Articles Taxes and budget
Township Debt and the 2026 Budget, Explained
Montgomery's issued debt fell in 2025, and its net debt is 0.614% of property value against a 3.5% legal limit. The audit's synopsis seems to show debt jumping by $27 million, but its two years are counted differently: 2025 includes the Municipal Complex lease for the first time. The 2026 budget raises the most the state's levy cap allowed, and $5.26 million in notes come due December 10. The figures, what each percentage measures, and what is not known.
The short version
- Issued debt fell in 2025. The township’s net debt issued went from $64,157,382.54 at the end of 2024 to $59,608,497.61 at the end of 2025 (2025 audit, Note 3).
- It is well under the legal limit. Statutory net debt is 0.614% of equalized property value. The state limit is 3.5%.
- The synopsis’s “jump” counts two years differently. Its 2025 figure includes, for the first time, $31.7 million owed under the county lease that paid for the Municipal Complex and library. The 2024 figure does not. The audit does not say why the lease was added.
- The 2026 levy is at the cap. The budget raises $20,270,740.50 in property tax, $0.54 under the most the state’s 2% levy cap allowed.
- Notes come due December 10. $5,256,850 in bond anticipation notes mature that day, and the 2026 budget does not set aside money to pay them down.
Debt at the end of 2025
The audit’s Note 3 summarizes the township’s borrowing. Sewer debt is repaid from sewer fees and is deducted from the legal-limit calculation, as is school debt.
| End of 2025 | End of 2024 | |
|---|---|---|
| General bonds, notes and loans issued | $36,326,850.00 | $38,606,850.00 |
| Sewer utility bonds, notes and loans issued | $23,789,621.98 | $26,252,405.91 |
| Less funds held to pay general bonds and notes | $507,974.37 | $701,873.37 |
| Net debt issued | $59,608,497.61 | $64,157,382.54 |
| Authorized but not yet issued, general | $5,382,490.00 | $2,433,490.00 |
| Authorized but not yet issued, sewer | $33,303,097.00 | $33,253,097.00 |
The legal limit. The audit quotes the township’s Annual Debt Statement: net debt of $41,201,365.63 divided by an equalized valuation basis of $6,712,054,967.67 “EQUALS .614%.” Under the 3.5% limit the township could borrow up to $234,921,923.87, leaving “Remaining Borrowing Power” of $193,720,558.24. The 2024 audit gave 0.657%.
The rating. The township’s 2026 budget presentation shows a Moody’s rating of Aaa and quotes Moody’s: “The rating also incorporates the township’s modest debt burden.” The presentation does not give the date of the Moody’s report. Introducing the budget on April 16, 2026, Deputy Mayor Barragan listed “Protect the Township’s Triple A Bond Rating” among its key points, the minutes record.
Why the synopsis seems to show debt rising
The township published a one-page “Summary or Synopsis of 2025 Audit Report” as a legal notice on August 14, 2026. Its General Capital Fund lines read:
| Line | Dec 31, 2025 | Dec 31, 2024 |
|---|---|---|
| Bonds and Notes Payable | $91,841,031.93 | $64,859,255.91 |
| Deferred Charges to Future Taxation-General Capital | $73,433,899.95 | $41,040,340.00 |
The full 2025 audit (statement “C”) shows what changed. Its 2025 balance sheet carries a new pair of lines, “Deferred Capital Lease Obligations” and “Capital Leases Payable,” each $31,724,559.95. The 2024 audit’s balance sheet had no lease lines, and the synopsis’s 2024 column was taken from it.
By LocalWhy’s arithmetic from the audit’s own figures, which ties to the cent:
- 2025 bonds and notes: $36,326,850.00 general + $23,789,621.98 sewer + $31,724,559.95 lease = $91,841,031.93, the synopsis figure.
- 2024 bonds and notes: $38,606,850.00 general + $26,252,405.91 sewer = $64,859,255.91, the synopsis figure, with no lease.
- Like for like, bonds and notes fell from $64.86 million to $60.12 million without the lease. The 2025 audit’s own balance sheet restates its 2024 column with the lease ($32,345,000.00); on that basis the total fell from $97.20 million to $91.84 million.
What the lease is. In a 2016 lease-purchase agreement, amended and restated in 2020, the Somerset County Improvement Authority bought the former Convatec site on Orchard Road and leases it to the township, which will ultimately own it (Res. #24-5-179, May 16, 2024). The township’s presentation lists “Municipal Complex (including library) $31,585,000” under “Improvement Authority Loans.” The authority’s “County Guaranteed Lease Revenue Bonds” of September 10, 2020 ($36,065,000) run to August 2, 2050 (audit Schedule C-14). The township budgets $1,914,000 a year for the “Improvement Authority Lease.” The remaining $139,559.95 of the 2025 lease total is a lease for two police vehicles. The lease is not counted in the 0.614% statutory figure.
