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March 16, 2010

RE: Governor Christie Delivers Budget Message

Dear Mayor:

Today in Trenton, Governor Christie delivered his first Budget Address to a joint session of the Legislature. The Budget Committees of the Legislature will conduct public hearings, during the next few months. Changes can be made to the Governor’s proposal and an Appropriations Bill passed by both Houses and sent to the Governor, by the end of June. The Governor can then sign the bill, as passed, or remove spending items, with the line-item veto. Final action will govern State spending for the Fiscal Year, which begins on July 1, 2010.

Click here for the Budget in Brief

Click here for the full text of Governor Christie's Budget Message

There is no good way out of an $11.2 billion budget hole. But the best way will inevitably involve broadly shared sacrifices. Municipal officials are braced to do their part, recognizing that their property taxpayers need to be insulated, as much as possible, from the impact of those sacrifices.

Still, a $271 million cut in CMPTRA funding, a $91 million skim from the UEZ fund, $61 million in cuts from a new “Extraordinary/Special Municipal/Capital City” aid program, and the elimination of Watershed/Pinelands/Highlands Stabilization funding will make this year an historic challenge to local officials. As we await more specific information on the formulas that will be used to apportion the pain, local officials should anticipate property tax relief funding to be down about 20%, from last year’s already reduced totals.

Accordingly, we are gratified that Governor Christie intends to provide local officials with meaningful tools to limit the, otherwise devastating, impact of the cuts announced today. And we salute Governor Christie for his leadership on this. Binding Arbitration reform, which requires arbitrators to recognize local caps and the impact of awards on property taxes, and Civil Service reform, that allows local governments to opt out of the system, have long been sought by the League. Combined with the pension and benefit reforms currently moving through the Legislature, they represent real progress.

But let the record be clear. The State is, once again, balancing its budget with municipal revenues. In order to avoid increasing State administered taxes, the Administration intends to use municipal property tax relief funding to bridge the gap. In fact, most of the Consolidated Municipal Property Tax Relief Act (CMPTRA) and all of the Energy Tax Property Tax Relief (Energy Tax) funding is revenue replacement funding. It is supposed to replace revenues that were originally collected by municipalities for local use. Those alternative revenues delivered municipal property tax relief for a long time, before various ‘reforms’ took them away from our cities, towns, townships, boroughs and villages – always accompanied by the solemn, statutory vow that we would be ‘held harmless.’ Further, pursuant to a ten year old State law, which has long been honored more in the breach than in the observance, CMPTRA and the Energy Tax are supposed to be annually adjusted to account for the effects of inflation. Instead, they will be cut by $271 million, in the Governor’s proposal.

A 20% cut, instead of an increase, will present a serious challenge to local budget makers, struggling to provide essential municipal services, effectively and efficiently. Still, as we have stated many times, there are other ways, besides compliance with its own laws, for the State to help us deliver property tax relief. And chief among them is by providing immediate and significant mandates relief.

We will continue to support the Governor and Lieutenant Governor during this economic crisis in addressing issues that result in high property taxes, such as unfunded mandates. We will continue to work with Red Tape Review Group as we head toward the April 20 deadline for their final recommendations. This 20% cut in property tax relief funding will cripple municipal services, without real mandates relief. And a 2.5% cap is unthinkable, unless local officials are given effective tools with which to address municipal costs-drivers.

We will provide a fuller analysis as details are made public over the next few days. In the meantime, direct your questions to Jon Moran at 609-695-3481, ext. 121.

Very truly yours,

William G. Dressel, Jr.
Executive Director




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