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June 30, 2011

Re:    Legislature Send Budget Bill to Governor

Dear Mayor:

Yesterday, both Houses of the Legislature passed and sent to the Governor a spending plan for the State’s next Fiscal year, which begins this Friday. The Governor will soon line-item veto the bill, removing and cutting certain appropriations. With those changes, it will likely be signed it into law.  Additionally, both Houses passed supplemental appropriations bills, funded by the controversial “Millionaires’ Tax.” It is anticipated that the Governor will veto these additional appropriations, corresponding to the reductions in his line-item vetoes. 

The appropriations bill that was passed yesterday (S-4000), anticipates revenues that the Governor has not certified. The Legislature’s revenue estimates are based on projections made by the highly respected non-partisan Office of Legislative Services (OLS). But the State Constitution specifies that the Governor’s certification of revenues controls spending and determines budgetary balance.

Based on the OLS projections, the bill passed yesterday would, among other things:

  • Provide funding to meet the requirements for “Abbott District” funding, pursuant to the Supreme Court’s latest school funding decision;
  • Direct $580 million to the 215 non-Abbott, below adequacy districts;
  • Distribute $87 million among every other school district in the state;
  • Restore funding cuts for Earned Income Tax Credits (EITC) for the working poor;
  • Restore funding for the Senior Citizens’ Property Tax Freeze;
  • Restore women’s health funding; and
  • Restore Tuition Aid Grants.

For municipalities, the bill includes three new provisions.

First, the bill would provide $50 million to municipalities with higher than average tax rates and/or lower than average property values, which have experienced an increase in crime rates. These funds could only be used for public safety, homelands security or other purposes that promote the safety and security of our citizens. With foreclosures up, collections down, property values ebbing and the demand for vital services rising – and forced to work within the confines of the inflexible 2% levy cap – this appropriation is timely and suitable to help meet real needs.

Second, the bill would return about $49 million from Sales Taxes collected in and promised to New Jersey’s Urban Enterprise Zone municipalities for economic redevelopment. The Urban Enterprise Zone Program was created in 1983 to foster economic redevelopment in designated municipalities, by encouraging the private sector to create jobs in those communities. As we indicated in our testimony to the Legislature, never has such assistance been needed more. Now is not the time for any cuts.

Third, the bill would base Division of Local Government Services (DLGS) “Best Practices” scoring on a municipality’s compliance with appropriate and predictable requirements. For scoring purposes, DLGS would rely on your answers to questions included on last year’s inventory. New “Best Practices” included on this year’s list could be factored in to next year’s tabulations. This provision will ensure fairness to municipal officials and taxpayers, and allow DLGS to offer an improving and evolving inventory of “Best Practices,” annually.

Both Houses are scheduled to return today. We will keep you posted on the latest, as quickly as we can.

Very truly yours,


William G. Dressel, Jr.
Executive Director



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