Dear Mayor:

Based on the best information, currently available to us, here is our preliminary analysis of Governor Corzine’s proposed budget for the State’s next fiscal year, which will begin on July 1.

Remembering that municipal property tax relief funding has been held flat for the past five years, the proposed increase in municipal property tax relief funding represents a positive commitment in a year when the State is confronted with a significant budget deficit.  It testifies to the fact that Governor Corzine recognizes the connection between municipal property tax relief funding and municipal property taxes.  This increase will help local officials limit property tax increases.

While Consolidated Municipal Property Tax Relief (CMPTRA) funding ($835.4 million) and Energy Tax Receipts Property Tax Relief (Energy Tax) funding ($788.5 million) will be level funded, a new budget line item – 2008 Municipal Property Tax Assistance – increases property tax relief by 2% ($32.6 million).  Every municipality will receive a 2% increase over last year’s aggregate (CMPTRA and Energy Tax) funding level.

The new $19.2 million program to encourage consolidations and shared services will include last year’s SHARE funding ($4.2 million) plus 15 million new dollars.

The Legislative Initiative Block Grant (Per Capita Aid) program will be level funded at $34.8 million.

Extraordinary Aid is slated to be cut from $43 million to $25 million. The $11 million REAP funding is slated to be eliminated. And $35.9 million, loosely referred to as “Municipal Assistance – Legislative Earmarks,” is also recommended for termination.

Highlands Protection Fund Aid, Open Space PILOT funding and Capitol City Aid are all to be level funded

Total “Municipal Aid” will increase from $1.918 billion to $1.938 billion – a total of $20 million more – a little bit more than a 1% increase.

The up to 20% property tax credits or rebates contained in A-1, currently awaiting the Governor’s signature, will cost the State $2 billion - $1,068.7 million more than the current rebate program. Tenant benefits under the bill will almost double from a total State cost of $126 million to $251 million. State payments for the Senior and Disabled Citizens Property Tax Freeze and the Property Tax Deduction Act will increase by $26.5 million and $24 million, respectively.

Accordingly, total “Direct Property Tax Relief” will increase from $1.715 billion to $2.959 billion – a total of $1.244 billion more – or a 73% increase.

Without going into the detail, total State “School Aid” will go from $10.3 billion to $10.9 billion – or a 5.6% increase.  Every town will receive additional aid.

If the budget is adopted as introduced, total State appropriations will be $33.3 billion, as compared to $31 billion in the State’s current fiscal year – an increase of 7.2%.   The Office of Management and Budget (OMB) estimates that about 50% of the State budget, $16.6 billion, goes to some form of property tax relief. 

We will continue to work with Governor Corzine, and with our partners in the Citizens Convention Coalition, in ongoing efforts to provide meaningful property tax reform and substantial and sustainable property tax relief for New Jersey’s citizens.

Very truly yours,

                                                                        William G. Dressel, Jr.
                                                                        Executive Director

P.S.      It is our understanding that the certified state aid numbers should be available from the      Department of Community Affairs by the end of next week.