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Again, we appreciate the State’s annual fiscal crisis, and we agree that the current state of affairs cannot be blamed on any one individual, party, branch or level of government. But we know that in no way can the blame be placed on our long-suffering property taxpayers. Accordingly, we object to those aspects of the Governor’s proposed Budget for the State’s 2008-2009 Fiscal Year, which ask those taxpayers to bear an inordinate share of the burden caused by past State policy mistakes.

One year after the historic Special Session for Property Tax Reform, which purportedly eliminated the need for a Citizens’ Convention, Mayors across the State feel that the rug has been pulled out from underneath them. And property taxpayers will be asked to shoulder more than their fair share of the funding burden.

In his Budget Address to the Legislature, among the many proposed cuts, the Governor mentioned three funding areas he was forced to short-change – hospitals, higher education and municipal property tax relief. Guess which one of those faces the deepest dollar cuts? Higher Ed will be cut by $75.6 million. Hospitals will lose $143.5 million. And municipal property tax relief will be slashed by $189.6 million.

This proposal will eliminate Consolidated Municipal Property Tax Relief Aid (CMPTRA) for any municipality with a population of under 5,000. It will cut CMPTRA funding in half for any municipality with a population between 5,000 and 10,000. And all but a handful of those with more than 10,000 citizens face substantial cuts in property tax relief, with some losing millions of dollars.

 Based on Trenton’s untested conventional ‘wisdom’ that bigger government is necessarily better government, and irrespective of extensive current service sharing arrangements, these arbitrary population limits seem designed to force local officials into otherwise unwise and inefficient consolidations.

The Consolidated Municipal Property Tax Relief program is composed of a number of previously discrete municipal property tax relief funding programs. Many of those programs were initiated as local taxes that lessened reliance on general property taxes. It was at the request, and for the convenience, of the taxpaying corporations that the State became the collection agent or decided to repeal those programs, which had previously provided direct dollars to municipal budgets. Those components of the consolidation, therefore, represent ‘revenue replacement’ funding, designed to keep things from becoming worse for municipal property tax payers, in all host municipalities, regardless of the number of their fellow municipal citizens.

Further, permanent State statutes mandate annual inflationary adjustments to the CMPTRA and Energy Tax funding programs. And the under-funding or elimination of virtually every other source on local property tax relief will adversely affect tax payers all around the State, many in municipalities facing special demographic- and density-driven budgetary needs.

For example, the $32.6 million distributed according to the CMPTRA formula, which municipalities received last year as 2008 Municipal Property Tax Assistance, is gone. All municipalities will receive level Energy Tax funding, despite State Law that ‘requires’ annual inflationary adjustments of this (and CMPTRA) funding. Last year, municipal efficiency was promoted to the tune of $34.8 million. This funding has been eliminated. Last year’s $32 million in Homeland Security Assistance is gone. Special Municipal Aid funding is cut from $153 million to $145.4 – a loss of $7.6 million. Extraordinary Aid funding is reduced by $1.7 million – from $34 million to $32.3 million. The $8 million Regional Efficiency Aid Program will not be funded. Open Space PILOT is the only municipal property tax relief funding that we have been able to identify that will actually increase – by $200,000, from $9.8 million to an even $10 million.

Again, we appreciate the problems that State officials face in putting together a responsible spending plan for our State’s next Fiscal Year. But we urge them to refocus on our mutual responsibility to relieve the burden of regressive and excessive property taxes.

If there needs to be a discussion about phasing in property tax relief funding cuts to address the State’s budget problems, we want to have a seat at the table. If there is to be a serious discussion about the way municipal property tax relief funding is distributed, we want to have a seat at the table. And if anyone in Trenton really wants to discuss how we can make property tax relief predictable, substantial and sustainable, we want a seat at the table. We know that if you don’t have a seat at the table, you’re probably on the menu. And this budget proposal seems to make us and our property taxpayers the main course.

William G. Dressel, Jr.
Executive Director



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