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April 17, 2012

RE: MAYORS MAKE CASE FOR ENDING STATE SKIM

Dear Mayor:

Today in Trenton, Mayors from all around New Jersey participated in a Press Conference to explain the problems that have been created by the State’s continuing use of municipal property tax relief revenues to balance its budget. (scroll down for Photos)

Following the Press Conference, a number of Mayors participated in a Roundtable with the members of the Senate Budget and Appropriations Committee. The Energy Tax skim was the most often discussed problem at that forum.

Over the past two years, Governor Christie and our State legislators have made tough choices on difficult issues. On issues like unfunded mandates, arbitration reform and pension reform, they have worked together, across party lines. And they have made progress. We know that it has not been easy. It has taken leadership and it has taken discipline.  And on behalf of Mayors all around the State, and on behalf of the property taxpayers we represent, we want to thank State Legislators and the Governor for what they have done to help us, going forward, to get a better handle on the many local costs imposed by past State actions.

What we ask of them this year will take similar discipline. This year, we want them to begin to end the State’s chronic dependence on local revenues to balance its budget. We want them to begin to restore to local budgets the dollars that have been diverted for many years to State purposes.

The League’s top property tax relief priority for 2012 is the restoration of revenue replacement funding diverted from Energy Taxes intended for local use. Taxes on gas and electric utilities were originally collected by the host municipalities.  When the State made itself the collection agent for these taxes, it promised to dedicate the proceeds to municipal property tax relief.

State policy makers reaffirmed that commitment when energy tax reform was enacted in 1997. Assemblyman Paul DiGaetano, who sponsored the Energy Tax Receipts Property Tax Relief revenue replacement program said, "We want local governments to be rest assured that the pending change in the collection of the state's public utilities and communication taxes will not reduce the local share of these revenues." His cosponsor, Assemblyman Paul Kramer said, "We want municipalities to know they can count on this money for property tax relief year after year." And when signing the new law, the Governor’s office released a Press Release, which reads, “Gov. Christie Whitman today guaranteed that New Jersey municipalities will receive a steady and increasing source of property tax relief when she signed legislation that distributes revenue for municipal aid from the state's new energy tax system.”

When that law was amended in 1999 to pledge annual inflation adjustments, the sponsors of that bill also wanted to address the concerns of local officials and property taxpayers. Assemblyman Samuel Thompson said, "By increasing aid in relation to the rate of inflation, this measure will provide for a more realistic approach in determining the amount of annual state aid to yield real property tax relief.”

Recognizing that the program was designed to replace municipal revenues, co-sponsor Assemblywoman Marion Crecco said, “"The energy tax replacement aid program was created to replace the aid municipalities lost as a result of the elimination of the gross receipts and franchise tax. It is important that we included this funding initiative in our legislation to link the rate of property tax aid increases to the annual change in the rate of inflation."

Another co-sponsor, Assemblyman Richard Bagger, commented on the importance of the inflation adjustment and said, “"Just as the consumer price index reveals the purchasing power of individuals and families, the Implicit Price Deflator is a tool that is used in determining the rate at which inflation effects the purchasing power of government agencies. As a matter of fact, the Implicit Price Deflator is the same index used to determine the annual inflation adjustment in municipal budget caps. It is only fitting, therefore, that the rate at which we increase annual state aid to municipalities would correlate with this percentage."

And the Senate sponsor, Senator Donald DiFranceso noted, "This is a fair, equitable and permanent manner in which to provide aid to municipalities and to address the increases that occur because of the uncontrollable effects of inflation."

For years, though, State budget makers have diverted funding from Energy Taxes to fund State programs.

The diversion of our municipal resources to cover State spending needs to end. The mayors have called on State policy makers to provide us with this important tool to relieve the worst-in-the-nation property tax burden borne, for too long, by the people of New Jersey.

If you have not yet done so, we urge you to contact your State Legislators to impress on them the importance of Energy Tax Receipts funding to you and your constituents. Please visit our Resource Center at http://www.njslom.org/energy-tax-resource-center.html or call Jon Moran at 609-695-3481, ext. 121, for further details.

Very truly yours,

William G. Dressel, Jr.
Executive Director

 

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League President Art Ondish, Mayor of Mount Arlington, convenes today's press conference on the restoration of the energy receipts funding.

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League First Vice President Janice Mironov, Mayor of East Windsor and Chair, League Energy Tax Restoration Task Force, addresses the press conference.

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Fanwood Mayor Colleen Mahr addresses the League press conference calling for the restoration of the Energy Receipts funding.

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Mayor Acropolis of Brick addresses the press conference.

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Mayors Janice Mironov of East Windsor, Wayne Smith of Irvington, Sophie Heymann of Closter, Paul Medany of Deptford, and Art Ondish of Mount Arlington address the Senate Budget and Appropriations Committee as part of the "Mayors Roundtable."

 

 

 

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