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May 4, 2012

RE: Energy Receipts Restoration Bill Introduced

Dear Mayor:

Yesterday in Trenton, Senator Paul Sarlo, who Chairs the Senate Budget and Appropriations Committee, introduced legislation that would phase-in, over five years, the restoration of $439 million in municipal property tax relief funding. (S-1900) Assemblyman Troy Singleton, a member of the Assembly Budget Committee, will introduce a companion bill when the Assembly convenes in Trenton, next week.

Due to a provision in the 1997 Energy Tax reform law, the restored funding would have to be used “solely and exclusively for the purpose of reducing the amount the municipality is required to raise by local property tax levy for municipal purposes.” As you know, there was no levy cap in 1997. So the effect of that provision on local budgets is different now. Under current law, a municipality would have to use any new funding to reduce both the capped and the excepted portions of the levy.

The sponsors recognize that municipalities have long been denied revenues that they were promised, and to which they are entitled. They acknowledge that it was wrong for the State to rely for so many years on municipal revenues to balance its budget. They recognize that the loss of those revenues has led to increased property taxes and has hampered local efforts to meet local needs.  We sincerely appreciate that.

The sponsors agree that the time has come to begin to restore to local budgets the millions that were cut to meet State needs in FY 2009, 2010 and 2011. The result of those cuts was increased property taxes, increased local budget stress, deferred investments, staffing cuts and service cuts. 

The restoration of $87.8 million this year is a great first step. That should be easily manageable in a budget that is slated to grow to $32.15 Billion in the coming year. The restoration of $439 million, in 20% increments, over five years will make a big difference in municipalities all around New Jersey.

The application of ‘poison pill’ protection to SFY 2012 combined Energy Tax and CMPTRA funding will help to further restrain the appetites of future State policy makers for municipal property tax relief resources.

While we study the bill, in depth, we thank the sponsors for listening to Mayors in their districts and all around the State. We stand ready to support any refinements that may prove appropriate. We look forward to helping gain support for this bill and for seeing it through the Legislative process. We salute Senator Sarlo and Assemblyman Singleton for their leadership.

If you have any questions, contact Jon Moran at jmoran@njslom.com

Very truly yours,

 

William G. Dressel, Jr.
Executive Director

 

 

 

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