Dear Mayor:

On Thursday, April 29, 2004, Governor McGreevey announced some major new property tax relief and reform proposals to a rare joint session of the State Legislature. The following day, he briefed the State's Mayors on these new initiatives, at the League of Municipalities' Mayors' Property Tax Summit.

This new "FAIR" (Fair And Immediate Relief) plan includes three main components.

• Fair and immediate relief for our hardest hit taxpayers.
• Reforms that will limit administrative and bureaucratic spending.
• And a plan to appoint a Citizens Task Force to craft a Special property Tax Reform Convention bill, for submission to the voters in 2005.

The immediate relief would include significant increases in homestead rebates and New Jersey SAVER checks. This would be financed by a 2.6% "Millionaires' Tax" on income in excess of $500,000. This new tax would affect only about 28,500 taxpayers, while the increased relief would benefit almost two million families. (For a copy of the one page summary with more on how the "Millionaires' Tax" and the increased rebates would effect your county, please contact Ms. Suzanne Delany at 609-695-3481, ext. 14.)

The new spending limitations involve a new 2.5% Cap on municipalities, school districts and authorities, which will be developed by DCA Commissioner Levin and Education Commissioner Librera. The new Cap is especially aimed at education administrative expenses.

The "structure and scope" of the Convention will be recommended to the Legislature by the "Citizens Task Force," which will report in time to allow the Legislature to advance the question to the voters in November, 2005.

We are pleased that Governor McGreevey has committed his Administration to true property tax reform, through citizen involvement in a Special Convention. This begins a process that will, at long last, permit the people who personally struggle with New Jersey's relentless property tax problem to work together toward a permanent solution. We warmly welcome the Governor's willingness to consider a Special Convention approach to property tax reform. This could help to feed a groundswell of support for the process we have come to embrace as the best hope to end New Jersey's chronic over-reliance on that regressive revenue assessment. (We are including a Draft Resolution Supporting the Call for a Tax Relief Convention for your consideration.)

We also commend the Governor for his efforts to address the symptoms of that condition this year. The rebates that have been proposed may not be as efficient as direct aid to municipal government, as a means of relieving the property tax burden. Still, they will help property taxpayers all over the State to cope, until the Special Convention can propose the needed reforms.

We intend to carefully evaluate Governor McGreevey's new Cap proposal, as the details become available. But again, with so many new responsibilities since the September 11 attacks, with the rising costs of meeting our traditional responsibilities, with property tax relief funding for municipal government level for so many years, and with just a one percent increase in support from the State this year, any local budget maker who can keep a lid on property taxes deserves to be called a hero - if not a magician. The vast majority of local elected officials do not need a Cap to tell them to control property taxes. The voters tell them much more eloquently and much more often. What those officials continue to need is a strong commitment from the State to meaningful relief and lasting reform.

Our Friday session also included a major announcement by DCA Commissioner Susan Bass Levin. A new regionalization assistance program, the "SHARE" (Sharing Available Resources Efficiently) program will distribute Implementation Assistance Grants, Feasibility Study Grants and Regional Coordination Grants to qualifying municipalities. Information and applications are available on-line at www.nj.gov/dca/lgs or by calling the Department at 609-292-7842.

We will keep you posted on all of these matters. If you have any questions or comments, please feel free to contact Jon Moran at 609-695-3481, ext. 21.

Thank you.