Statement By Gary Passanante, Mayor of Somerdale …

STATEMENT BY THE HONORABLE GARY PASSANANTE,
MAYOR OF SOMERDALE,
MEMBER, NJ LEAGUE OF MUNICIPALITIES EXECUTIVE BOARD,

CO-CHAIR, NJLM PROPERTY TAX REFORM COMMITTEE
REGARDING POSSIBLE

CONSTITUTIONAL AMENDMENTS TO PROMOTE GREATER PROPERTY TAX RELIEF AND REFORM

BEFORE THE JOINT LEGISLATIVE COMMITTEE ON CONSTITUTIONAL REFORM AND

A CITIZENS PROPERTY TAX REFORM CONVENTION

THURSDAY, SEPTMEBER 28, 2006

COLLINSWOOD, NJ

Thank you Chairman Burzichelli, Chairman Kenny and Members of the Committee. I am Gary Passanante, Mayor of Somerdale, a member of the League of Municipalities Executive Board and co-chair of the League’s Property Tax Reform Committee. I am also honored to serve as the Chairman of the Citizens Convention Coalition Executive Committee and served on the Governor’s 2004 Citizens Convention Task Force.

I know that your focus today is on specific Constitutional Reform and I intend to address that issue. But I also would welcome the opportunity to appear before you again, when you begin to consider the second part of your Committee’s charge – to “determine whether amendments to the State Constitution should be recommended to the Legislature for submission directly to the voters or whether such amendments should be referred to a citizens property tax constitutional convention to be convened for the purpose of reforming the system of property taxation.”

In our opinion, this special session of the Legislature will have been a success if it does nothing more than coalesce support in both Houses for action to advance a Citizens Convention. Our taxpayers need to know that if the State Legislature fails to enact real property tax reform, then they themselves can take the next crack.

On behalf of the League of Municipalities and the Citizens Convention Coalition, I want to offer you all our support and whatever assistance we can provide. And I want to express our sincere hope that the Legislature will make history and obviate the need for a Citizens Convention, by passing real and sustainable reforms before the end of this year.

On the issue of Constitutional reform, I’d like to focus on a few areas that you should consider.

Over the last century, many taxes that had been collected by local governments were either abolished or became State taxes. In most cases, when these changes were made the State promised to reimburse municipalities either the amount they had been collecting or the amount that the State would collect. But that commitment has not always been scrupulously honored.

These revenues were intended for municipal use from their beginnings. When the State, at the request and for the convenience of the taxpaying businesses, became the collection agent for these taxes, it pledged to redistribute the funds back to local governments.

In the 1990’s, Legislators in both parties and in both Houses recognized the fact that increases in population, prices, wages and employee benefits – increases over which mayors and governing bodies have little, if any, control - erode the ability of local officials to keep a lid on property taxes with “level funding.”

Appreciating that fact, they put laws on the books that were supposed to preserve the property tax relief benefits of at least these two programs, into the future.

According to State sources, in FY 2001, the State provided municipalities with about $1.604 billion in general property tax relief funding. In the State’s last Fiscal Year (2006), the figure was around $1.693 billion. Though we appreciate the State’s struggle to provide a little more than a 5% increase in tough budgetary times; at about half the rate of inflation (11%), that’s hardly enough to help us to stem the rising tide of property taxes.

We understand the State's fiscal problems and did not ask the Legislature to honor its statutory commitment to full municipal property tax relief funding. Still, it is important to remember that, with the passage of this budget, our local property taxpayers will have been denied $283.7 million of relief, over the past five years.

A large percentage of municipal, school district and county spending is mandated by State law. The underlying demand for local public services continues to increase, and the costs continue to rise with inflation and population growth. Without commensurate increases in relief funding, increases in property taxes are inevitable.

For the last ten years, the State Constitution has provided one bright beacon of hope for our beleaguered property taxpayers.

The Council on Local Mandates has the exclusive constitutional authority to rule that a State law, rule, or regulation imposes an unconstitutional "unfunded mandate" on boards of education, counties, or municipalities. Under the Constitution, if the Council so rules, the "unfunded mandate" in the law, rule or regulation ceases to be mandatory in effect and "expires."

Just this past Tuesday, the Council on Local Mandates nullified the new DOT policy regarding local collection and disposal of dead deer on local roads.

Unfortunately, both the Constitutional Amendment and the enabling legislation allow the legislative and executive branches to impose some unfunded mandates. Of the six listed exceptions, or loopholes, one stands out as particularly troublesome. It allows for the State to impose new costs on our property taxpayers, when those costs “are imposed on both government and non-government entities in the same or substantially similar circumstances.”

So, how can the State, through Constitutional Reform, provide needed relief to local governments and, more importantly, to property taxpayers?

We ask you to consider the following.

Give the voters the opportunity to:

* Constitutionalize the promise to annually adjust property tax relief funding to account for inflation, as required by State statute, and to account for increased population;

* Constitutionally expand and increase payments in lieu of taxes to more adequately reimburse local governments for money lost due to state mandated property tax exemptions;

* Constitutionally expand the types of unfunded mandates that can be nullified by the Council on Local Mandates; and, if they judge it necessary,

* Authorize a special convention for property tax reform, and allow the convention to propose statutory, as well as Constitutional changes.

We would like to thank Speaker Roberts for his consistent leadership on the issue of property tax reform and Governor Corzine for making property tax reform a high priority in his first year in office.

Finally, we would like to thank each of you for accepting appointment to this key Committee and for all that you’ve done, not only since August, but throughout your years of public service for the property taxpayers of our Garden State.

Since the introduction of the Citizens Convention concept, the Legislature has said that it is your job and th Statement By Gary Passanante, Mayor of Somerdale …