Millville town officials on Tuesday sought after ways to cut spending and discussed raising comparatively low tax rates to cover a potential 2008-fiscal-year budget shortfall. The need to add staff or take some positions full-time and extra engineering costs that come with development have especially stressed town spending proposals.
If the fiscal 2008 budget was approved as presented this week, with it’s $460,000 spending plan, Millville would face a nearly $80,000 shortfall.
“We’re going to have to do something,” said Millville Town Manager Linda Collins. “It’s getting so busy.”
Millville’s apparent financial woes might seem mysterious to some who see development — and the taxes that come with it — as a funding mechanism for the town. More than 6,000 homes have been proposed within town limits, according to officials Tuesday, and many have already been approved, including roughly 2,500 for Millville by the Sea alone. Fees are charged for permits and merely to submit a plan and Millville — like all municipal governments in Sussex County — receives 1.5 percent of the sale price of property in transfer taxes after each time that property changes hands.
Millville expects to bring in $500,000 next year in transfer taxes, according to the preliminary budget proposal. The town received had received just more than $493,000 from the tax as of Dec. 31, after receiving just more than $502,000 last year.
But despite the transfer tax revenue that will likely, with development, climb in the near future — something that cannot be said for most neighboring towns or the county — the town would be in bad shape next year.
Much of the revenue generated through permitting fees and submission charges is reserved to cover service fees needed to facilitate development. Millville plans to spend $100,000 next year on consultants — it had already spent about $59,000 in the 2007 fiscal year, through Dec. 31. In the proposed 2008 plan, town officials have budgeted $207,000 in revenue from building permits, site plan review fees and subdivision fees.
While fees and property tax revenue can be used for any purpose, transfer taxes are a binding revenue source, meaning a significant portion of them can only be used for capital costs and certain operating expenditures, such as public safety, public works and economic development.
Millville does not yet have a police force or a public works department that could benefit from the extra funding. More than $73,000 has been earmarked out of transfer taxes to be used to someday build a police force and the town has generated nearly $1.5 million to supplement what Sussex County calls a “rainy day fund.” But that money might sit there for a while. Town officials expressed dismay Tuesday and said they felt cornered by the restrictive nature of the tax.
“It is startling how much restricted revenue there is there as we move forward,” said Deputy Mayor Joan Bennett.
An example of the lopsidedness of town revenue sources: After the 2006 fiscal year, according to documents prepared by the town’s Georgetown accountant, Millville had a fund balance of more than $1.2 million. But only $162,000 was available for unrestricted use; more than $1.1 million came from a build-up in transfer tax revenue. The town plans to only receive $65,000 in property taxes next year, a number that is drastically lower than the budgeted, and restricted, transfer tax figure.
More properties will certainly lead to higher property tax revenue, some noted. But even after making some cuts, officials began to discuss a property tax raise. (Cuts included cutting its planned Millville Volunteer Fire Company donation in half. Millville now plans to donate $2,500 next year instead of the $5,000 it approved for 2007.) Millville’s current property tax rate of 20 cents per $100 of assessed value is about half of the Sussex County rate of 40.7 cents per $100.
“We get people that are buying new properties,” Collins said, and, “They called us when they got their tax bill because they thought it was a quarterly bill. “We’ve got to do something. It looks like we have no choice.”
Some officials, though, were wary of a tax increase.
“You’d have to convince people that they are getting something other than their tax bill,” Town Councilman Gerry Hocker said.