December 14, 2010
Re: Urging for the Exemption for Reserve for Uncollected Taxes Sample Resolution
As you are aware, when the new 2% cap was signed into law the exemption for the Reserved for Uncollected Taxes was eliminated. Assemblymen McKeon and Burzichelli have recently introduced A-3603 to permit a municipality to exclude the Reserved for Uncollected Taxes in excess of 2% from the cap calculation.
In addition to collecting property taxes for its own operations, the municipality also serves as the collection agent for the county, school districts, fire districts and other special local entities and the municipality must provide those entities with the full amount they deem necessary for their operations, regardless of the actual collection rate. Due to myriad factors beyond local control, the actual collection rate never equals the total local levy, especially during an economic downturn, when unemployment soars and property values plummet, causing an increase in tax appeals, which the municipality must defend and which subject the municipal budget to further losses, when successful.
To account for the shortfall and potential losses, State law requires the municipality to budget an appropriation in a line item known as the Reserve for Uncollected Taxes, which is generally determined through a formula driven calculation in which the variables change year to year.
Without the exemption municipalities will be forced to further cut their municipal levy in order to meet the 2% tax levy cap to guarantee the collection rate for school, special districts and counties, which will cause further pressures on the municipal budget resulting in cuts to services and personnel.
Furthermore, any municipality that does not collect 100% of taxation annually will be adversely affected in their ability to provide services and property tax relief by the existing exemptions due to the fact that the other taxable entities (schools, special districts and counties) automatically receive 100% of their taxation rate.
We urge you to adopt the attached sample resolution (WORD or PDF) calling on the State Legislature and Governor to exempt the Reserve for Uncollected Taxes from the 2% cap.
If you have any questions or need additional information please do not hesitate to contact Lori Buckelew at email@example.com or 609-695-3481 x112.
Very truly yours,
William G. Dressel, Jr.