Galloway Taxpayers - Are You Ready To Take On More Debt?

In October 2013 Galloway Council authorized the borrowing of as much as $1.58 million for tax-appeal refunds. On November 5th - Election Night – the township website announced the intent to borrow an additional $2.14 million to cover more appeals. Interestingly, the Galloway Township manager performed the calculations just in time for the information to be released to the public on Election Night!  Obviously this borrowing that will increase the township debt was withheld from the public because it would have impacted negatively on the current administration and affected the voting on November 5th.

The opportunity to pay tax appeal settlements with bonds rather than out of the operating budget happens because the Council faces a budget that exceeds the state-mandated cap. The budget shortfall can be explained in part due to the flat funding of state aid, a lack of surplus and failure on the part of Council to act in a timely manner to address the fiscal impact of falling home values.

The Governor provided municipalities a way to circumvent his own “Tax cap” law by signing a law which states the following:

 “Any municipality that has ended the previous budget year with a deficit in operations caused, whether in whole or in part, by obligations created from tax appeals, may issue notes with the approval of the Local Finance Board on such conditions as the Local Finance Board deems appropriate. The amount of notes authorized pursuant to this provision shall not exceed the cash payments or tax credits due to tax appeals and shall be authorized by a bond ordinance approved by the Local Finance Board.”

This means that Townships, like Galloway, will be allowed to finance operating expenses through the “back door”. Think of it as paying your electric bill with a home equity loan. Does anyone think this is a good idea or fiscally sound?