Gloucester Twp. Borrows $10M Of $53M Set Aside For Tax Shortfall

GLOUCESTER TOWNSHIP, NJ — Gloucester Township borrowed $10 million in tax anticipation notes in July, three months after council passed a resolution that allowed it to borrow up to $53 million amid the coronavirus pandemic.

The resolution council passed in April said the township could borrow up to $53 million in tax anticipation notes — which allow government entities in New Jersey to bridge short-term emergency needs — due to the uncertainty surrounding tax collection and miscellaneous revenue streams surrounding the coronavirus. Read more here: Coronavirus May Cause Tax Shortfall; Gloucester Twp. Has $53M Cushion

To qualify for a tax anticipation note, a municipality must meet certain criteria and get approval from state officials.

At the council meeting on Aug. 24, Business Administrator Tom Cardis said the township borrowed $10 million of the $53 million based on tax concerns on July 15.

He said the township is concerned about a revenue shortfall, although he didn’t specifically say what this amount was set aside for.

It also wasn't clear how much, if any, of the money had been spent. Cardis didn't respond to a message from Patch seeking further information.

Cardis mentioned during the meeting that the township needed to make sure it could pay the money due to the schools. The township collects the taxes that are due and then pays them to the school districts and other entities residents pay taxes for.

It wasn’t clear if the township has yet seen a shortfall of revenue, or how much of a shortfall there was. Cardis said Gloucester Township received its state aid payment for August, but that didn’t mean there was a guarantee they would get the payments in September or October, Cardis said.

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Cardis said the loan has a 47.21 percent maturation rate, and will mature on Mach 1, 2021. He expects the money will still be in the budget, and that the township will be able to repay the $10 million from cash proceeds.

Cardis also said the township didn’t need to pass a resolution to borrow the money because the resolution passed in April authorized the township to borrow needed money.

The Chief Financial Officer (CFO) will then prepare a report detailing what money was borrowed, and that report will be presented to council during a public meeting, according to officials.

The fact that the township borrowed $10 million became public knowledge after resident Pete Heinbaugh asked about the township making an item on the bill list labeled as a coronavirus payment to law firm Parker McCay.

Under state law, the township is permitted to borrow 30 percent of the tax levy plus 30 percent of the amount of miscellaneous revenues received in cash in 2019, which comes out to $53,120,035.92, township officials said previously.

The CFO prepared a cash flow forecast with respect to the township's budget requirements, showing that the township anticipates a cash flow deficit, pending the receipt of taxes and other revenues.

See related: NJ Coronavirus, Reopen Updates: Here's What You Need To Know