05 July 2010

A new way to fight growth?

The state is moving close to a 2% cap on the growth of municipal budgets with a few special exceptions like capital improvements and pensions.  Since I am not privy to the details, I can only speculate.  But this seems like it makes it easier for towns to reinvest in crumbling infrastructure and community centers but harder to deal with population growth that will require more services, policemen and teachers.  That could disincentivize the generosity of planning boards that used to encourage growth as a way to improve ratables.  Am I missing something?


Anonymous said...

Wouldn't it also mean that no town would want to reduce its budget in a good year, because if it was a mistake it would be even harder to make it back the following year?

Anonymous said...

Yes, you are missing something.

First, few if any towns in NJ have a zoning scheme based on fiscal impacts and ability to finance public services to serve zoned growth (one objective of a capacity based, timed/phased growth approach).

Second, the NJ MLUL restricts the ability of towns to extract impact fees to pay for services of growth. This structural deficit is known as the "ratables chase" that is the engine of local property tax increase.

Third, even if the fiscal reality and the economics of the ratables chase are recognized at the local level, changing zoning to reflect fiscal reality is a very slow process. And Permit Extension Acts have locked in growth approvals that can not be reduced.

During lags in zoning revisions, growth will occur.

The timing mismatch between an immediately effective state imposed spending cap and long range zoning changes will create fiscal chaos.

This can only lead to further erosion of public services as growth generates more costs than can be serviced under the cap.

And then, consider the effect of tax appeals as the real estate and housing bubble furrther deflates.

And economic recession drains state aid.

Basic mathematical reality leads to rather dire conclusions.

I am disppointed by the fact that I have seen virtually no discusssion of this set of issues.

Perhaps economists and planners at Bloustein could lead such a dialogue?
Or am I missing it?