September 13, 2010

RE: Update on “Tool Kit” Developments

Dear Mayor:
As the Legislature begins holding regular sessions and committee meetings, we wanted to give you an update on some ‘special session’ items, and the League’s activity with regards to management reforms and mandates relief.

As you remember, back in the Spring, Governor Christie launched his old-fashioned barnstorming campaign to gain legislative approval of a new ‘hard’ cap on local tax levies. In that effort, Governor Christie held town-hall meetings and other media events all around our Garden State.

Between May 10, when the Governor forwarded his cap and ‘toolkit’ proposals to the Legislature, and July 15, when the final press clips were in, the Governor’s Office issued no fewer than 28 Press Releases promoting the new caps.

From July 15 until August 26, the Governor’s Press Office was silent on the other 32 ‘toolkit’ bills. Then, the Administration announced a laundry list of ‘best practices’ that would be used to determine whether the state could penalize municipalities by withholding a part of the revenue replacement funding on which their current-year budgets depend. And we learned that this initiative is part of the ‘toolkit,’ which is supposed to help municipalities balance their budgets.

It has now been two months since the Governor signed the new 2 percent levy cap into law. The League had asked the Governor and the Legislature to delay action on the cap until after they had agreed on the ‘toolkit’ management reforms and mandates relief items that would make that cap workable. Our request was ignored. Agreement on management reforms and mandates relief has NOT been reached. We fear there is a danger that inertia has set in.

While it is important that the necessary reforms and mandates relief bills be done right, the Legislature really needs to pick up the tempo. To date, the pace of action has been nothing, if not glacial. And if that doesn’t change, citizens who depend on high quality local government services will be left out in the cold in 2011.

All around the State, responsible municipal officials have begun planning their 2011 budgets. At this point, those plans MUST account for the new cap. At this point, those plans must be based on the assumption that meaningful management reforms and mandates relief initiatives will NOT be in place. At this point, those plans must also be based on the further assumption that next year’s State Budget will not provide statutorily required revenue replacement funding.

Mayors and governing bodies will do whatever they can to prevent negative outcomes. Under current assumptions, however, property taxpayers should anticipate service cuts. And local government employees should expect lay-offs.

Here is a timeline on ‘toolkit’ developments

June 28: Speaker Oliver and Assembly Majority Leader Cryan assigned nearly three dozen property tax reform ideas to various Committee Chairs, who were to review the concepts over the Summer in preparation for legislative action in the Fall.

June 29: In South River, the Governor said, “It’s not just the cap.  It’s the toolkit as well.   Both must be done.   One cannot be done without the other.   If you do the toolkit without the cap, it renders the toolkit less effective.   If you do the cap without the toolkit, it makes the cap unworkable.    Both have to be done together.”  

July 1: Governor Christie opened this year’s Special Legislative Session with a speech to both Houses of the Legislature. The Governor focused on the issue of property tax caps. The Governor intended for the Legislature to continue to meet until property tax solutions are in place. He includes, among those solutions, the 33 initiatives of his “toolkit.”

July 2: At a hearing in Trenton, the Senate Budget and Appropriations Committee focused on the schedule, process and procedures that the Senate would use to review new caps and other possible property tax relief reforms over the next few months.

That Senate schedule called for full day hearings, with concrete reform proposals to be advanced to the full Legislature by mid- to late September. The proposals would include a cap, with exemptions yet to be determined, and ‘toolkit’ management reforms.

Also in Trenton, the Assembly Budget Committee took testimony on property tax caps from DCA Commissioner Lori Grifa, representatives from the School Boards Association, the Association of Counties, various public employee groups and the League.

July 3: Governor Christie and Senate President Sweeney reached agreement on a new statutory 2 percent levy cap. The new cap would be shaped as a Conditional Veto of S-29, the statutory 2.9 percent levy cap, which the Legislature sent to the Governor on June 28.

July 7: The Assembly Budget Committee met in Trenton, in the aftermath of the bi-partisan agreement on new property tax caps.  League Third Vice President, Mayor Janice Mironov of East Windsor, League Past President, Mayor Chris Bollwage of Elizabeth, Cherry Hill Mayor Bernie Platt and Collingswood Mayor Jim Maley, Chair of our Economic Development Committee, joined Bill Dressel to urge the Legislature to focus on the immediate need to enact local government cost containment reforms.

July 8: The state Senate concurred with the Governor’s conditional veto (CV) of S-29, amending the tax levy cap from 4 percent to 2 percent.  

July 12: the General Assembly approved S-29, amending the tax levy cap from 4 percent to 2 percent.  In response, the League issued a press statement, which read, in part:

“Caps do not address the real cost drivers confronted by local leaders.     A hard 2.0 cap is, as the Governor said ‘unworkable,’ without the toolkit.   No one can declare the cap a victory for reform until the toolkit reforms are passed.    Now that the proverbial cart has been placed before the horse, the Legislature and Administration must immediately prioritize and pass the toolkit reforms.

 “The League of Municipalities can support a property tax levy cap, if and only if it is moved as the final piece, not the centerpiece of reform.

July 13: Governor Christie signed S-29, which amended the tax levy cap from 4 percent to 2 percent. Senate President Sweeney said, “Now that the cap is in place, it is even more essential that we provide communities the tools they need to properly manage their finances without cutting essential services or lowering their residents’ quality of life.”

July 19: The Senate Budget and Appropriations Committee began work on several bills that are meant to enact provisions of Governor Christie’s toolkit reforms. The League was present to present the municipal perspective on these bills. East Windsor Mayor Janice Mironov, Third Vice President of the League, was joined by Frenchtown Mayor and League Executive Board Member Ron Sworen in presenting testimony on the “toolkit” bills. 

