A Madison homeowner with property assessed at the borough average of $718,000, near market value after a recently completed borough-wide revaluation, is expected to see a $39 increase in the municipal portion of their tax bill under a proposed municipal budget introduced Monday night.

The municipal portion of the tax bill, estimated to be $2,683 for the average home, is less than a quarter of the overall bill, with most of the total tax bill going toward schools. A portion also goes to Morris County and to open space.

Councilman Ben Wolkowitz, the governing body's finance liaison, said the 1.48 percent increase in the tax levy is below the state-mandated 2 percent cap, less than the rate of inflation, and the lowest increase since 2003.

The more than $25.6 million budget would raise $13,636,718 through taxes, $199,510 more than the previous year.

A public hearing on the budget is scheduled for the Borough Council's 8 p.m. April 8 meeting.

Wolkowitz said the budget grows surpluses, allocates additional funding for capital improvements, and does not call for any layoffs, furloughs or reductions in services. It does not increase utility charges.

He said that is partly because last year's budget was strong.

"The budget of 2012 was an excellent budget, and it panned out," Wolkowitz said.

Expenses are down because employees are contributing more to pension and healthcare costs, senior employees retired, and departments are paying close attention to cost-cutting, he said.

Open space tax formula?

Madison's property revaluation has raised the question of what the borough should do about the municipal open space tax, a separate line on tax bills automatically calculated based on property values. So, while property assessments increased by more than 60 percent with the revaluation, so did the municipal open space tax. The average homeowner would pay $144 toward the open space fund, a $62 increase from the previous year.

The Borough Council could introduce an ordinance at its April 1 meeting that would adjust the rate. While some officials have indicated they would like to adjust the municipal open space tax formula to keep the amount collected in line with previous years, others are working to figure out if all or part of the increase will be needed to pay off money borrowed for the Madison Recreation Center land and fields.

Borough officials plan to meet with the Madison Athletic Foundation to go over the plan for paying off the debt.

Not unanimous

Councilwoman Jeannie Tsukamoto and Councilman Rob Catalanello, both Republicans, cast the "no" votes. Tsukamoto said the budget has too much padding and in some cases does not budget enough revenue from shared service contracts. She also said there was not enough time to review the final document.

Catalanello said he would not vote to introduce a budget that has not adjusted the open space tax formula. He also said Madison ought to talk with ratings agency S&P to consider its thoughts on what the borough can do to maintain its AAA bond rating, which received a "negative outlook" last year.

Wolkowitz said S&P's written report made it clear why the ratings agency gave Madison a negative outlook, such as several years of drawing down surplus to balance the budget. He said recent events such as the announcement that Pfizer, Madison's largest property taxpayer and second-largest electric utility consumer, is leaving, and uncertainty surrounding federal budget cuts, show why it is important for Madison to build its surplus.

The vote on the budget went along party lines, with the exception of Republican Councilman Bob Landrigan, who voted to introduce the budget along with Democrats Council President Carmela Vitale, Councilwoman Astri Baillie, and Wolkowitz.

Landrigan, Madison's Office of Emergency Management coordinator, said prudent budgeting allowed the borough to absorb costs from Superstorm Sandy without waiting for emergency federal funds.

"We weren't foolish. We did the right thing," Landrigan said during the meeting. "Would I like to say zero percent and make a statement? Sure, but that's not the right thing to do."

Officials said while the public hearing on the budget is set for April 8, the budget might not be voted on until a later meeting because the state might need more time to review the budget, which needs to be done before it can be approved.