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December 15, 2008

RE: S-7 (Pension Payment Deferral Option)

Dear Mayor:
Lacking majority support, due to the reservations of some members and the absence of others, today the Senate did not voted on S-7. This bill would implement Governor Corzine’s pension payment deferral option. (You can access a copy of the bill at http://www.njleg.state.nj.us/2008/Bills/S0500/7_I1.PDF.) Anticipating trouble ahead for local budget makers and property taxpayers, the Governor had originally unveiled this proposal last month at our Conference.

Both Houses will return to Trenton after the First of the Year. At that time, they could be prepared to consider this initiative.

We have been involved in discussions with the Administration and with Senate Majority Staff on this. Our involvement in the discussions has allowed us to counter arguments being offered by public employee unions for amendments that would benefit their members. Since such amendments could limit local management options and, thereby, jeopardize any benefits that might accrue to our property taxpayers, our involvement in the genesis of the bill has been crucial.

Throughout those discussions, we have insisted that municipalities be given the right to opt out of any deferral, should they judge that to be in the best interests of their property taxpayers. Each municipality will need to be able to balance the need for immediate relief, in the current economic climate, with any potential long term costs. We maintain that such a decision can only be made by municipal officials, in light of local conditions.

Given the condition of the state’s budget and of the state, national and global economy, and given the dim prospects for meaningful municipal property tax relief funding, this option could provide short-term relief just when it is most desperately needed by local budget makers and property taxpayers.

An Executive Branch analysis of this initiative, which includes a link to the reduced billings that would apply in your municipality, if the bill is enacted as it currently reads, can be found at http://www.state.nj.us/treasury/news/2008/p081125.pdf.

As currently drafted, the bill will provide both expenditure and levy cap relief for pension liabilities (in the case of the levy cap, for those in excess of a 4 percent increase) through 2012. We thank the Administration and Senate President Codey for working with us on these provisions. Without this relief from the arbitrary and artificial limits that the caps impose on prudent and informed local decisions, the pension payment deferral option would not work for the benefit of our citizens. And without that relief, there would be no real option available to locally elected and locally responsive municipal leaders.

Given the disastrous condition of State finances, we need to recognize that this could be the surest form of property tax relief available to the citizens of many municipalities in 2009. We expect many will use the reduced billing to relieve pressures elsewhere in the budget that would otherwise result in bigger property tax increases, reduced staffing, service cuts and/or levy cap waiver requests.

If you have any questions, please contact Jon Moran at 609-695-3481, ext. 121.

                                                                                                                Very truly yours,

                                                                                                                William G. Dressel, Jr.

                                                                                                                Executive Director

 

 

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