PRINCETON — The state will reimburse Princeton nearly the full amount officials had requested to cover the cost of the town's historic consolidation, and it could allow a cut in the municipal tax rate, Mayor Liz Lempert said yesterday

In a letter, a Department of Community Affairs (DCA) official said the state will reimburse Princeton $464,000 to cover 20 percent of the cost of merging the former Princeton Borough and Princeton Township on January 1.

“I’m very pleased that they are stepping up and showing their support, in the way of keeping their word,” Lempert said. “Their reimbursement means that we can possibly pass on additional savings to our taxpayers.”

Town officials had calculated costs of about $2.3 million and hoped to receive as much as $471,000, based on Gov. Chris Christie’s vow to reimburse towns one-fifth of the cost as a way to encourage consolidations.

Councilwoman Heather Howard said in an e-mail that the state’s move will set a good precedent for other municipalities considering consolidation.

“It’s good news for our budget and good news for the taxpayer. I appreciate DCA following through on the governor’s commitment -- it’s a recognition that we did the right thing by consolidating and the state has an interest in supporting our efforts,” she said.

The reason for the $7,000 difference between the requested and granted amounts was not explained in the DCA’s letter. Some officials had expressed concern about what constituted reimburseable expenses because Princeton was the first town to qualify for the assistance and the state had not established a policy on the matter.

In the letter, Thomas Neff, director of the DCA’s Division of Local Government Services, said municipal officials initially submitted $1.7 million in costs in 2011. A year later, after adding some costs and subtracting expenses for ineligible items like new employee uniforms, stationary and non-essential signage, the newly merged town increased the figure by about 30 percent, to $2.3 million, he wrote.

While the increase is large, the agency recognizes that the initial estimate “was prepared in good faith and was inaccurate only due to the ‘first-ever’ nature of the merger that was implemented,” Neff wrote.

By Oct. 1, Princeton will receive $350,000 and must submit a “full accounting of disbursements” to Neff’s division, including contracts, proofs of payment and other documents, he said in the letter. After the documents are vetted the remaining $114,000 will be provided.

Princeton’s citizens finance advisory committee has recommended to the council that the state reimbursement and other savings be used to cut the tax rate for the new municipality by 1 percent from the figure currently proposed.

The town’s proposed $61 million budget is $3 million less than the combined borough and township budgets last year, and calls for a tax rate reduction from 47 cents to 46.3 cents per $100 of assessed home value. The further reduction could bring the municipal tax rate down to 45.3 cents.

Councilman Bernie Miller said he was pleased to see the state come good on their promise and said that throughout the transition process they’ve received a lot of support from DCA.

“I’m very pleased that DCA recognizes the cost of consolidation as we’ve submitted it, and we’re quite pleased that we received an indication from the state that they would repay the 20 percent as promised by the governor,” Miller said.

But he said he's still unsure if the town should implement a further cut to the municipal tax rate because there are some concerns about what the future could hold for the town's financials.



Contact Jon Offredo at joffredo@njtimes.com or (609) 989-5680.

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