February 22, 2011
Governor Unveils FY 2012 Budget
Today in Trenton, Governor Christie proposed a State Budget for the Fiscal Year (click here for the budget summary) that will begin on July 1, 2011. Before that date, the Legislature will conduct hearings and pass an Appropriations Act that will govern State spending over the following twelve months.
Leading off with some good news, after three straight years of cuts, we’re relieved that, with this budget, the Governor intends to help New Jersey mayors and governing bodies stop the bleeding. We thank Governor Christie for maintaining formula-based municipal property tax relief funding at current levels.
Faced with a sluggish economy, high unemployment, declining property values, rapidly rising pension costs, benefit and utility costs, an incomplete toolkit and an arbitrary and artificial 2% levy cap; local budgets could not have weathered any further State raids on local revenues.
In his budget speech (click here) today, Governor Christie announced level funding for the Energy Tax, CMPTRA and Open Space Payments In Lieu Of Taxes (PILOT) programs. There are two sources of general municipal property tax relief funding – money that the State collects, but which it had promised to return to local governments. These are: the Energy Tax and the Consolidated Municipal Property Tax Relief Act (or CMPTRA) funds.
Though often referred to as “State Aid,” these are actually revenue replacement programs, intended to replace property tax relief funding that was, formerly, generated through taxes assessed and collected locally.
Additionally, Open Space PILOTs are provided in recognition of the fact that the preservation of Open Space benefits all New Jersey citizens, and of the fact that it does, however, impose costs on the citizens of the host municipality, denying them the economic, budgetary and property tax rate benefits of a developed ratable.
League President, Mayor Chuck Chiarello of Buena Vista, thanked the Governor, and said, “We sincerely hope that, as the State begins to get its budget in order, it can free itself completely from its dependence on municipal replacement revenues, and phase-in faithful compliance with the statutes.”
The Governor also reiterated his commitment to pension and benefit reforms. He commended Senate President Sweeney for his work and Speaker Oliver for her comments in support of swift action on these matters. The Governor indicated that he will authorize an immediate payment of $500 million toward the State’s pension obligation, as soon as the Legislature passes pension reforms. And he indicated that he will support increased property tax credits, if the Legislature takes timely action on health benefits reforms.
The Governor plans to increase school aid by $250 million, with every district receiving some part of the increase.
The Governor’s proposal would, however, cut $10 million from the Transitional Aid program, designed to get municipalities through particularly difficult challenges. Our current crisis has increased the need for this aid. Now is not the time to cut it. We will work with the Legislature to restore this needed funding.
“Again,” said Mayor Chiarello, “we thank Governor Christie for holding the line on further property tax relief funding cuts. We look forward to working with the Legislature, as it proceeds with the process.”
We will communicate further on this, as we proceed with our analysis of the Governor’s proposal; and will keep you posted on all important developments.
If you have any questions, contact Jon Moran at 609-695-3481, ext. 121 or email@example.com.
Click here for the Governor's Budget Speech
Click here for the Governor's Press Release
Click here for the Governor's FY 2012 Budget Presentation
Click here for the Governor's FY 2012 Budget Summary
Very truly yours,
William G. Dressel, Jr.