Montclair School Budget Update: Can PILOTs Save The Day?

MONTCLAIR, NJ — Should Montclair Township start sharing revenue from tax abatements with the local public school district? That’s what some residents are demanding amid a tough budget season in the township.

Montclair town officials and school administrators postponed a proposed joint meeting on Monday over confusion about who would be in attendance. The meeting would have provided a chance to discuss the possibility of the town providing some funding for the local public school district, which recently made major staff cuts in order to close a $5.5 million budget gap, Baristanet/Montclair Local reported.

In an email to several people involved in the meeting, Mayor Sean Spiller wrote that the purpose of the gathering would have been to “get everyone in a room that has a question or possible solution, so we can see if any lead to a way forward or minimally, ensure we are all on the same page with regard to the challenges.”

• See Related: Montclair Students Protest Teacher Cuts In School Budget (WATCH)
• See Related: School Budget Cuts Leave Montclair Residents With Big Questions

Some Montclair residents have been asking if the town can part with any funds from its own coffers to help the school district soften the blow. One proposal? Diverting some revenue from properties with payments in lieu of tax agreements (PILOTs) – most of which normally goes to the township.

PILOT agreements, also known as municipal tax abatements, are deals that enables a developer to switch their standard tax payments for a property with a fixed, yearly payment to the municipality. Some municipal officials have called them useful tools to attract development to distressed or blighted areas of town. But their use has drawn criticism from opponents, some who caution that the deals can enable a big developer to skip out on paying their fair portion of property taxes.

COULD PILOT FUNDS HELP MONTCLAIR SCHOOLS?

Nearly 2,000 people have signed an online petition titled “Rescue Montclair Public Schools” which argues for using PILOT funds to fuel local schools.

“Year after year, Montclair Public Schools have been faced with a deficit in the district’s budget, leading to mass teacher layoffs, and instability in the lives of our teachers and children,” the petition reads. “Our schools are funded over 90% by taxes, and we have a 2% cap on how much the taxes can increase each year. In addition, we are considered a wealthy district, so our state aid is negligible. Because our costs increase by more than 2% annually, we are forced to make painful staff and program cuts every year.”

The status quo is not sustainable, the petition says. It continues:

“As Montclair continues to build luxury apartments that do not pay school taxes because they pay PILOTs (payments in lieu of taxes), we must ensure schools receive a fair share of these payments, which are outside the 2% cap because they are considered non-tax revenue. Currently, the municipality keeps 95%, sends 5% to the county, and NOTHING to the schools. Not sharing PILOTs breaks our social contract: everyone in the community supports public schools at a level proportional to their property value. The wealthiest property owners in our town are getting huge property tax discounts through sweetheart PILOT agreements. Thus, instead of sharing revenue with the schools, the township gives tax breaks to wealthy developers.”

During the May 16 town council meeting, Mayor Sean Spiller quizzed financial consultant Bob Benecke about the situation and how PILOT funds might apply. Watch the video below (it's cued to Spiller/Beneke’s statements).

Councilman Robert Russo noted that the possibility of sharing PILOT revenue was one of the reasons he abstained on the municipal budget vote. Russo said he’s made inquiries to township administrators about similar situations in Princeton, Cedar Grove and Woodbridge.

Other council members spoke about the possibility of sharing PILOT revenue or other funding during their May 16 meeting, including David Cummings and Lori Price Abrams (watch the videos below, cued to each councilor’s statements).

• Read More: Montclair Council OKs Town Budget At Packed Meeting (See Tax Impact)

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