Who believes the Township really will Collect 99.02% of Taxes Due in 2020?

Proof Number 3 – How will the Township Collect 99.02% of Taxes Due in 2020? The Township of Teaneck is responsible to collect taxes from residents for its own use and on behalf of the school district and county.  In recent years, the township has collected $160 million a year in property taxes, of which nearly $91 million is remitted to the Teaneck Public Schools and almost $14 million is sent to the County of Bergen, with the remaining $55 million used by the township.

The township is obligated to pass on to the school district and to the county 100% of the amount due, without exception. If the township collects more than anticipated, it keeps the excess; any shortfall is the responsibility of the township. The board of education and county would be unable to operate without the money collected on their behalf by the township.

The state requires municipalities to set aside a reserve for uncollected taxes, based on its experiences in previous years. In 2018, the township set aside a reserve of uncollected taxes of nearly $1.6 million based on a tax collection rate of 99.02%; the township actually collected 99.33% (as seen on page 2 of the 2019 User Friendly Budget –click here) 2018 and 2019 were good years; the economy was roaring and unemployment was regularly setting record lows.

In the 2020 budget, the township has a reserve of $1.7 million, based on an estimated rate of collection of 99.02%. As seen in the 2020 Budget introduced on March 24th on page 24 of the agenda packet at click here .

Is its uncollected taxes estimate part of why the Township suddenly took its budget undergound?  Will the township be able to collect 99.02% of the taxes due? It was clear during the March 24th council meeting that the economic havoc being wrought on the nation would have a devastating impact on the township’s ability to collect property taxes, yet the council refused to consider the impact and make any changes to the budget. The council had a meeting scheduled on its agenda for April 6th, by which time the levels of unemployment were approaching record highs and the economy was devastated. Given the opportunity to review and revise its budget for the new economic realities on April 6th, the council decided to cancel the meeting in its entirety, issuing a “Sunshine Notice” that claimed that the meeting was cancelled “because there are no matters necessary for the continuing operation of government”. Teaneck appears to be alone in not predicting any bottom-line budgetary impact (click here and here for recent media reports on how other municipalities anticipate crunch time for collections on 2020 taxes).

Quarterly Township Taxes due in two weeks: Taxes for the second quarter are due on May 1st, with a 10-day period that extends the deadline to May 10th. It’s clear that there will be a shortfall in the $40 million due to be collected for the quarter. A decline of 5% (or $2 million) would be a significant burden. A fall by 10% ($4 million) would be devastating. A drop of 20% ($8 million) would wipe out the township’s entire available fund balance. And there’s no reason not to believe that the continuing economic devastation won’t continue further into the year.

Meanwhile, the township will be legally obligated to fulfill its requirement to pay the Teaneck Public Schools and the County of Bergen 100% of the monies owed.

A spoof? Any rational person can foresee that this hole could become one of the saddest proofs that the 2020 Budget is a work of political fiction.