Cape May City Manager Bruce MacLeod. Photo by Jack Fichter

CAPE MAY - The city's proposed 2009 budget includes a property tax increase, a hike in water bills and higher beach tag fees.

City Manager Bruce MacLeod presented the proposed budget at a special council meeting Jan. 13 to an almost empty City Hall Auditorium.

At this point, the budget is a “working document,” to which council can suggest changes, he said.

The proposed $15.1 million city budget calls for a 2.1 cent tax increase. The proposed local purpose tax rate would be about 33 cents per $100 of assessed value.

The water fee increase is the result of almost 18 million gallons less of water used in 2008. The result was a reduction of $300,000 in utility bills and revenue.

MacLeod called it a double-edged sword because the city must anticipate less water department revenue this year and less surplus money to help fund the 2010 budget. He said the water utility would anticipate almost $190,000 less surplus money for 2009.

The city must increase rates to generate $555,0000 to balance the water-sewer utility budget, said MacLeod. Council is expected to discuss a specific rate increase next week.

The water use reduction is likely due to fewer visitors to the city last year and water conservation in tough economic times, said MacLeod.

He is recommending a $1 increase in both the price of daily beach tags from $4 to $5 and three-day tags from $9 to $10, which would yield $150,000 for the beach utility. The extra revenue will fund a $50,000 appropriation for the beach utility capital improvement fund to be set aside for future beach replenishment and $70,000 for payment and reduction of bond anticipation notes principal.

MacLeod suggested the beach utility adopt a pay-as-you-go approach. The sale of all beach tags in 2008 totaled $1.7 million.
Cape May's proposed budget included a one-time appropriation of $510,000 for the reduction of future debt, which the city received in the form of a premium from a bond sale last October.

Salary and wages total $6.3 million with no new full time employees hired and no layoffs planned. The police department would receive a $30,000 increase for seasonal employees.

The fire department would receive $25,000 to fund a temporary position to accommodate a fifth employee to each shift for the summer months.

The city's other expenses total $8.2 million including debt service, pensions, payroll taxes, insurance and capital improvement. The remaining $2 million of discretionary funding requested by city departments is $110,000 less than last year, said MacLeod.
A large part of the reduction came from a recycling collections contract that saved the city $60,000 per year which will continue for five years.

The city ended the year with $3.2 million in its surplus account of which $2 million is used in the 2009 budget.

Miscellaneous revenues such as parking meter fees, mercantile licenses are anticipated to bring in $4.2 million.

Under state law, a tax cap law limits the growth of local taxes to 4 percent annually. The proposed city budget is under the tax level cap by $2.