The township could have the option to change how it does its budgets and ultimately, its tax bills.
Last week a bill was passed by the Senate that would allow towns like Lyndhurst currently operating under a budget aligned with the state’s fiscal year to return to using a calendar fiscal year system.
Lyndhurst, along with 58 other municipalities, uses the state’s fiscal year calendar to conduct the budgeting process. In 1991 the state allowed towns to convert to the state fiscal calendar, contending it would create a smoother budget process to be on the state’s calendar. Towns with the highest populations and the largest budgets were required to make the transition, while others such as Lyndhurst chose to make the transition. Towns had hopes of greater state aid if they were aligned with the state’s budgeting process.
"We found we were competing against places such as Jersey City and Paterson with very unique needs for state aid…and now our tax bills are very complicated," said Debra Ferrato, Lyndhurst’s tax collector.
Residents, whose municipalities work under a calendar year, get one tax bill a year. Those bills include the actual school, municipal and county taxes. Lyndhurst’s year runs from July 1 and ends on June 30 of the following year. Residents receive two bills; one in July and one in January. In the July bill, township taxes are estimated, and January’s bill is sent out prior to the county and school budgets being completed.
The conversion would not only alleviate the confusing tax bills, but could also put Lyndhurst back into the running for extraordinary aid. The town applied and got $200,000 in extraordinary aid in 2005. It applied again in 2006, but did not receive any. Although Ferrato admits the town’s surplus of $2.8 million could hurt its chances of state aid, State Senator Paul Sarlo, the sponsor of the bill, said putting Lyndhurst in competition with towns such as North Arlington and Rutherford rather than Jersey City might prove fruitful.
"Many of the towns that use state fiscal year budgets are much bigger than Lyndhurst," explained Sarlo. "If Lyndhurst was allowed to return to a calendar-based budget year, they would become more competitive for extraordinary state aid."
The 1991 law stated that municipalities making the switch to the state’s fiscal budget could not revert back to the calendar year budget. Towns were allowed to carry bonds to carry them through a later budgeting process that year in order to make the conversion. The state did not want towns to use the conversion as a way to get funds through bonding, so it made the conversion final. The new bill would require that all bonds previously issued to finance the transition from a calendar year to a fiscal year be paid off. Lyndhurst has paid off the $4 million it borrowed to make its transition in 1992.
If the bill becomes law and Lyndhurst wanted to make the switch, it would have to prepare a transition budget that covers the period of July 1 to Dec. 30 prior to the proposed resumption of a calendar fiscal year cycle. And this time, no borrowing could be used to finance the temporary six-month budget.
Mayor Richard DiLascio was not available to comment on whether the town would seek the conversion, but has historically said he would favor going back to the calendar fiscal year.