Why it was added in 2025 is not stated. The same firm, Suplee, Clooney & Company LLC, prepared both the 2024 and 2025 audits. Neither the audit’s lease note (“LEASE PURCHASES”) nor its other notes explain the change. The audit does not say why the lease was added to the balance sheet.
The 2026 budget
| 2026 | 2025 | |
|---|---|---|
| Total general appropriations | $34,733,531.40 | $35,653,850.48 |
| Core budget, excluding grants (presentation) | $32,826,592 | $31,718,666 |
| Amount raised by taxes (levy) | $20,270,740.50 | $19,434,108.00 |
| Surplus used | $5,100,000 | $5,300,000 |
| Grants | $1,903,380 | $3,931,626 |
| Municipal debt service | $5,961,500.00 | $5,861,131.88 |
| Municipal tax rate (per $100 of assessed value) | 0.501 | 0.480 |
| Municipal tax on the average assessed home | $2,534.26 (home assessed at $505,749) | $2,435.52 |
The total fell because grants fell by $2,028,246; the core budget rose by $1,107,926.
Three measures of the increase. Each is correct for what it measures.
| Measure | Change | Where it comes from |
|---|---|---|
| Core budget (appropriations excluding grants) | 3.49% | Presentation: “3.49% increase in core budget compared to 4.0% Inflation” |
| Municipal tax rate | 4.39% | Presentation: “Tax Rate Increase = 4.39%“ |
| Tax levy (dollars raised) | 4.30% | LocalWhy’s arithmetic: $836,633 ÷ $19,434,108 |
On the average assessed home, the presentation gives a “$98.74 ANNUAL Increase” in municipal tax. It also shows an “Average Annual Increase of approximately 2.98% since 2020” in the municipal rate (0.425 to 0.501).
How officials summarized it. At the May 14 hearing the chief financial officer said the average assessed home paid “$2,133 for municipal services” in 2020 and pays “$2,534.00” under this budget, “an 18% increase over 6 years; an average of about 3% per year.” After the adoption vote the Mayor read a statement that the minutes summarize as “Tax increase 3.49%, excluding grants, resulting in an annual increase of approximately $98.74 or $8.23 per month for the average assessed home” and “Municipal portion of total property taxes accounts for 13.75%.” The presentation labels 3.49% as the “increase in core budget”; the levy and rate measures are in the table above, and the 2026 rate breakdown is below.
Stated cost drivers (presentation, “No increases in discretionary spending”):
| Item | Increase |
|---|---|
| Health insurance | $266,000 |
| Police salary | $260,000 |
| Other salaries | $145,250 |
| Capital improvement | $143,000 |
| Debt expense | $100,368 |
| Utilities | $79,500 |
| Payroll taxes | $40,000 |
| Pensions | $26,000 |
| Total | $1,060,118 |
The levy cap. State law limits the yearly rise in the amount raised by taxes to 2%, with set exclusions. The adopted budget’s cap sheet gives a “Maximum Allowable Amount to be Raised by Taxation” of $20,270,741.04. The budget raises $20,270,740.50, which the sheet marks “(0.54)” under the cap. Reaching it used $52,062 of unused cap from 2023; $460,427 of that 2023 allowance expires, and $141,125 of banked cap remains. The exclusions are health insurance $208,220, pensions $7,210, capital improvements $143,000 and “Debt Service and Capital Leases” $15,368. Separately, Ordinance #26-1774 let appropriations rise by up to 3.5%; it does not set the tax rate. It was introduced March 5, 2026 (5-0) and adopted March 31, 2026 (4-0, Committee Member Martin absent).
Votes. The budget was introduced April 16, 2026 by Res. #26-4-135, 5-0 (Martin, Ahn, Taylor Todd, Deputy Mayor Barragan, Mayor Singh), and adopted May 14, 2026 after a public hearing, 5-0.
Fund balance. The current fund balance was $8,793,869.24 at December 31, 2025, down from $9,217,495.11 (synopsis). A presentation slide titled “Ongoing Use of Surplus is Reducing Available Reserves” shows $3,703,869 left after the 2026 budget’s use, labeled “Lowest level since 2019.” Presenting the audit on September 3, 2026, the chief financial officer said, in the meeting video’s captions: “WE’RE DOWN FROM JUST ABOUT 9.2 TO 8.8. SO WE NEED TO STOP THAT BLEEDING. AND ONE OF THE WAYS WE DID THAT IS BY DECREASING THE USE OF SURPLUS IN OUR BUDGET THIS YEAR FROM 5.3 MILLION TO 5.1 MILLION.” The 2026 budget uses $5,100,000 of surplus; the 2025 budget used $5,300,000.
