Bloomberg News

Christie Confounded as Padded Services Send New Jersey Taxes Soaring

October 29, 2013

The Barnegat Light lighthouse

Padded government services that help keep the state’s property taxes high come into clear focus on the Jersey Shore, which Christie has made the focus of this year’s re-election campaign after Hurricane Sandy devastated the area in 2012. Photographer: Emile Wamsteker/Bloomberg

At the height of tourist season, 150,000 people vacation on Long Beach Island, an 18-mile stretch of New Jersey (STONJ1:US) shore. The crowds are gone by October, when the traffic signals blink amber along the main boulevard.

Just 7,500 residents remain year round, and with them the police forces for six towns. For the next eight months, about 75 full-time officers, earning $7.1 million annually, are responsible for repeated checks of 18,000 empty vacation properties on a barrier island where the median home value is $782,900, double New Jersey’s average.

“For what -- to get Mrs. Olsen’s cat out of a tree?” said Dino Spadaccini, a 50-year-old lawyer from Hamilton, New Jersey, with a vacation house on Long Beach Island. Last year, he paid $4,662.48 in property taxes on his four-bedroom home assessed at $522,700, county records show.

“At that time of year, when there’s nobody there, you feel like you’re in a police state,” said Spadaccini. “All they want to do is pull someone over.”

While New Jerseyans earn the third-highest per capita income in the U.S., local property taxes covering schools, police and other services are the highest in the nation -- $7,885, on average, in 2012, according to the state Community Affairs Department. In 2009, voters threw out Governor Jon Corzine, a Democrat, and elected Republican Chris Christie, who pushed through a 2 percent annual cap on increases in real-estate levies.

Padded Services

Padded government services that help keep the state’s property taxes high come into clear focus on the Jersey Shore, which Christie has made the center of this year’s re-election campaign after Hurricane Sandy devastated the area exactly one year ago. Yet New Jersey isn’t the only state to bear the cost of overlapping jurisdictions.

Big Spending

  • Part 1: Local Tax Fiefdoms Flourish in Obscurity Fueling Big Government in America
  • Part 3: Daniels Defied in Indiana Shows How Government Guards Taxpayer-Funded Jobs
  • Part 4: Counties Losing People Keep Bureaucracy as Governments Refuse to Downsize
  • Slideshow: 10 Ways to Protect Your Government Fiefdom

From coast to coast, more than 90,000 jurisdictions dot the country, up 10 percent since 1982, according to the U.S. Census Bureau, even as shrinking budgets forced the elimination of 360,000 public-school positions from July 2008 through October 2012 and reductions at half the nation’s police departments. That number includes the nation’s 12,880 school districts.

While Long Beach Island, six miles (10 kilometers) off the Atlantic Ocean coast, is crawling with cops even after vacationers head home, the spit of sand is in danger of vanishing. For a century it has endured catastrophic storms including Sandy, and a sea level rising as much as 16 inches. Its year-round population has dropped 18 percent from its peak 30 years ago.

Six of Everything

The island stays afloat on a raft of taxpayer dollars big enough to sustain six chief financial officers, six municipal clerks, six tax assessors, six tax collectors, six town attorneys, six public-works supervisors and six auditors. Long Beach Island also has two elementary schools and five police chiefs. One, Michael Bradley, earns $189,000, or $14,000 more than Christie. Thirty of Bradley’s 36 full-time officers make more than $100,000 a year.

“We collect a lot of money here on Long Beach Island,” said Leonard Connors, 84, mayor of Surf City for 47 years and a former Republican state senator. “Whether it’s well-spent or not -- that remains to be seen.”

The island’s life raft is stuffed with tax riches from the mainland, too. New Jersey is spending $350 million in state and federal funds for improvements to the Manahawkin Bay Bridge, the only roadway to the island, listed as structurally deficient in a 2007 state transportation department report. The U.S. Army Corps of Engineers is overseeing a 50-year, $189 million project to pump sand from the ocean floor to a shoreline diminished by storms and cyclical erosion.

Visitor Spending

At stake is $1.2 billion in annual visitor spending, the core of tourism, the state’s third-biggest private industry, which had a record $40 billion revenue in 2012.