Mayors Mironov and Sworen urged the Committee to move beyond the proposals on their agenda and to focus on issues like the State’s retention of Energy Tax property tax relief funding, arbitration reforms, further civil service reforms and cap considerations regarding the reserve for uncollected taxes, the costs of pre-existing labor agreements and the burden of assessment appeals.

The Committee advanced three bills that the League supports:

S-2012, which allows gross income tax refunds to be credited against a taxpayer’s delinquent local property taxes;

S-2072, which permits publication of legal notices by governments and individuals on official government websites instead of newspaper; and

S-2208, which allows certain organizations, such as the League, to file complaints with Council on Local Mandates in certain circumstances.
Further, three bills were “for discussion only” and can be brought back at a future hearing.  These bills included:

S-2154, which replaces references to the Civil Service Commission with chairperson of commission to clarify the duties and responsibilities of the chairperson;

S-2173, which limits the unused sick leave pay and vacation leave carry-forward for school and local employees; permits local unit to pay certain benefits over 10 years and limits sick leave use by public employees before retirement;  and

S-2206, which provides that the state or local authority in civil service may institute temporary layoffs.

Meanwhile, we had reached out to several Assembly Committee Chairs, who had been asked, by Speaker Oliver, to lead the review of different issue-areas of proposed reforms.  Over the summer, League officers, members and staff meet with Assemblymen McKeon, Moriarty, Diegnan, Greenwald, Wisniewski and Assemblywoman Stender on the various toolkit reforms.

July 22: Speaker Sheila Oliver made Assemblyman John McKeon the Assembly’s point man on mandates relief. Assemblyman McKeon, who served as mayor of West Orange from 1998 until July 1 of this year, was to lead an effort to examine state mandates on local governments that are a major driving force behind property tax increases.

August 16:  the Senate Budget and Appropriations Committee, chaired by Senator Paul Sarlo, continued its work on several bills that are meant to enact provisions of Governor Christie’s toolkit reforms and began discussing Civil Service Reforms. League President, Mayor James Anzaldi of Clifton, along with Mayor Samir Elbassiouny of Washington Township (Warren), Millburn Township Administrator Tim Gordon, Middletown Township Administrator Anthony Mercantante and Wantage Township Administrator Jim Doherty, testified on behalf of the League providing the municipal perspective on the need for modernized rules and the ability for municipalities to choose to opt-out of Civil Service. 

August 23:  The state Senate approved a few bills of interest to local officials. Though one of these bills implements one of the Governor’s toolkit recommendations, none of them will help municipalities cope with the 2 percent levy cap. The toolkit bill, S-2208, allows certain organizations, such as the League, to file complaints with Council on Local Mandates in certain circumstances. This bill implements recommendation number 21 of Governor Chris Christie’s 33-bill package of reforms aimed at solving New Jersey's property tax crisis.

The other bills of interest to us, which the Senate approved, were:

S-351, which expands scope of review of Pension and Health Benefits Review Commission. Under the bill, the commission would review all legislation that affects the financing, procedures, or operations of pension or health care plans or programs, including all defined benefit retirement plans or systems, defined contribution retirement plans or programs, or deferred compensation or other individual retirement account-type plans for public employees in this State, or legislation that mandates or permits public entities to pay for employee health care benefits in active service or in retirement. The League supports this bill, which moved over to the Assembly.

S-1392, which requires PERS to train employers on enrollment requirements; requires employers to certify validity of PERS enrollment; requires assignment of investigator; clarifies penalty for providing false information to PERS. The League opposes this bill, which would shift oversight responsibilities from the State Division of Pensions to already over-burdened local officials.
August 25: DCA issued the “Best Practices Inventory.”

August 26: Mayor John Bencivengo of Hamilton Township (Mercer) and Mayor Anthony Persichilli of Pennington Borough, co-chairs of the League of Municipalities’ Mandates Relief Committee, were joined by Marianne Smith, Manager of Hardyston Township, and Richard Krawczun, Manager of Lawrence Township, Mercer County (right photo above)), to present testimony on unfunded State mandates.

Unfunded mandates and costs drivers, such as Stormwater Management mandates, binding interest arbitration reform, civil service reform and COAH requirements drive up local costs.   Ms. Smith and Mr. Krawczun provided details on how these and other State mandates impose increased burdens on property taxpayers all around the State.

During the hearing Assemblyman McKeon noted he would hold future hearings on shared services, consolidation and civil service bumping rights. 
September 9: League President, Mayor Jim Anzaldi, and staff met with DCA Commissioner Grifa and her staff to discuss issues related to the “Best Practices Inventory.” As a result of the meeting, clarifications from DCA are forthcoming.

If you have not already done so, we urge you to pass the draft resolution the League prepared and distributed in our July 14 Dear Mayor letter.  Our goal is for all municipalities in the State to pass a resolution consistent with the intent of this resolution, which urges the Legislature to promptly act on the “toolkit” reforms.    The resolution is available in Word or PDF format at the League’s toolkit information page: http://www.njslom.org/2011FY-Budget/toolbox-news.html

For more on the toolkit package, please contact either Jon Moran at jmoran@njslom.com or 609-695-3481 x121, Mike Cerra at mcerra@njslom.com or at x120, or Lori Buckelew at lbuckelew@njslom.com or x112.
Very Truly Yours,

William G. Dressel, Jr.
Executive Director