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Monday, January 5, 2009

New Jersey League of Municipalities Reacts to
Further Cuts in Property Tax Relief Funding

As a part of New Jersey’s FY ‘09 ‘mid-course correction’ spending cuts, which will total $2.1 billion, Governor Jon S. Corzine today announced new reductions of more than $15 million in Special Municipal Aid and Extraordinary Aid. These come on top of relief cuts included in the budget signed in June.

Absent direct funding from Washington in the next economic stimulus package, local budget makers recognize that the Governor’s pension deferral legislation could be the only form of property tax relief available to the citizens of many municipalities in 2009. We expect many would use the reduced billing to relieve pressures elsewhere in the budget that would otherwise drive bigger property tax increases and levy cap waiver requests.

From FY 2008 funding levels of $153 million (Special Municipal Aid) and $34 million (Extraordinary Aid), the FY 2009 Appropriations Act, as signed by the Governor in June, deducted $10 million and $9 million, respectively. The further cuts of $15 million, which the Governor announced today, will bring aggregate FY 2009 Special Municipal Aid and Extraordinary Aid losses to $34 million.

Special Municipal Aid is provided to municipalities faced with structural deficits, wherein essential service demands exceed the ability of the resident property taxpayers to support. Extraordinary Aid provides short-term assistance to municipalities experiencing a catastrophic loss of tax ratables or other fiscal difficulties. About 39 municipalities, whose budget cycles coincide with the State’s fiscal year have requested Extraordinary Aid. These are the municipalities whose property taxpayers will bear the brunt of these Extraordinary Aid cuts.

With all that in mind, we again urge State officials to carefully reconsider:

  1. the need for some form of incremental municipal property tax relief, to allow local officials to adopt budgets that meets the needs of their citizens during a year of economic distress;
  2. the need for cap relief related to pension payments, to allow local officials to address their citizens’ needs for effective municipal programs and services, beyond public employee pensions;
  3. the need to reject any proposals that would be injurious to the ability of local officials to manage their municipality in the most efficient and economical manner possible.

Confronting such a devastating economic crisis, in 2009 the State, along with mayors, must work together in solving our State’s fiscal problems. The last thing New Jersey needs is any more lay-offs. A rising unemployment rate will have negative consequences for all of us. The next to last thing we need is excessive property tax increases. But if lay-offs and/or tax increases are necessary, we need to work together to minimize their impact on the people we are sworn to serve.

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For further information contact: William G. Dressel, Jr., Executive Director at (609)695-3481, extension 122 or 609-915-9072



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