presented: January 14, 2014

Once again it is my pleasure to stand before you and present the 2014 Atlantic County Executive Budget.

As all of you well know, these are challenging economic times.  However, County Government is quite capable of responding to the challenges that confront us.  The most significant of these is the decline of casino gaming in Atlantic City, which for many years has been the mainstay of our regional economy.  What happens in Vegas may stay in Vegas, but what happens in Atlantic City affects all of Atlantic County and the region. 

Since 2008, Atlantic City has lost a third of its tax base, approximately $18 billion, largely due to successful casino tax appeals and declining property values.  The ripple effect of Atlantic City's shrinking tax base is felt throughout Atlantic County and will be for some time to come.  When Atlantic City's assessed value goes down, every other municipality in the county must pick up a larger share of the county budget. Even though the county budget is consistently below the state mandated cap and county spending is well under control, municipalities that have delayed doing a reval may see their tax rates go up and have to assume a greater share of the overall tax base.  

The tax burden on some Atlantic County communities is even greater when casinos tax appeals are successful since the towns must then pay a share of the tax refund that is returned to Atlantic City due to its overpayment of county taxes.

It is important to keep in mind that Atlantic City also settled tax appeals from 2007 to 2012 which resulted in Atlantic City overpaying county taxes by $16.2 million. This required the remaining 22 towns to make up the $16.2 million, while Atlantic City’s tax burden was lessened by the same amount. This resulted in a 4 cent tax increase for any town that was at 100% of equalized value.  However, for towns that had ratios below 100%, their tax increase was much higher. For example, Atlantic City’s ratio, which is based on outdated property assessments, was 120% of equalized value in 2013.  This resulted in the City paying $2 million less in taxes in addition to receiving the $16.2 million credit.  Thus Atlantic City saw a net decrease in county taxes of $18.2 million, which the 22 towns had to absorb. This situation would not be as severe had the city complied with the state’s demand that they conduct a reval. Instead they delayed doing so.

At the present time there is little we can do about how Atlantic City handles its property tax assessments.  As a judge told me when we tried, the county has no standing when it comes to property tax assessments.  To correct this problem I am seeking legislation that would allow for countywide tax assessments.  This would eliminate the inequities inherent in the current system where some pay more than they should while others pay less.

Atlantic County has responded aggressively and proactively to a challenging economy.  For the past 14 years, our budget has always been below the state mandated cap that restricts how much property taxes can be raised.  Last year we were down $3.6 million.  This year we are down $3.5 million.  In 2008, when the recession began, we began to take more severe actions to reduce costs. Since then we eliminated or froze 122 positions, reduced other expenses in excess of $1 million and mandated employee furloughs.

We have privatized programs and services when practical in areas such as security, inmate services, building maintenance, workers compensation and nutrition site management.  

The 2014 County Budget that I present to you today is $196,638,472.62, an increase of only 1.4% from last year.  The Amount to be Raised by Taxation is $156,500,165.19, an increase of 0.579%, just over half of one percent, and approximately $3,542,718.80 less than allowed by the state budget cap.  Based on the best information we currently have available, we conservatively predict the County equalized Tax Rate will be remain fairly stable at 0.3899 cents, 1.9 cents less than last year, and is lower than the .44 cents rate when I first assumed office in 2000.  As has been our policy, we have allocated 50% of our surplus into this year’s budget.

We must be real.  The economic challenges that lay ahead are substantial and beyond the ability of any one level of government to resolve on its own. This is the new normal.  It will require new thinking and a new approach.  Most important, it will require a new spirit of interlocal cooperation.  County, municipal and state governments, as well as public authorities and the private sector, must think beyond their local boundaries and traditional roles. 

As I have said for years, we need to abandon the politically popular but antiquated concept of “home rule”. It is simply not sustainable. New Jersey has more government per square mile than any place on earth. We have 565 independent municipalities, 603 school districts and more than 500 mayors and police chiefs.  Is there any wonder why property taxes in New Jersey are among the highest in the nation?  The 28,000 residents of Princeton Township and Princeton Borough recognized the value of consolidation and cooperation.  On January 1, 2013 they were the first two significant communities in New Jersey to officially merge in more than half a century.

For years I, like many of you, have been an advocate of regionalizing and consolidating municipal services whenever practical.  In Atlantic County, we have had successful efforts to regionalize and share services in such areas as animal control, road maintenance, and snow removal.  We implemented cooperative purchasing programs for goods and services such as gas, electric, and building, janitorial and kitchen supplies. We, in cooperation with our municipalities, need to expand these successes into other areas such as centralized emergency dispatch and economic development. But this cannot be done by decree. We need municipal cooperation. In the past, many municipalities had been reluctant to relinquish direct control over some of their operations.  Now, hopefully, they are beginning to realize that their citizens can be served as well or better through a shared service arrangement.

We need to seek new ways to cooperate.  We need to attract, retain and grow new and existing businesses.  But economic improvement won’t come on its own nor can we sit passively and wait for it to happen.  We must take the initiative and make it happen.  In the coming year Atlantic County will work aggressively with local organizations such as the Greater Atlantic City Chamber to establish a private sector driven entity to stimulate regional economic development and job creation.  Areas that are growing and creating jobs have taken this approach.

Traditionally economic development in Atlantic County has been done piecemeal with various public authorities and municipalities establishing their own priorities and agendas with limited coordination and cooperation.  This may have worked adequately in good times but in tough economic times many have come to realize that meaningful, sustainable economic development must be regional in perspective and must be a shared responsibility of both the public and private sector.

Many thanks to Congressman Frank LoBiondo, who was successful in his efforts to have this region designated as one of six national test locations for unmanned air systems research. We have the opportunity to establish Atlantic County as a center for aviation research.  This designation will enable us to build on our economic development assets such as the FAA William J. Hughes Technical Center and the Stockton Aviation Research and Technology Park.  We should all be grateful to Dr. Herman Saatkamp for his efforts in helping to resurrect the Aviation Research and Technology Park so that it may achieve its full potential.  Aviation is one of the few sectors of the economy where the United States is still a net exporter. 

Our goal is not the development of an Aviation Research and Technology Park in itself, but the establishment of an aviation research industry cluster centered here in Atlantic County of which the park is one component.  Although this important project had been encumbered by mismanagement while under the four county South Jersey Economic Development District, it is getting back on track and we are committed to getting it back on track.  As I have stated, we need to diversify the local economy and there is no more promising place to start than with aviation.   

In conclusion, let me assure you that county government is well positioned to handle the challenges that lay ahead. Our fourteen perfect annual audits, strong and consistent bond ratings and low debt, attest to the soundness of our fiscal policies and the quality and experience of our financial staff place us in a much stronger position to manage an economic downturn.