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June 17, 2010

RE:  League Position on Governor’s Proposed 2.5% Constitutional Property Tax Cap,
Mandates Relief and the ‘Toolkit’ Reforms 

Dear Mayor:

On June 8, we were joined by our Vice Presidents, two Past Presidents and Members of our Executive Board, as we met with Governor Christie’s Chief of Staff Richard Bagger, DCA Commissioner Lori Grifa, and other high ranking Christie Administration policy advisors. The purpose of the meeting, which was held at the League’s request, was to discuss the Governor’s Toolkit, in general, and, specifically, the proposed Local and State Constitutional Caps.

Yesterday, our entire Executive Board voted to support the caps, if amended, as the final piece, not the centerpiece, of vital property tax relief initiatives.

Our approval is conditioned on the following.

  • Statutory reforms relating to binding arbitration, civil service, public employee pensions and benefits, disciplinary procedures, school and special district elections and mandates relief must be enacted BEFORE the voters are asked to approve the Constitutional Caps.
  • Arbitration reforms must limit the full economic impact of awards to conform to the 2.5% cap.
  • Since many municipalities will be in the midst of multi-year contracts that require increases in excess of 2.5%, the administration’s cap proposal must account for the fact that such contracts will be in place at the time the cap is imposed
  • The administration’s proposed arbitration reforms must be able to withstand a probable legal challenge.
  • Health benefit reforms must conform future health benefit costs to the 2.5% cap.
  • The Administration must advance immediate mandates relief initiatives to assist municipalities in managing within the 2.5% cap.
  • The cap must allow local units some flexibility to deal with pension costs, utility costs, disaster and emergency response costs and other costs imposed by factors beyond the control of local leaders.
  • The local cap must mirror the State cap, where possible, on exceptions and the process needed to exceed cap limits.
  • Municipal revenues, such as the Energy Tax, which are now collected by, and diverted to, the State, but which are legally intended for municipal property tax relief, must be constitutionally dedicated for their original purpose.
  • In the alternative, those taxes should be reformed to allow collection directly by municipalities.
  • The cap should include a provision allowing an exception to the cap, up to a limit of, for example, 5%, to be approved by a 2/3 vote of the governing body.
  • The proposal could still require the voters to approve by a simple majority any increase over that level.
  • A simple majority vote should prevail in a cap exception referendum.
  • A cap exception for the costs associated with tax appeals should be included.
  • Cap exceptions to allow flexibility to meet local capital needs.
  • Costs mandated by the Administrative Office of the Courts (AOC) should be excepted from the 2.5% cap or the costs of new AOC mandates should be capped at 2.5%.

There is a danger that the Legislature may advance the cap question to the voters and be delayed in acting on the other reforms. We commend Governor Christie, who has recognized this as an unacceptable outcome. The Governor can delay signing a bill that would amend current law or enact a new statute. But nothing can delay a proposed Constitutional Amendment, once the Legislature passes the Resolution by sufficient majorities. It cannot, at that point, be held until other actions are taken.

It is, therefore, imperative for the other toolkit and mandates reform bills to be on the Governor’s Desk, before the Legislature votes to advance the proposed caps.

We are committed to working with the Administration toward that end, so long as the issues raised above are satisfactorily addressed.

We have posted a DRAFT RESOLUTION in support of this position for your consideration. It can be accessed at:
(WORD) (right click to save Word Document)

If you have any questions, contact Jon Moran at 609-695-3481, ext. 121.

Very truly yours,

Hon. James Anzaldi                                        William G. Dressel, Jr.
President, NJLM and                                      Executive Director
Mayor, Clifton




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