Tax cap hits rich towns

The days of on-demand trash pickup are over for residents of Millburn, the Essex County community best known for the Mall at Short Hills, where Cartier diamonds meet Dior fashions.

Homeowners in the town of 18,700 people 20 miles west of Manhattan were accustomed to summoning a public-works truck at no charge to collect whatever they neglected to set out on garbage day.

On Jan. 1, a cheaper private hauler will replace municipal employees collecting trash in the township, whose $170,000 annual median household income is more than triple the national average.

"You would call and they would come, and that's not going to happen," said Mayor Sandy Haimoff, 73. "People will realize they have to get the garbage out the night before."

While poor cities such as Camden and Newark struggle with reduced state aid that has forced them to cut police forces, some of the wealthiest towns in the second-richest state also are rethinking expenses as they cope with Gov. Christie's 2 percent cap on annual property-tax growth. The first-term Republican cut aid to towns last year and limited annual increases in local taxes, forcing mayors to weigh worker firings and program reductions.

Montclair, a community of about 37,000 people 12 miles west of Manhattan, has shed 10 percent of its workforce in two years, said Township Manager Marc Dashield. This year it cut library funding to a state-mandated minimum of $2.36 million, from $3.13 million, and scrapped the budget for its arts council and First Night, an alcohol-free New Year's Eve celebration.

"We had to make a decision and say, 'These are the core functions of government,' and anything outside was open to examination," Dashield said. "The arts council was a great thing for this community. First Night was a great thing for this community. But it was outside the parameters."

A property-tax cap in New York that will take effect Jan. 1 will have a similar impact, Moody's Investors Service said in a July report. Gov. Andrew Cuomo signed a law in June that prohibits any annual increase above 2 percent or the rate of inflation - whichever is lower - unless 60 percent of voters agree. Moody's cited that cap this month when it downgraded the credit ratings of the village of Suffern and the city of Long Beach.

In New Jersey, Moody's gave Medford's rating a negative outlook in November after the town deferred school-tax payments. In June, the company lowered its rating on the Morris County township of Long Hill to Aa3, the fourth-highest investment grade, from Aa2.

The two towns had eliminated jobs and reduced garbage collection and other expenses. Analysts cited high debt and, in Long Hill's case, few prospects for revenue growth.

Almost 60 percent of U.S. municipal officers said finances were worse in 2011 than in 2010, according to a September survey by the National League of Cities. Two in five reported that their city cut services other than public safety and social programs, including funding for libraries and parks and recreation.

The financial strains prompted New Jersey voters in November to approve a merger of Princeton Township and Borough, after it failed in at least three earlier referendums. Local officials estimate the combination will save as much as $3.1 million a year.

"It's about making choices. We can't any longer think we can sit around and have everything we want and pay for it," Christie said in a November public meeting with the Princeton mayors. "We can't try and govern in a way that makes everyone happy."

With a median household income of $70,378 in 2008, New Jersey is the second-richest state in the United States, after Maryland. It has the nation's highest property taxes, averaging $7,576 last year, according to the state Department of Community Affairs. The levies, the main source of funding for schools and towns, have climbed 70 percent in the last decade.

Millburn's average $19,441 property-tax bill was the third-highest in the state last year, while Montclair's $16,413 was 12th-highest. In Princeton, the average was $15,255 in the borough and $16,212 in the township.

In Upper Saddle River, ranked by Bloomberg Businessweek as the 21st-richest U.S. zip code, fifth graders are learning on iPads bought by the school district and donors. Administrators don't know whether they can afford to buy the devices for all of their students, said Angela Sacco-Torres, president of the school board and co-owner of JMT Mortgage Consulting.

The town of 8,200 in northern Bergen County has been hit by job losses in financial services, Sacco-Torres said. While total employment in New Jersey fell 3.5 percent from 2004 to 2009, the state's financial-services industry lost 6.1 percent of its jobs in that period, according to the New Jersey labor department.

"Upper Saddle River was a new-money community," Sacco-Torres said. "We had a lot of people who worked on [Wall] Street and then the economy went southward. A lot of people in town are struggling. A lot of people are losing their homes."

Upper Saddle River residents voted in November not to renew a tax for parks and recreation.

"For the next five years or so, people are going to be very wary about any tax increase," Sacco-Torres said.

Harding, a Morris County township about 45 miles from Manhattan that has an average residential property value of $1.3 million, merged its municipal-court services with three other towns' in 2010. This year, the council closed its public tennis courts rather than spend $50,000 to resurface them.

"Do we just remove it or do we repair it?" Gail McKane, the township administrator, said this month. "How does the community feel?"

Millburn estimates saving $800,000 a year when the private trash hauler takes over, and the mayor isn't expecting gripes. During the summer, officials ended Saturday drop-off for recyclables, and with it overtime costs for sanitation staff.

"I have not received one complaint from the residents," Haimoff said.