The resident petition
At the April 16, 2026 meeting, the minutes record, Raj Koltur, a Montgomery resident, speaking on behalf of residents “presented a petition with 500+ signatures requesting $3 million in budget reductions for the 2026 municipal budget as follows: discretionary and controllable spending reduction by 10 percent across the board; a hiring freeze, not backfilling any open positions for 2026; pausing new sewer capital projects in 2026; shift to a flat sewer rate; and evaluate residential permit sharing agreement with Hillsborough.”
The budget was adopted on May 14 with the same total and levy as introduced; LocalWhy found no amendment between the two meetings. The 2026 sewer bond ordinance (#26-1777, $300,000 for plant pumps and collection-system repairs) and the sewer rate ordinance (#26-1775) were adopted the same night, both 5-0. At the May 14 meeting, the minutes record Koltur, in public comment before the hearing, thanking the Committee “for their willingness to address residents’ concerns presented in a petition,” and the Mayor, in her statement after adoption, extending “gratitude to the petitioners for reaching out and sharing their concerns.” The petition’s full text and signers are not posted.
Where the 2026 tax bill goes
The Somerset County Board of Taxation’s 2026 abstract gives Montgomery a general tax rate of 3.607 per $100 of assessed value:
| Goes to | Rate per $100 | Share (LocalWhy’s arithmetic) |
|---|---|---|
| Montgomery schools (regional district) | 2.457 | 68.1% |
| Somerset County: county 0.490, library 0.065, open space 0.054 | 0.609 | 16.9% |
| Montgomery Township: municipal 0.501, open space 0.040 | 0.541 | 15.0% |
Fire-district tax is billed separately and is not in this rate. The school budget is set by the elected Board of Education; see school budget and facilities.
What is coming
- December 10, 2026: notes mature. The $5,256,850 in bond anticipation notes (Ordinances 2022-1686 and 2023-1699; audit Schedule C-10) were first issued December 12, 2024 and renewed December 11, 2025 at 3.75%. The 2026 budget appropriates $2,368,000 in bond principal, $1,482,000 in bond interest, $197,500 in note interest and $1,914,000 for the lease. Its “Payment of Bond Anticipation Notes” line is blank. The notes must be renewed, paid or replaced with bonds. LocalWhy’s reading of the state’s note-renewal rule (N.J.S.A. 40A:2-8), not confirmed by the township, is that no paydown is yet required.
- General borrowing authorized but not issued. By LocalWhy’s sum, $8,472,600: Ordinances #24-1730 ($2,433,000), #25-1753 ($2,499,000), #25-1766 ($450,000) and the 2026 capital ordinance #26-1776 ($3,090,600, adopted May 14, 2026, 5-0). Whether the township will sell permanent bonds, and when, is not public.
- Sewer. At the end of 2025, $33,303,097 of sewer debt was authorized but not issued, mainly the Stage II plant ($17,000,000) and the Pike Brook plant ($14,600,000). On March 5, 2026 the Committee voted 5-0 (Res. #26-3-96) to sell up to $17,000,000 of Stage II bonds to the New Jersey Infrastructure Bank and the State. The Cherry Valley consolidation has no bond ordinance yet; see wastewater consolidation.
- Tax appeals. The audit holds a $1,000,000 Reserve for Tax Appeals (Note 10). See the Kenvue tax appeal.
The 2025 audit was certified by Res. #26-9-236 on September 3, 2026, 5-0 (Herring, Martin, Ahn, Taylor Todd, Singh). The township’s September 3 finance update gives a 2025 tax collection rate of 99.04% ($140.2 million collected), and charts the share of each year’s levy collected by August 31: 69.84% in 2026, against a 2021-2025 average of 67.04%.
What is not known
- Why the 2025 audit added the county lease to the General Capital balance sheet, and why the synopsis’s 2024 column was not restated to match. Only the township’s chief financial officer or the auditor can say.
- How the budget notice’s “Balance of Outstanding Debt” (general principal $65,442,650.00; sewer principal $27,372,596.00) ties to the audit. LocalWhy could not reconcile it, and the notice gives no as-of date.
- The plan for the December 10, 2026 notes and any 2027 bond sale.
- The closing date and final amount of the Stage II state loan, and the long-term financing for Pike Brook and Cherry Valley.
- The petition’s full text and signers.
What residents can do
- Watch the Committee agendas for November 12, December 3 and December 17, 2026 (check the meeting calendar). A note renewal or bond sale would appear there.
- Read the records. The 2025 audit and the 2026 adopted budget are on the township site.
- Ask in writing. Questions on the lease presentation can go to the township’s chief financial officer; records such as the petition can be requested from the Clerk under the Open Public Records Act.
- Speak at the 2027 budget hearing. The budget is usually introduced in the spring, with a public hearing before adoption.