In Burlington County, a 458 percent tax hike with Christie’s blessing

When two New Jersey towns asked voters to approve a property-tax hike last month, Gov. Christie scorned them.

The state's other 564 municipalities didn't seek permission to exceed the 2 percent cap on tax increases. Didn't Medford and Lawrence Townships know how to cut spending?

But Christie was mum a few days later when his administration quietly gave Chesterfield the go-ahead to raise municipal taxes a whopping 458 percent. The average tax bill in the tiny rural Burlington County community will jump nearly $1,000.

"Wow, whew," Medford Mayor Randy Pace said last week, as budgets across the state were being finalized, when he learned about Chesterfield's numbers. Medford voters agreed to a 30 percent tax increase after painful debate.

"We were vilified for what we did," Pace said, referring to Christie's lambasting town officials on radio broadcasts. But if Chesterfield needs to raise its tax that much, there must be a reason, Pace said.

Like Medford, there are special circumstances at work in Chesterfield. Neither town has raised taxes for about five years and both now face fiscal challenges. But unlike Medford, Chesterfield didn't need voter approval to fix its finances.

Chesterfield is one of 18 municipalities statewide that enjoy a little-known exemption to the tax-hike cap. Towns and boroughs are exempted when they have a tax rate of less than 10 cents per $100 of assessed real estate value, according to the Division of Local Government Services, which approves municipal budgets.

Most are tiny and offer few services.

Chesterfield, whose population of 4,600 enjoys no municipal trash collection, adopted a $4 million municipal budget last month that called for the tax rate to jump to nearly 30 cents from 5 cents. For property assessed at the township average of $396,900, municipal taxes will go up $961, to $1,171. County and school taxes are still being calculated, but the average overall tax bill last year was $8,623.

Chesterfield Mayor Michael Hlubik said the all-Republican town committee "didn't have much choice." For the last five years, taxes have been relatively flat, thanks mostly to a windfall from construction fees from Old York Village, a projected 1,200-home development. "We had a surplus ... so basically the town was paying the taxes for the people," said Hlubik, a high school teacher of agricultural science.

But when the real estate market slowed, that excess began to dwindle, he said. "We could easily take our surplus and use it all this year, but that wouldn't be a wise financial decision," he said.

Hlubik, who's been on the township committee 12 years, said he was shocked when only about 15 people attended the budget hearing and only a few complained about the proposed rate hike. They "were upset because a couple of years ago they had an increase because of the new school. ... If I wasn't sitting on the committee, I'd be angry, too. But there's no fluff we can knock out. This budget is bare-bones," he said.

Minutes of the meeting show that only five taxpayers spoke. Resident Alex Robatin said the "initial hit" of the tax increase would be hard. Sharon Cosmo said school taxes also had gone up and she had seen a lot of houses for sale.

When tax bills come out this summer, Hlubik said, he expects his phone will be ringing off the hook.

Committeeman Rich LoCascio, a certified public accountant who was elected less than two years ago, said the town had to make tough decisions.

"The lesson we have learned ... is that construction fees are not a sustainable revenue option," he said. "The tax rate went up because the surplus went down, not because spending went up," he said. Over the last two years, the spending plan has actually decreased.

Next year, according to law, the town must abide by the cap or hold a referendum to exceed it. But taxes should stabilize by then, LoCascio said, because the committee "took a good hard look at what the surplus is and what we can realistically replenish."

Medford officials also believe taxes will stabilize next year, after this year's tax hike helps to repair the budget. They were forced to address a $6 million deficit created by past spending and a failure to raise taxes, even gradually, over a half-decade, they said.

Other South Jersey towns exempted from the cap are Shamong, New Hanover, Washington Township, Woodland, and Bass River. In Shamong — where taxes are still being calculated due to a reassessment — the rate is about three cents per $100 of assessed real estate value. But Shamong uses state police patrols and does not offer municipal trash pickup.

Shamong administrator Susan Onorato said the cap exemption for small towns was justified.

"If we had a big expense and needed to raise it up for whatever reason, we'd have the added expense of going out to referendum for it," Onorato said. The town likely couldn't afford it, she said.

There were many more exemptions and loopholes in previous cap laws, said Ben Dworkin, director of the Rebovich Institute for New Jersey Politics at Rider University. The Christie administration's measure, he said, "really clamped down on these exemptions. … It had more teeth." But, he said, some exceptions are necessary.

The governor is "not worrying about the tiny towns" skirting the law, he said. "He wants to highlight the larger towns that make a larger narrative that portray him as a governor who stood up against property-tax spending."

Christie's office did not respond to a call and an e-mail requesting comment.

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