From the Sidelines: Fees, Taxes, and $4.8 Million Surplus in Water and Sewer

The governor has boasted that he has reduced property taxes. Towns, including Montville Township, have claimed they have adhered to the governor's cap on property taxes, but how are they really doing it and is it what is really best for property tax payers?

Fact, Montville Township was recently "surprised" by a $4.8 Million surplus in the water and sewer department. They shouldn't have been surprised because they reviewed these budgets and actually raised rates and restructured how these services are paid for. While they were crying poverty and charging rate payers more, they also acquired this surplus.

They also have been artificially meeting the state imposed 2 percent cap by taking almost $1 million per year from rate payers to use in the municipal budget. They aren't alone in this. More and more services for both the board of education and the township are becoming fee based. It may seem fair that particular people who use a service ought to pay for that service. Student activity fees, safety busing fees, and now the most egregious, water and sewer fees, have become a staple in government finance. But let's be clear: a fee required by government is a tax. If you have no choice in paying it, then it is a tax. There is, however, one important difference.

Property taxes are deductible. Fees are not. Every dollar taken from overcharging rate payers and used to reduce a tax deductible property tax is a double whammy for the rate payers. If they use this surplus to further reduce property taxes, they simply add insult to injury to the rate payers.

At this point, water and sewer service about 80 percent of the property tax payers in the township. Voters tend to accept fees or not relate them to the cost of living in Montville Township. Because property taxes are deductible, reducing them by using fees doesn't make any sense except to politicians that want to pretend they are reducing the cost of local government.

One final comment. In 2000 we eliminated the old MUA as a separate entity and it became a water and sewer department. The MUA was sitting on about $12 million because of growth and connection fees, but rate fees had been stable for years. In 2003 Marie Cetrulo and I worked to reduce the water rates for most customers. The MUA had been supported by property taxes since its inception and was supposed to be paid back. We took that money and paid down some of the debt of the MUA and took money to properly repay the tax payers. Unfortunately, that repayment has become an "income" for the township that the Township Committee members are now addicted, too.