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A million-dollar standoff in N.J.

When Pemberton Borough cut its school taxes, Trenton said the new levy would be too low - and ordered more.

Enough money to pay the bills and cut the tax rate, too. How could they go wrong?

That's what officials with the pocket-size Pemberton Borough School District thought when they settled on the tax levy they planned to put before voters in the April 21 school election.

In the coming year, overall costs were down. A "sending district" that exports most of its students to Pemberton Township, the borough closed its one school in 2007. Its superintendent retired last June and wasn't replaced. That saved a chunk of change. Pass it on to the taxpayers, district officials decided.

But hold on, there. According to the state Department of Education, Pemberton Borough's generous impulse was illegal. The $910,166 that district officials proposed to tax residents fell below the minimum required by the state's education-funding law, according to borough officials. They needed to raise an additional $93,744.

No way, fired back Pemberton.

What has followed is one of the odder governmental dustups this side of Trenton. Pemberton Borough, population 1,210, has dug in its heels. So has the state.

"The law dictates our action in this matter," said Richard Vespucci, a state education spokesman. "We are obligated to follow the law, and local school officials are obligated to follow the same law."

But the borough has not been moved.

"It's just insane in these economic times, with taxes going up as much as they have, that they won't let us cut taxes as they did before," said John Knorr, the district's school business coordinator.

Knorr noted that five times in the last two years districts were allowed to raise less than the state minimum.

That's true, Vespucci said, but since then the New Jersey attorney general has barred exceptions to the law, which is intended to distribute school support fairly across all districts.

Under the state's levy, the owner of a $100,000 home would pay $1,569, or $147 more than Pemberton Borough wants to charge.

Another district, Lake Como in Monmouth County, wanted to go below the minimum this year but relented, New Jersey School Boards Association spokesman Frank Belluscio said. Some legislative adjustments to the formula law may be worth contemplating, he suggested.

"You want consistency in your funding formula," Belluscio said. "On the other hand, there are other variables that should be considered."

What has transpired in Burlington County is a kind of budgetary Ping-Pong match, and the ball is still in play.

According to Knorr, the Pemberton Borough school board submitted its proposed levy to Lester W. Richens, the county's executive education superintendent, in March. When Richens rejected it, Knorr said, the higher levy was submitted for a public hearing. A session was held, and, amid expressions of citizen support, the board rejected the higher amount.

The board was poised to put its rogue levy on the April 21 ballot when the state Department of Education took the matter to Superior Court and won. The higher amount went to the voters . . . who rejected it.

How to respond to the voters' mandate fell to the Borough Council. On May 18, it voted unanimously to reduce the levy - a recommendation the school board accepted, Knorr said.

The next volley is probably the state's. If the Borough Council fails to raise its figure to the state's $1,003,940 minimum, Vespucci said, Education Commissioner Lucille Davy has the authority to set the levy. If that happens, the borough will consider making its case before a judge, Knorr said.

Pemberton Borough just doesn't need all that money, he said. The township school district has informed the borough that it has a credit of about $87,000 for overpaid tuition. And while imposing the minimum levy would give residents a cut in their tax rate, borough officials had hoped to shave off almost 15 cents more.

The issue is bigger than Pemberton Borough, said Knorr, a retired state education employee who was county schools business administrator in Burlington and Camden. By his count, about 50 New Jersey school districts impose the minimum levy.

"What this means is those districts can never lower the tax levy, no matter what," Knorr said.

So Pemberton Borough will continue to wage its mini tax revolt.

"I know we're . . . probably going to lose," Knorr said. But for now, the borough isn't budging.