Deferring tax hikes catches up to Medford

Medford Mayor Randy Pace says tax hikes could have helped.
Medford Mayor Randy Pace says tax hikes could have helped.

The township is looking at painful cuts because it kept its tax rate flat from 2006 to 2010.

Posted: March 11, 2012

There's budget trouble in Medford, an affluent Norman Rockwell suburb with two newly renovated fire halls, respected schools, and a variety of lush parks.

Despite the recent economic turmoil and the township's apparently insatiable demand for amenities, its tax rate stayed flat from 2006 to 2010 and went up only slightly last year.

And that is precisely why the Burlington County community now faces a financial emergency, say leaders of the five-member, all-Republican Town Council and a chorus of budget experts. They cite accounting gimmickry and quick fixes that seemed to balance the budget while the town sank deeper into debt.

"I was told repeatedly that Republicans don't raise taxes," Mayor Randy Pace said, referring to conversations with his political party leaders before he ran in November against their endorsed candidates.

Pace said tax increases when times got rough coupled with spending restraint could have saved Medford from the hard choices it now faces. Moody's downgraded the town's credit rating last year, and the finances still are not in order.

Politicians fear being labeled "a tax hiker" because they feel it means they are "almost guaranteed to get thrown out of office," said Patrick Murray, a political analyst at Monmouth University.

Before the economic downtown of 2008, a lot of towns used "one-shot gimmicks and borrowing to avoid raising taxes," he said. But when the bill collectors came calling, the focus turned to cutbacks. Unfortunately, he said, that often is not enough.

Now in Medford, a town a 23,000 with a quaint downtown and sparkling lakes, a tax increase is a must, said Town Manager Christopher Schultz, who was hired last year.

To address a nearly $6 million deficit, he recommended dismantling the Parks and Recreation Department and perhaps ending municipal trash pickup.

Some residents see the proposed tax hike and the cuts as a double whammy.

Cathy Schmitt, a nurse having lunch at a Medford cafe last week, said she was upset, but not at the "new regime." The current council is trying to "remedy what went wrong in the past" when residents "were too trusting" and unaware of the growing debt, she said.

Schmitt, a 16-year resident, said the municipal taxes were reasonable and should have been increased slightly over the years. Though she voted against a proposed tax increase last year, she said now she gets it.

Should taxes have been raised?

"I'm trained to advise yes," Schultz said last week. "If you raise it a penny or 2 cents, maybe 3 or 4 cents, . . . we wouldn't be in the trouble we're in."

Spending also needs to be reined in, he said, noting that it doubled from 2006 to 2010.

The town recently acquired a fire hall, upgraded another one, and bought a $660,000 artificial-turf field. It also struggled with higher-than-average legal bills and the cost of a rapidly growing police force.

"So now we have the hole," Schultz said of the nearly $6 million deficit. Schultz, formerly Moorestown's manager, knows of no other town in the area in similar straits.

Schultz proposed a tentative $18.4 million budget, down roughly $3.5 million from last year.

The average tax bill last year was $9,000 on a home assessed at $200,000, the town average, but properties have since been revalued. He has tentatively proposed a 6-cent increase in the tax rate.

Missing from this year's budget proposal is the use of a school-tax deferral, dubbed "accounting gimmickry" by Bill Love, a retired chief financial officer from Medford who frequently tangled with the previous mayor and council. Taxes the town collected for the school district were counted as an asset to make the budget appear balanced, he said. The amount was later subtracted when the money was turned over to the schools.

Pace said the township's previous leaders used those tactics because they were being groomed for higher office and were warned not to "breathe a whisper of a tax increase" while continuing to give the public what it wanted.

"That's a problem all over the country - the desire to make everyone happy so that you can get their vote," Pace said. The debt was ignored, he said.

Chris Myers, who was on council for 10 years, including several stints as mayor, resigned last year after a sex scandal involving an alleged male escort. Myers, a Republican, ran for Congress while mayor. He could not be reached for comment.

Scott Rudder, a councilman who was mayor between 2005 and 2008, went on to become a state assemblyman, and former Councilwoman Maryann O'Brien was elected a county freeholder in 2010. Neither returned calls for comment. Another former mayor, Bob Martin, also could not be reached.

Pace was named mayor in January after he and two running mates - Chris Buoni and Frank Czekay - campaigned against the old regime and without the county GOP committee's endorsement.

Pace said he wouldn't shy away from supporting a tax hike - or deep cuts - to avert insolvency and a potential state takeover. A referendum will be held next month to get voters' permission for a yet-to-be-determined increase.

To remove some of the sting, the council has already laid off four officers from the 33-member police force, stopped brush pickup, and made parks and recreation cuts. If voters defeat the request, municipal trash pickup likely will be gone, too.

Until last year, towns could simply raise taxes to balance budgets or pay bills. Many, including Evesham and Moorestown, imposed considerable tax hikes for a year or two after the recession hit.

But then Gov. Christie stopped the practice. Now towns must get voter approval before raising the tax levy by more than 2 percent.

Last year, Medford was one of 14 towns that tried to get voters' blessing. But residents overwhelmingly rejected a tax hike that would have brought a $325 increase for the typical property owner.

Pace said council must try again. This time, he said, it plans to better educate the public and be transparent about all the options.

Buoni said he was optimistic the public would be more receptive. Council, he said, is laying out all the facts and gathering public input.

"As it stands today, if everything was left alone, Medford Township is financially insolvent," he said. "We do not have the ability to pay our bills without significant changes."


Contact Jan Hefler

at 856-779-3224, jhefler@phillynews.com, or follow @JanHefler on Twitter. Read her blog at philly.com/BurlcoBuzz.

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