TAX NEWS - June 2010

New Jersey Tax: Adopting calendar-year budget

HAMILTON -- The township is one step closer to switching from a fiscal-year budget cycle to one based on the calendar year, a change that could help it absorb state aid cuts better and help the administration construct a budget with more specific figures.

Hamilton currently operates on a fiscal year that runs from July 1 to June 30.

Council last night unanimously approved a resolution permitting the township to petition the state for the change to a calendar year.

In a memo to council, business administrator John Ricci made the case for the change, saying it "allows us to lessen the impact of the more than $5 million reduction in state aid" that the township learned about in March. Hamilton lost nearly $3.5 million in energy tax receipts and $1.4 million of Consolidated Municipal Property Tax Relief Aid.

Adopting a calendar-year budget schedule would help the township finalize figures for expenses such as winter storm and pension costs.

Pension bills aren't typically available until November, months after fiscal year budgets are introduced. Calendar year budgets, on the other hand, are introduced in February, "at which time pension bills will be known and winter storm costs can be developed with more accuracy," Ricci wrote.

The township also would be able to save on the cost of tax bills, according to his memo. If the township changes to a calendar-year budget, only one tax bill with all four quarters would be mailed. That alone would save at least $25,000, Ricci said.

The township's application will be heard before the state's Local Finance Board on July 14.

If the request is granted, the township would introduce and adopt a transition-year budget for July 1 to Dec. 31, and then a calendar-year budget for Jan. 1, 2011, to Dec. 31, 2011.

Ricci said the tax rate would remain stable during that 18-month period.