Paterson averts government shutdown in midnight tax rate vote
By Jayed Rahman
Published: August 26, 2015
City council members initially voted down a measure to set a preliminary 4.15-percent tax rate on Tuesday night into Wednesday morning for fear of a “catastrophic” tax increase on property owners before voting to approve a reduced 4.06-percent municipal tax rate averting a potential government shutdown in September.
“We’re looking at some people being hit,” said Julio Tavarez, 5th Ward councilman. He cited his own taxes which will go up considerably once the tax bills are calculated using the new property assessment numbers.
Tavarez’s home is valued at $192,000. He said his home’s value did not drop in assessment more than the needed 31-percent to see a reduced tax bill. Similarly, Ruby Cotton, 4th Ward councilwoman, said her taxes will go up by $3,000 on her home assessed at $285,000.
“I envision a doomsday scenario,” said Andre Sayegh, 6th Ward councilman.
“Folks be prepared,” said Tavarez. “Remember Christmas. It’s not going to be that good this year.” Tavarez alluded to an end-of-year reduced tax bill that many property owners saw at the end of last year.
James TenHoeve, acting finance director, said Cotton and Tavarez’s cases are anomalies. City officials said taxpayers who did not see an assessment reduction of more than 31-percent will see a tax increase once the new rate is in place.
Council members were deliberating increasing the current 2.90-percent tax rate to 4.15-percent. Six council members with the exception of council president William McKoy voted against the measure initially, but at the insistence of the 3rd Ward councilman some council members began to re-consider their vote.
Business administrator Nellie Pou said without a preliminary tax levy the city would not be able to raise the funds needed to continue operation. “We cannot send out the tax bills without an estimated tax levy,” said Pou.
TenHoeve said the city would run out of money and be forced to cut services and lay off employees at some point in September.
Pou said the city would have to borrow money to fund operations or face shutdown.
The city’s post-property revaluation tax picture shows 4.87-percent or $2.10 million in savings from county taxes. An almost 11-percent or $72,089 savings in county open space taxes, according to city officials.
“Are we prepared to shut the government down?” asked McKoy. He urged council members to reconsider in light of the consequences that would result from a government shutdown.
Ruby Cotton, 4th Ward councilwoman, and Maritza Davila, councilwoman at-large, opted to change their votes. McKoy continued to hold out for other defections at the criticism of Tavarez.
“You are here trying to get votes for the mayor,” remarked Tavarez.
“You are being irresponsible,” retorted McKoy.
After the brief exchange. Kenneth Morris, councilman at-large, seeing little steam in the move to re-consider, suggested cutting the rate from 4.15 to 4.06-percent after asking why the city did not conduct a tax assignment sale which could have raised at least a few millions for the city.
Pou said the city conducts a tax assignment sale every year. She indicated one will be held this year.
Alex Mendez, councilman at-large, asked about an estimated sewer bill to neighboring towns that have been using the city’s sewer system while paying very little in fees. He said the city could have raised revenue from collecting a fair fee from neighboring towns.
“I’m not being irresponsible for not supporting the tax levy,” asserted Mendez.
Morris’ reduction will result in a $5 million shaving, he said. City officials indicated the $5 million cut will likely result in layoffs if the city is unable to find a source for that money.
Last year, the city received $25 million from the state to balance its budget.
Morris’ suggestion resulted in six council members voting – after 12:30 a.m. — in favor of setting the preliminary tax levy at the reduced 4.06-percent.
“I’m not totally happy about it, but I’m relieved,” said Mohammed Akhtaruzzaman, 2nd Ward councilman.
Tavarez and Sayegh and Mendez voted against the measure. James Staton, 1st Ward councilman, was absent. The city will be able to collect $145.68 million from property owners to fund government for the first half of fiscal year 2016 which began on July 1st, 2015.
Correction: A previous version of this story neglected to mention Mendez voted against the measure.