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February 26, 2008

                                                                                    RE: State Budget proposal

Dear Mayor,

Today in Trenton, Governor Corzine presented his FY 2009 Budget to a Joint Session of the State Legislature. This proposal now goes to the Legislature, which must pass a balanced budget by the start of the State’s next Fiscal Year, which begins on July 1.

The proposal represents what the Governor called “many unpleasant choices.” It calls for the elimination of two Departments of State Government (the Departments of Agriculture and Personnel) and the State Commerce Commission. And it asks all other Departments to absorb funding cuts. It further calls for sacrifice in a number of other areas, including direct property tax relief, hospital aid, higher education assistance and Medicaid. But the deepest cuts appear to be in municipal property tax relief funding.

This proposal will eliminate Consolidated Municipal Property Tax Relief Aid (CMPTRA) for any municipality with a population of under 5,000 (194 municipalities) and it will cut CMPTRA funding in half for any municipality with a population between 5,000 and 10,000 (136 municipalities). Based on Trenton’s untested conventional ‘wisdom’ that bigger government is necessarily better government, measured in terms economic efficiency, and irrespective of current service sharing arrangements, these arbitrary population limits seem designed to force local officials into otherwise unwise and inefficient consolidations.

Be advised that NJSA 40A:4-45.45 b.(2) provides an exclusion from the levy cap for increases in the property tax levy for “amounts required to be raised to replace State formula aid due to a reduction in State formula aid from the previous local budget year.” And, we understand that those municipalities sharing in the cuts, which total $62 million, will be given priority consideration in the apportionment of  the $32 million available as shared services incentives.

Despite State statutes that require inflationary increases in CMPTRA (and Energy Tax) funding for ALL municipalities, those municipalities with a population of more than 10,000 will get the same CMPTRA funding that they received in last year State budget.

Other municipal property tax relief funding cuts include $-1.7 million from Extraordinary Aid, $-32 million from Municipal Homeland Security Assistance, $-8 Million in REAP funding and $9.2 million less appropriated to the SHARE program (though $22 million unexpended in the current year will be carried forward).

One year after the historic Special Session for Property Tax Reform, which purportedly eliminated the need for a Citizens’ Convention, our property taxpayers will once again be asked for patience. And they will be asked to shoulder more than their fair share of the funding burden.

We will have a more complete run-down of the proposal ready for you tomorrow. For now, you can access the Governor’s speech at:

Very truly yours,

William G. Dressel, Jr.
Executive Director


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