Last week’s dramatic announcement from the Lakewood Student Transportation Authority (LSTA) that they will be raising the fee for non-mandated children to opt into the busing program has raised questions about why the reduction is happening now and what prompted the township to make the cut so soon before school started, when the state budget was approved in late June.

Asked for comment, Township officials tell The Lakewood Scoop that the subsidy reduction only came after the State Local Finance Board rejected Lakewood’s request to raise an additional $12.9 million in property tax revenue above the state’s 2% cap, which would have allowed the township to raise and spend additional property tax revenue.

TLS first reported on that decision earlier this month.

With that request rejected, officials say the township has been forced to make difficult reductions to its budget — and more cuts could be coming.

The Local Finance Board voted 4-3 against Lakewood’s request for $12,927,234.41 in cap relief after board members expressed concerns about the township’s repeated reliance on cap waivers and the long-term sustainability of its finances.

With the waiver now rejected, township officials say they are being forced to make additional reductions, including the approximately $2.75 million cut to the LSTA.

The latest development follows a broader reduction in state funding for Lakewood. The state’s fiscal 2027 spending plan provides $1 million in discretionary municipal aid to the township — a restoration from the governor’s original proposal, but a sharp decline from the $8 million and $7 million provided in the previous two state budgets.

Township officials and local lawmakers have argued that Lakewood’s rapid population growth has placed extraordinary demands on municipal services while state funding formulas have failed to keep pace.

The township is now facing the challenge of balancing those demands while remaining within the state’s tax cap.

At the Local Finance Board hearing, township Administrator Pat Donnelly outlined a series of steps Lakewood has already taken to reduce spending, including a hiring freeze, limiting replacement of retirees and restricting promotions to positions considered necessary to maintain staffing levels.

Donnelly also told the board that Lakewood has begun preparing a potential layoff plan and is examining ways to reduce costs and potentially scale back certain services.

“We recognize that there’s areas that we just need to financially find a way to kind of stuff as much as we can inside this envelope,” Donnelly said.

Township officials tell TLS that the LSTA reduction should therefore not necessarily be viewed as an isolated cut, and more cuts may be coming.

The township is continuing to examine its budget and municipal operations in an effort to close the gap created by the loss of anticipated revenue and state funding.

The financial pressure comes as Lakewood continues to experience significant population growth and increasing demands for police, public works, emergency medical services, road maintenance, snow removal and other municipal services.

Snow removal alone was cited as a major unexpected expense this year. Donnelly told the state board that Lakewood spent approximately $8 million following an unusually severe winter, compared with roughly $1 million to $2 million in a typical year.

The township also sought federal reimbursement for some of the storm-related expenses following the state of emergency declared by the governor, but those efforts were rejected by the Trump administration, which the state is appealing.

Local Finance Board members acknowledged the unusual pressures facing Lakewood but said the township could not continue indefinitely relying on large cap waivers.

For now, the township must operate within the revenue limits imposed by the state, and officials say that means difficult decisions about municipal spending — including the LSTA subsidy — are likely to continue.

The $2.75 million LSTA reduction is thus the latest visible consequence of the state’s decision not to grant Lakewood the additional $12.9 million in property tax authority it sought.

And according to township officials, it may not be the last.