Property owners in the City of Wayne are going to receive an unpleasant surprise when their winter tax bills arrive in a few weeks.
A tax increase of 13.1399 mills will be included on the Dec. 1 property tax bills which are due no later than Feb. 15. The average home in Wayne, valued at $118,000 according to Zillow, with a State Equalized Value (SEV) of $59,000 will see an increase of $787. The hefty addition to the current property tax rate was agreed to by a consent judgment filed Nov. 12 between the city and the Municipal Employees Retirement System (MERS) which manages pensions due retired city employees.
MERS had filed suit Aug. 7 against the City of Wayne which is currently $4,753,409 in arrears in payments into the retirement fund and is facing an additional 7.2 million contribution in 2022. Municipal contributions to the pension fund are required by state law. In March, the city made the bare minimum payments into MERS, remitting only the contributions made by current city employees and sending nothing from the general fund budget toward the arrears.
City officials said at a meeting last week that while they have voted to add the tax rate to the current budget, the additional funds will be dedicated to the delinquent MERS pension payments as agreed in the settlement.
Officials have continually blamed the failure to make the MERS payments on the actions of previous administrations and have stressed that this is a problem created by decisions made in response to the national recession in 2008. Currently, the city is reportedly facing a projected budget deficit of about $4.3 million for fiscal year 2020-2021. The city has been in a deficit spending situation for more than a decade.
In an unsigned letter addressed to “Wayne Citizens and Businesses” on city letterhead, three situations are cited as responsible for the current financial levy facing property owners.
“At the peak of the 2008 national recession, city employees were offered a higher pension if they retired early. Due to the influx of new retirees into the system, long-term investment returns being less than anticipated, extended life expectancies and other additional reasons, the unfunded pension obligation has risen significantly in the 12 years since,” the letter states. “The city's annual required contribution to MERS rose from approximately $1.8 million in 2010 to a projected $7.2 million for 2022.”
The average pension in the City of Wayne is $2,500 per month, according to city records, and there are about 170 former employees who collect a city pension.
The unsigned letter also claims that during the years following the recession, Wayne lost about 45 percent of the city tax base which has not been recovered and also cited the failure of the state Legislature to pay local governments “billions of dollars of revenue sharing rightly owed to us over the past 20 years.”
City officials said that the increased tax levy could continue for several years and city attorney Anthony Chubb told the council members that they should know in May of 2021 if MERS was planning to sue for the ongoing contributions coming due.
The letter to residents claims that the “City of Wayne has done everything possible to avoid this scenario. Properties have been sold, staffing is still at a minimum, the employees took concessions in their collective bargaining agreements, retiree healthcare was reduced to a stipend and the city has reduced spending across the board,” it states.
Negative comments regarding the uncontested consent judgment have filled several social media sites dedicated to City of Wayne issues. Many posts question the timing of the settlement until after the Nov. 3 election and the inability of residents to question the actions of the administration in light of the current COVID-19 meeting restrictions.
One mill is equal to $1 for every $1,000 of taxable property value, or SEV, usually 50 percent of market value of the property.
Newly reelected Mayor John Rhaesa did not respond by press time seeking comment for this story.
