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April 6, 2011

Re:   Support Municipal Priority Funding

Dear Mayor:

Giving municipal property taxpayers all the relief they deserve needs to be a part of "the new normal." For 10 years now, however, it has been standard operating procedure to give our State’s struggling citizens less.

Over the past ten years, in fact, the State has denied local property taxpayers, statewide, over $3.4 billion of relief.

As most veteran municipal officials know, New Jersey’s two main formula-driven general municipal property tax relief programs are the Energy Tax Receipts Property Tax Relief program (Energy Tax) and the Consolidated Municipal Property Tax Relief Act program (CMPTRA). Though often referred to as “State Aid” programs, both are actually revenue replacement programs, intended to replace property tax relief funding that was, formerly, generated through taxes assessed and collected, specifically, to fund municipal programs and services.

Chapter 168, P.L. 1999, provided that in each year subsequent to State FY 2002, Energy Tax and CMPTRA distributions would annually increase at the rate of the Implicit Price Deflator – used to measure the impact of inflation on governmental spending. According to a decision rendered by our State Supreme Court in the 1980s, however, the State can supersede permanent statutes simply by including a provision, to that effect, in the Annual Appropriations Act (the State Budget). For the past ten years, that is exactly what has happened.

As the enclosed chart demonstrates, if the State had complied with those statutory funding requirements, the $1,580,292,000 which municipalities shared in 2001 would have grown to $2,182,502,000 this year. Instead, the Governor has recommended that $1,293,794,000 be distributed. In this year alone, therefore, the State budget will be balanced by $888,708,000 that should be returned to municipalities for property tax relief.

This year’s total distribution should be roughly 38% more than the distribution in 2001. Based on that, you can roughly estimate what you would be receiving this year if the State complied with the aggregate funding requirements every year, and if it distributed to your municipality the same proportion of the total that your taxpayers originally received in 2001.

The amount of combined CMPTRA and Energy Tax that was distributed to your municipality in calendar year 2001 (or Fiscal year 2001-2002) plus 38% will give you that total.

For example, in 2001 (according to information on the State’s Division of Local Government Services website), East Windsor Township in Mercer County received $4,439,622 in combined CMPTRA and Energy Tax funding. Adding 38% to that would mean that the citizens of East Windsor would receive about $6,126,678 this year (assuming no changes to the formulas by which the funds were originally distributed). In fact, East Windsor has been told to anticipate $3,517,385. That’s a difference of over $2.6 million.

Last November, at the League of Municipalities’ annual Conference, Mayors from all around our Garden State voted to put an end to this sad practice. Without a dissenting vote, they approved our “RESOLUTION TO END STATE DIVERSION OF MUNICIPAL REVENUES AND DEMAND COMPLIANCE WITH STATE LAWS.” (A copy can be found on our website, www.njslom.com.)

Pursuant to our Resolution, the League demands an end to the State’s reliance on municipal property tax relief revenues to balance its budget and address other priorities. To achieve that goal, the League has formed a special Statutory Funding Compliance Committee. Chaired by Mayor Janice Mironov of East Windsor, the League’s Second Vice-President, the Committee has begun to advocate for a State Budget that would honor the letter and spirit of the applicable State statutes, and provide for the full statutory distribution of Energy Tax and CMPTRA revenue replacement funding.

In the opinion of the League’s Officers and Executive Board, compliance with the statutes is the single most important thing that could be done to provide our citizens with immediate, significant and sustainable property tax relief.  This, then, is our number one priority for 2011.

We need your help. Mayor Mironov has asked me to reach out to all of you.

Please fill out and return the enclosed form, if you agree that the State should comply with its own statutory funding requirements; and that doing so would enable you to provide, for your citizens, immediate and significant property tax relief, without any unnecessary cuts to vital local services.

Thank you.

Very truly yours,

Hon. Chuck Chiarello
President, NJLM and Mayor, Buena Vista Township

 

 

Comparison of Actual Municipal Property Tax Relief Funding and Statutorily Required Municipal Property Tax Relief Funding from CMPTRA and the Energy Tax (ETR), pursuant to P.L. 1999, c. 168 (NJSA 52:27D-439). The law states the funding should be annually increased by the Implicit Price Deflator (IPD), also termed “the Cap Rate.”

 

CMPTRA + ETR


(Fiscal Year)                                                                                (Calendar Year)

                    Actual Appropriation                                         Statutorily Required

             (000)                                     IPD (Cap Rate)                 (000)

                                                      (+ increase required)

2002                1,580,292                    2.5%                             

                                                                                                1,619,799 

2003                1,590,292                    1%                              

                                                                                                1,635,997  

2004                1,598,084                    2.5%                           

                                                                                                1,676,897  

2005                1,623,253                    3.5%                           

                                                                                                1,735,589   

2006                1,623,938                    4.5%                           

                                                                                                1,813,690

2007                1,626,150                    5.5%                           

                                                                                                1,913,443   

2008                1,623,939                    5%                              

                                                                                                2,009,115    

2009                 1,597,357                  6.5%                            

                                                                                                2,139,708      

2010                1,565,230                       0%                               

                                                                                                 2,139,708     

2011                1,293,794                       2%                             

                                                                                                  2,182,502

2012                1,293,794

                         (Proposed)

FY 2012 (Statutorily Required)                   $2,182,502,000
FY 2012 (Proposed)                                     $1,293,794,000
FY 2012 municipal revenues not distributed $888,708,000

FY ’03 – ’12 (Statutorily required)      $18,866,448,000
FY ’03 – ’12 (Actual*)                         $15,435,831,000
10 year state usage of local revenues      $3,430,617,000

(*Actual distributions from FY ’03 through FY ’11
plus proposed distribution for FY ’12)

 

Please return signed form via fax (609) 695-0151 or mail to:
NJ League of Municipalities
222 West State Street
Trenton, NJ  08608

 

“A promise made should be a promise kept, and municipal officials have not forgotten and will not sit quietly by while municipal funds continue to be diverted for state use. State officials are quick to announce a 2 percent spending cap for municipalities, passage of so-called “toolkit” legislation, and a claim of no new state taxes. Yet at the same time they are diverting huge amounts of municipally-owed monies from energy tax receipts. In effect, state officials are transferring their problems down to local officials and increasing local property taxes.  … The Governor and Legislature should introduce and adopt a FY 2012 State Budget that provides for the full statutory distribution of Energy Tax Receipts and CMPTRA Revenue Replacement funding. The state must be held accountable to towns and local property taxpayers. We call for an immediate and full restoration of our rightful municipal money.”

- League 2nd Vice President and Mayor of East Windsor Janice S. Mironov, Chairperson of the League’s new Statutory Funding Compliance Committee. 

 

Yes, Mayor Mironov, I, _____________________________________,
                                                         (Full name)

Mayor of _______________________________________, fully support
                                       (Municipality)

your efforts to convince State policy makers to comply with the statutes requiring annual inflationary adjustments and  full annual distribution of Energy Tax and CMPTRA revenue replacement funding. Restoration of these municipal revenues is the single most important tool that the State could give to municipal officials struggling to provide property tax relief and essential services in 2011, and in the future.

Signed,

___________________________________              _______________________________
(Signature)                                                                             (Dated)

______________________________________                __________________________________
(Address)                                                                               (City)                                  (Zip)

______________________________________                 __________________________________
(Phone)                                                                                 (E-mail)

 

 

 

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