May 4, 2012
Re: New User Fee Cap Bill Introduced
Yesterday in Trenton, Senate President Steve Sweeney proposed for introduction S-1914. This bill would require new user fees for the provision of traditional municipal services to be included within the 2% municipal and county property tax levy cap. User fees for traditional county services and traditional school services would not be included in any cap calculations. And the bill exempts user fee amounts collected pursuant to a shared services or joint meeting agreement.
“Traditional municipal services” are defined as “basic services provided generally throughout the municipality without regard to a taxpayer’s preference … which have been traditionally funded through the municipal purposes tax levy …” The term would include “… but not be limited to …” street lighting and clearing waste collection and recycling, police patrol and response and fire response. The cap would apply to amounts collected through user fees for services that were previously funded by the property tax, in the local budget year preceding enactment of the bill. (If the bill becomes law this year, the cap would not apply, for a calendar year municipality, to revenues from user fees for services, which were in place in 2011. If, however, a service was funded through property taxes in 2011, the cap would apply to new user fees.)
As currently drafted, and as it would be effective immediately, the bill raises concerns regarding implementation. Local budgets, in compliance with the levy cap, that have been introduced and await action by the Division of Local Government Services could become non-compliant.
The definition of “traditional municipal services’ is open-ended, leaving municipalities and State regulators unsure on its application and, therefore, unable to properly plan for future years. The practice of aggregating fee supported accounts might make adequate oversight impossible.
Municipal budget experts believe that it to be more appropriate to fund some services by user fees – especially those services for which a recipient and a cost can be clearly and accurately calculated. And user fees can provide a means to recapture some of the costs for services provided to non-residents, as well as local taxpayers.
Due to the recession, the cost of living is currently increasing at a moderate rate. That has not always been the case in the past, and it will not always be the case in the future. At that time, some flexibility from the artificial constraints on local budget options could be beneficial. Serious consideration should be given now to how citizens’ municipal service needs will be met then.
We will keep you posted on this matter, as our analysis and Legislative action progresses. If you have any questions, contact Lori Buckelew at email@example.com
Very truly yours,
William G. Dressel, Jr.