the mayor and council sent a letter to the legislators, the response letter - published in some local newspapers - was not what the local officials had hoped.
Beck's letter criticized the council for approving a salary increase for non-union employees in these difficult times. Beck's February letter stressed tough decisions have to be made in tough times. "...[S]ome draconian measures will have to be taken to rectify the bad decision made by the prior administration and the economic downturn," Republican Beck said, taking a swipe at the former Democratic governor, Jon S. Corzine.
DuPont's proposal would exclude houses of worship and other religious organizations and would be similar to what is being considered in other states, such as Hawaii and Kansas. In Massachusetts, Harvard University recently agreed to contribute a PILOT to the city of Cambridge, DuPont noted.
"We've cutting our operating expenses; we're cutting our payroll; we're reducing our debt," he said. "And yet there is no mechanism or tool that our state legislators or our governor has provided to us to offset that."
The point of his proposal was to begin a debate on the state level to help struggling municipalities.
The pending municipal budget will reflect the financial difficulties, and will call for employee layoffs and unpaid work furloughs, DuPont said.
Along with Beck, O'Scanlon and Casagrande, DuPont sent his letter to Senators Joseph Kyrillos Jr. (R-13), Sean Kean (R-11), the county's two other senators, and to Senate President Stephen M. Sweeney (D-3).
Beck was not immediately available for comment.
