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March 8, 2011

RE: League President Mayor Chiarello Presents League Perspective on State Budget Proposal

Dear Mayor:

Today in Trenton, League President, Mayor Chuck Chiarello of Buena Vista Township, presented testimony to the Assembly Budget Committee. The Mayor focused on the municipal impact of the Governor’s FY 2012 Budget proposal. You can access the full text of Mayor Chiarello’s statement at: http://www.njslom.org/testimony/030811-Chiarello-Budget-testimony.pdf.


Mayor Chiarello testifying in Trenton at the State Budget Hearing

Below are the highlights of the testimony.

  • Giving municipal property taxpayers all the relief they have coming to them needs to be a part of "the new normal.”
  • The task at hand for mayors and municipal governing bodies is crafting a 2011 budget that meets all the needs of our citizens, and creates a climate for economic recovery, within the 2% levy cap.
  • State policy makers can help by recognizing the problems we all face.
  • These include increased property tax appeals (and their cap implications), declining collection rates (and their cap implications), escalating pension and benefit costs (and their property tax implications) and the lack of cap flexibility (and its impact on municipal services).
  • Pensions and benefits are of immediate concern. Their impact on property taxes is significant.
  • Local government pension contributions will go up by an average of 22% this year.
  • And State Health Benefit Plan costs are slated to climb by 11.7%.  
  • These costs are putting local budgets into a death spiral. Only State action can pull us out of this nose-dive.
  • State policy makers need to act on pension and benefit reforms without delay.
  • No elected official ever wants to raise taxes. But the state sets tax policy for all New Jersey governments. And only state action can provide true local property-tax reform.
  • The Governor’s budget proposal for the State’s next Fiscal Year provides that every municipality in New Jersey would be able to receive the same amount of general property tax relief funding next year, as it is getting in the current State budget.
  • That’s a step in the right direction.
  • But it is less than our property taxpayers should have coming to them.
  • Last year, over $271 million was slashed from 2009’s already diminished combination of Energy Tax and CMPTRA property tax relief funding.
  • And 1/3 of the total – over $3 million – was diverted from Open Space PILOTs.
  • During budget deliberations this year, we urge the Legislature to use the Governor’s proposal as a baseline.
  • If actual State revenue receipts exceed current anticipations, we ask the State to reduce its reliance on Energy taxes, which are supposed to be used for property tax relief, and to increase the distribution to municipalities, as required by the statutes.
  • State’s use of Energy Tax revenues totaled $403 million in 1998, and more than doubled to $829 million by 2008.
  • Actions taken to close state budget gaps should not widen the gaps that the economic downturn has already opened in municipal budgets.
  • The Governor’s proposal would also cut $10 million from the Transitional Aid Program, which is meant to help municipalities pull through extraordinary hardships.
  • Further, it would have the State divert sales tax revenues collected in, and intended to be returned to, our State’s Urban Enterprise Zone municipalities.
  • Never has such assistance been needed more. Now is not the time for such cuts.
  • Those will be our priorities for this year’s State Budget.
  • But for the longer term, we need to end the State’s reliance on local revenues to balance its budget.
  • Faced with unprecedented fiscal challenges and new stringent budget caps, we cannot carry the State any longer. The Energy Tax revenues promised to local governments must begin to be restored.

If you have any questions on the State Budget proposal or on Mayor Chiarello’s testimony, contact Jon Moran at 609-695-3481, ext. 121 or jmoran@njslom.com.

Very truly yours,

 

William G. Dressel, Jr.
Executive Director

 

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