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March 10, 2014

RE: Urge Your Legislators to Support A-1021/S-268, Energy Receipts Property Tax
        Relief Initiative

Dear Mayor:

As we commence a new legislative session and state budget, it is imperative that you contact your State Legislators and urge them to support Assembly Bill A-1021 and Senate Bill S-268.  These companion bills will phase-in the distribution of an additional of $331 million, adjusted for inflation, in 20% increments over the next 5 years. Beginning in the fifth fiscal year, energy taxes would be paid directly to municipalities.  This legislation would require municipalities to use the additional revenue to reduce the amounts they are required to raise by the local property tax levy for municipal purposes, to reduce municipal debt, to rehire police officers and firefighters laid off in the previous four fiscal years, and for extraordinary costs related to an emergency declared by the President of the United States or the Governor.

Identical legislation was passed by the Assembly last year, with broad bipartisan support, on a vote of 67-5, with 3 members not voting; however, the Senate did not act.

For over a century, public utilities have been taxed for their use of municipal rights-of-way. These taxes are meant to assure local property taxpayers compensation for hosting transmission facilities and lines that allow gas and electric energy corporations to serve customers, conduct business and earn profits in our Garden State. For as long as the taxes were paid directly to municipalities, that is exactly what happened.

In the 1980's, the State decided to collect the utility taxes, with the promise that the proceeds would be returned to the host municipalities. Almost immediately, however, some of the money was annually diverted to the State's budget. In the late 1990's, a law was passed that was supposed to cap the State diversion of these Energy Receipts and to provide municipalities with increased property tax relief funding. But soon thereafter, in order to exceed that cap, the State began to commingle the Energy Receipts with Consolidated Municipal Property Tax Relief Act (CMPTRA) funding. The result was a few years of level funding for municipal property tax relief and increased Energy Tax funding for State budget priorities.

Then, Energy Tax and CMPTRA funding for municipal property tax relief was slashed by about $28 million in 2008 and $32 million in 2009, followed by losses of about $271 million in 2010. Not a penny of that has ever been returned or restored.  In recent years, legislators on both sides of the aisle in Trenton have recognized that the decision to redirect municipal revenues for State own use is unjustified and has been a major contributor to increases in local property taxes.

Ending the State diversion and restoration of our energy tax receipts to municipalities remains our major property tax relief priority.  Progress on this issue requires a continuing bi-partisan approach, by Mayors and Legislators. 

Please urge your State Senator and Assembly representatives to support Assembly Bill A-1021 and Senate Bill S-268. We need to strongly unite and voice our support. Let's work together to make it happen this year!

Very truly yours,

Suzanne M. Walters, President
New Jersey State League of Municipalities;
Mayor, Stone Harbor Borough

Janice S. Mironov, Immediate Past President,
NJLM; Chairperson, NJLM Energy Receipts
Restoration Committee; Mayor, East Windsor Township






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