In February, Governor Corzine introduced his proposed budget for the state’s next fiscal year. It included a $20 million increase in total municipal property tax relief funding. And, though that is just over a 1 percent increase, it includes a new $32.6 million line item, which will give the vast majority of municipalities a 2 percent increase in general formula aid.
Because municipal property tax relief funding has been held flat for the past five years, any proposed increase in formula assistance funding represents a positive commitment. It testifies to the fact that Governor Corzine has not failed to recognize the connection between municipal property tax relief funding and municipal property taxes; even though that connection was not made by the Legislature’s Special Session for Property Tax Reform. This increase will help local officials limit property tax increases.
Our colleagues in the State House need to remember that the lion’s share of the formula aid that municipalities receive from the state is a partial replacement for funds that were originally direct sources of municipal revenue. From Public Utility Gross Receipts and Franchise Taxes, now distributed as Energy Tax Receipts Property Tax Relief, to Business Personal Property Taxes, Financial Business Taxes and Class II Railroad Property Taxes, all of which have been folded into Consolidated Municipal Property Tax Relief Aid, these revenues were intended for municipal use from their beginnings. When the state became the collection agent for these taxes, it pledged to redistribute the funds back to local governments. So, from our perspective, these do not constitute new “aid” from the Treasurer of New Jersey. Instead, we see them as local revenues, temporarily displaced.
Aside from formula aid, Special Municipal Aid will increase from $94.7 million to $132 million—a gain of $37.3 million. And a new $19.2 million program to encourage consolidations and shared services will include last year’s SHARE funding ($4.2 million) plus 15 million new dollars.
On the negative side of the balance sheet, Extraordinary Aid is slated to be cut from $43 million to $25 million. The $11 million REAP funding is slated to be eliminated. And $35.9 million, loosely referred to as “Municipal Assistance—Legislative Earmarks,” is also recommended for termination.
We will continue to work with Governor Corzine, with any legislators who recognize the need for further progress, and with our partners in the Citizens Convention Coalition, in ongoing efforts to provide meaningful property tax reform and substantial and sustainable property tax relief for New Jersey’s citizens.
Editorial from New Jersey
Municipalities, Volume 84, Number 3, April 2007