Borough residents will see no tax increase under this year's proposed municipal budget.

The proposed budget maintains all services at current levels and anticipates no staff reductions, Mayor Raymond Eppinger said.

“Even with cuts in state aid and these uncertain times, this administration continues to fulfill its promise to restore fiscal order to the Borough,” Eppinger said.

The proposed budget is about $31.3 million. If approved, the municipal tax rate would be $1.942, a slight decrease from last year, said business administrator Andrew Salerno. A homeowner would pay about $5,205 in taxes for a home assessed at the borough average of about $84,000, he said.

Last year, the borough saw a 19-percent tax rate increase.

“Last year, we had the big tax increase mostly due to a drop in revenue,” Eppinger said. “We had less collections from host community benefits, less state aid and things of that nature. We also had issues with budgetary things that we had to adjust and address. It was like a tsunami. We got hit all at once. We knew it would be tough on the taxpayers last year … We are in a much better financial position now.”

The borough has three components to its budget.

Under the proposed budget, the water utility will see a 15-percent increase this year, with a total budget of about $3.2 million.

“We're paying more for water as well as upgrading the infrastructure,” Eppinger said.

The electric utility totals about $13 million and the current operating fund is about $15.1 million.

To balance this year's budget, money from the electric surplus will be transferred to the general fund, officials said.

“We have been much more aggressive in finding accounts that needed to be updated and brought on to the books,” Eppinger said. “We've also been much more aggressive with collecting. It's all now paying dividends.”

“We're using the electric surplus, which we historically have done,” Borough Administrator Andrew Salerno said. “We believe we can sustain the surplus for the next three years. Then in 2012 we probably will be facing some increases with our wholesale cost. We'll need to prepare to address that and that will impact upon the amount of surplus you'll have available.”

South River is one of several towns, including Milltown, that operate an electric utility as part of a co-op Public Power Association.

The budget book is available at the library, Borough Hall and posted on the Web.

Susan Loyer: 732-565-7243; sloyer@MyCentralJersey.com