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May 22, 2008

 

For Fairness Sake, Relief Funding Needs to be Restored

Throughout this year’s State budget deliberations, we have heard a lot of talk about municipal funding formulas, the need to base distribution on ‘efficiency,’ and fairness. All of that talk can and should serve as a beginning for a long, thoughtful and serious debate on how to maximize property tax relief in New Jersey. But it should not be used to disguise the current crisis.

Following the Governor’s proposal to cut municipal property tax relief funding by $190 million, three major concerns were immediately apparent to those elected to plan and manage local budgets.

The magnitude of the proposed municipal property tax relief funding cuts;
The timing of the municipal property tax relief funding cuts; and
The arbitrary population ‘formula’ used to apportion those cuts. 

Regarding the magnitude of the cuts, in his address to the Legislature, among the many proposed cuts, the Governor mentioned three funding areas he was forced to short-change – hospitals, higher education and municipal property tax relief. Guess which one of those faces the deepest dollar cuts? Higher Ed will be cut by $75.6 million. Hospitals will lose $143.5 million. And municipal property tax relief will be slashed by $189.6 million.

Regarding the timing, local budget makers were given no warning on the cuts, as they planned their own budgets for 2008. One year after the historic Special Session for Property Tax Reform, which purportedly eliminated the need for a Citizens’ Convention, Mayors across the State feel that the rug has been pulled out from underneath them. And property taxpayers will be asked to shoulder more than their fair share of the funding burden.

And regarding the arbitrary population formula, the original proposal would eliminate Consolidated Municipal Property Tax Relief Aid (CMPTRA) for any municipality with a population of under 5,000. It would cut CMPTRA funding in half for any municipality with a population between 5,000 and 10,000. And all but a handful of those with more than 10,000 citizens would face substantial cuts in property tax relief, with some losing millions of dollars.  Based on Trenton’s untested conventional ‘wisdom’ that bigger government is necessarily better government, and irrespective of extensive current service sharing arrangements, these arbitrary population limits seem designed to force local officials into otherwise unwise and inefficient consolidations.

Recently, the Treasurer reiterated the need for this State budget to mark a major turning point in the way the State conducts its fiscal affairs. The target for completion of the budget is between June 16 – 19. The Budget WILL be balanced at $32.8 billion. There will be NO new taxes. There will be NO more expenditures funded with ‘one shot’ revenues. And, most significantly for us, there will NOT be 100% restoration of the $189 million municipal funding cuts. HOWEVER, more than the Administration’s proposed $15 million shift is likely, but the money WILL come from other cuts.

That $15 million shift marked an acknowledgment by the Administration that the original proposed cuts failed to meet the ‘fairness’ test. They were too large, too sudden and too arbitrary.

We agree. Accordingly, regarding the Administration’s mid-June budget deadline, League Leadership believes that it is more important to get the budget done right, than it is to get the budget done early. League Leadership has decided to continue to push for full restoration of the slated $189 million municipal property tax relief funding cuts. The roughly $15 million shift, from one group of property taxpayers to another, falls short of the promise for significant, sustainable and reliable property tax relief funding, that was made just last year, by the Legislature’s Special Session. Only full restoration of the $189 million in municipal property tax relief, slated to be cut in the Governor’s original proposed budget, would allow local budget makers to consolidate the gains made possible by last year’s modest increase. And that would provide a further boost to citizen confidence in New Jersey’s commitment to meaningful and sustainable property tax relief.

 

                                                                        Very truly yours,

 

                                                                        William G. Dressel, Jr.
                                                                        Executive Director

 

                       

 

 

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