In the Loveladies section of Long Beach Township (9626MF:US), an eight-bedroom oceanfront contemporary built in 1987 is listed for sale on Realtor.com for $14.99 million. On the rental site VRBO.com, a one-week lease for an “ultra-private, exclusive oceanfront oasis” with five bedrooms and a heated pool in Loveladies is priced at $24,500.

“We’re paying for very wealthy and stupid people who built right next to an eroding shoreline and they expect us to bail them out,” said Orrin Pilkey, a coastal geologist and professor emeritus at Duke University Nicholas School of the Environment in Durham, North Carolina (STONC1:US). “It’s crazy.”

Home Rule

Christie, a 51-year-old seeking re-election on Nov. 5, attributes much of New Jersey’s tax burden to home rule, the power of local elected officials to oversee spending in towns that typically operate their own schools; criminal courts; zoning and planning boards; and fire, police and public-works departments.

Those officials also use their taxing power for “backup” general-obligation debt pledges, potentially exposing their residents to financial risk. In 2011, local governments, including counties, guaranteed 23.7 percent of New Jersey municipal debt rated by Moody’s Investors Service. The figure was 7.9 percent in 2008, according to a May 2, 2012, Moody’s report.

Such guarantees led to credit reviews or downgrades in Hoboken, Harrison, Collingswood and Salem when real-estate plans faltered. Moody’s warned that backup financing for an incinerator sent Harrisburg, Pennsylvania (STOPA1:US), into default.

Capping Taxes

In 2010, Christie, citing the financial burden of New Jersey’s 566 municipalities and 600-plus school districts, cut aid to towns and capped annual increases in local taxes at 2 percent, forcing mayors to weigh cuts including worker firings and reduced services. In 2011 he signed legislation offering a one-time state subsidy to any towns that consolidated.

It was enough to bring around Princeton Borough and Princeton Township, two municipalities in central New Jersey that share their name with the Ivy League university. Voters, who had rejected at least three merger proposals in 60 years, agreed to end the split effective Jan. 1, 2013. In April, the newly united Princeton introduced a $61 million budget, about 5 percent less than the towns’ separate 2012 spending. The government workforce dropped 9 percent, to 261 employees.

“It’s one of those things that drives taxpayers crazy -- duplicative, excess and overlapping local governments and services,” said Michael Drewniak, Christie’s press secretary. “In terms of local government cost-control and reforms he’s succeeded in implementing, Governor Christie views this as unfinished business that he intends to pursue aggressively with the legislature.”

Not Budging

On Long Beach Island, Christie’s offer was no inducement.

“I have yet to see anything that came up that saves Harvey Cedars any money,” said Jonathan Oldham, who for almost 20 years has been mayor of Harvey Cedars, the island’s least populous town, with 337 year-round residents, according to 2010 census data.

“Two times there were serious conversations about merging the police departments,” Oldham said. “It almost tore our town apart. Neither time did it save us more than $10 per home. So you’re going to save me $10 on my house and then you’re going to cut my service significantly?”

With police in particular, residents want “personalized service,” according to Joseph Mancini, the 63-year-old mayor of Long Beach Township, the most populous town, with 3,100 living there year-round.

“It’s not really a budget issue,” he said. “It’s more of a preference.”

Mancini, who estimates Long Beach Island had $1 billion of damage from Sandy, said a fully trained police force needs to operate year round.

Pitchforks

In 2008, three years before the Christie proposal, Assemblyman Reed Gusciora, a Democrat from Trenton, sponsored a bill for the island towns to merge -- an idea, he said, that came from Princeton constituents who owned vacation homes and said they had no voice on government spending because they weren’t registered to vote there. Locals met his idea “with pitchforks,” he said.

“There was such vehement opposition,” he said. “I couldn’t get any traction with the people who would have benefited.”

Three Republican lawmakers representing Long Beach Island - -- Senator Christopher Connors and Assemblymen Brian Rumpf and Daniel Van Pelt -- sent him a letter stating such a law would strip citizens’ “right to decide the fate of their communities and government.”

Van Pelt left the Assembly in 2009 after his arrest in a bribery case for which he served a federal prison term. His former colleagues, whose state positions pay $49,000 a year, work side jobs for the island’s local government.

