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Chuck Chiarello / N.J. must stop skimming energy-tax funds from towns
(article appeared on the website on April 9, 2012)

Once upon a time, there really was property-tax relief. Systematically, the state of New Jersey has taken property-tax relief away from you. It didn't happen overnight - in fact, it's been going on for about 20 years through many governors of both parties. However, the problem has gotten worse in recent years.

In 2011, a total of $505 million in energy taxes was taken by the state from all the municipalities in New Jersey. This is up from $72 million in 2005.

What are energy taxes? They are taxes paid by utility companies for electric and gas lines that run through every town in New Jersey; the energy taxes are paid to municipalities in lieu of property taxes. There was a time about 40 years ago when each municipality received these energy taxes directly from the utility companies. Then Trenton got a bright idea to collect all the energy taxes directly, split up the money and then return it back to every community in New Jersey with a handling charge. The state cleverly renamed the energy taxes and began to call the money "state aid." The state gave us our own money back and made it sound like it was helping us.

There was even a time when some communities did not have to collect any local property tax from residents because the energy taxes covered those bills. That was before the state got hold of the money and began using it to fund state programs or fill budget gaps.

Now is the time for the Legislature and the governor to give back to the municipalities the money they have skimmed off the top. Towns could use these funds to prevent future tax increases and provide property tax relief.

The New Jersey State League of Municipalities has been fighting this issue for a number of years but intensified its efforts in 2011. Now, in 2012, the league is making an even greater effort: Don't let the state take money away from local property-tax payers.

Local governments collect the taxes for our schools, county, and other entities. We must give 100 percent of those funds to the entities we collected the money for - we can't skim those dollars. Likewise, the state owes municipalities 100 percent of their energy-tax dollars and should not skim money off the top.

In little Buena Vista Township, we have lost $5 million over the past 10 years. Imagine what we could have done for our taxpayers with that type of relief.

It will likely be impossible to go backward to make up for our losses, but we can stop the skimming now. Imagine what this could mean for the larger towns in this region. Here's one example: Egg Harbor Township lost almost $18 million over the past 10 years.

Energy taxes are a bipartisan issue. Big town or small, urban or suburban - all property owners would realize savings.

The League of Municipalities calls on our state policymakers to provide us with this important tool to relieve the worst-in-the-nation property-tax burden that has been borne for too long by the people of New Jersey.

The state does have the right to override the statutory dedication of these revenues to local governments, but this should be done to deal with real emergencies and crises that occur. It should not be the normal way the state deals with these funds.

Please let your legislators and the governor know that you want energy taxes and other taxes that have been skimmed off restored back to our municipalities where the revenue rightfully belongs. This will bring real property-tax relief to our residents and result in better management of local budgets. Your priorities as a property-tax payer are just as important as many other projects that sidetrack your dollars in Trenton.

We cannot solve this problem without your support. Hundreds of municipalities have already passed resolutions in support of restoring the energy taxes. More information is available on the League of Municipalities website at under the heading of "Energy Tax Restoration Center." Each town can calculate the amount it has lost in the past 10 years. You will find the amount of money involved to be amazing.


Chuck Chiarello, a committeeman in Buena Vista Township, served as mayor for 17 years and is immediate past president of the New Jersey League of Municipalities.



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