‘Forced Consolidation’

Rumpf, 49, from Little Egg Harbor, is the public defender for Surf City, which paid him $1,134 from January through May 2013, according to municipal records. Connors, 57, from Forked River, is the attorney for Ship Bottom and Surf City, where his father is mayor. Together, the towns paid the senator’s Forked River law firm, Dasti, Murphy, McGuckin, Ulaky, Cherkos & Connors, $34,180.91 from January 2012 through May 2013, records show. As he was protesting Gusciora’s proposal, he said, he had those professional-services contracts as well as one with Beach Haven.

Connors, in an interview, said he opposed Gusciora’s bill on constituents’ behalf, not his own.

“I don’t think you could find a mayor on the island that was in favor of forced consolidation,” he said. “My responsibility is to represent their interests as a legislator. That’s exactly what we did.”

The towns, and not lawmakers, should decide how they want to govern, he said.

One Government

Long Beach Island pays a lot of money for government.

The six towns’ $55.24 million budget this year is about 5 percent higher than that for Sayreville, a central New Jersey borough 10 miles southwest of Staten Island, New York (STONY1:US), whose brickworks churned out construction materials for the Empire State Building, Rockefeller Center and the Statue of Liberty pedestal.

Sayreville, where New Jersey native Jon Bon Jovi grew up, has 43,000 residents, almost 500 percent more than the island’s year-round population. It has a municipal workforce of about 250, or 10 fewer than in the beach towns.

Sayreville has several unincorporated sections, yet it has one municipal government.

Island government should operate as Sayreville does, rather than “six little fiefdoms,” according to Deb Whitcraft, 58, who served as mayor of Beach Haven for 10 years.

Mayoral Burden

Charlie Farrell, president of the Loveladies Property Owners Association, said the burden is on the mayors. Loveladies is a community in Long Beach, where a home was listed for sale in August with a price tag of $1.8 million and annual property taxes of more than $13,000.

“No one wants to give up the positions or the power or the ego that goes with it,” said Farrell, a retired senior vice president for JPMorgan Chase & Co (JPM:US). “I don’t know how you’re going to get change unless it was somehow mandated, and I don’t know whether that’s legally possible.”

On Long Beach Island, the six towns’ population has dropped 18 percent over 30 years, to 7,500, according to 2010 census data. Municipal spending totals $55.24 million, according to 2013 budget documents. That’s enough to pay about 260 workers, plus bond debt and all local services, from road paving to lifeguard drug tests.

Unused Leave

Together, town employees have stashed unused leave equivalent to 14,124 days, or 38.7 years, payable when they retire. Elected officials have set aside just 37 percent of the $2.18 million due for those payouts, the budget documents show.

The highest-paid municipal employee is Bradley, Long Beach’s 50-year-old police chief. His force covers that town as well as Barnegat Light. Under his leadership, he said, the township has gained $750,000 in revenue from shared-service contracts, extending equipment or expertise to 14 towns.

“We’re trying to be fiscally prudent with our tax dollars,” Bradley said.

The township hires temporary officers to assist full-timers during the summer, and in the off season the regular force engages in training, offers community drug education and patrols as “the eyes and ears to protect people’s important investment,” Bradley said.

In 2011, Sayreville reported 50 violent crimes and 619 non-violent offenses, state police data show. The chief there, John Zebrowski, has 85 officers and is paid $159,402, according to state pension records.

Long Beach Island reported seven violent crimes and 434 non-violent crimes. Pay in 2012 for its five chiefs, overseeing about 70 officers, totaled $676,804, or 325 percent higher than the single Sayreville chief’s compensation.

“We have a wealthy residency base here, and so what?” said Spadaccini, the Hamilton lawyer with the vacation home. “We can get away with this? And we can keep doing it? Nobody can justify to me why there is not one municipality.”

To contact the reporter on this story: Elise Young in Trenton at eyoung30@bloomberg.net

To contact the editors responsible for this story: Jeffrey Taylor in San Francisco at jtaylor48@bloomberg.net; Stephen Merelman at smerelman@bloomberg.net.


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