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STATEMENT OF WILLIAM G. DRESSEL, JR.,
EXECUTIVE DIRECTOR, NJ LEAGUE OF MUNICIPALITIES
BEFORE THE ASSEMBLY BUDGET COMMITTEE CONCERNING GOVERNOR CHRISTIE’S CONDITIONAL VETO OF S-29

Thank you, Chairman Greenwald and Members of the Committee. We appreciate this opportunity to present to you our concerns with the Governor’s Conditional Veto of S-29.

We support efforts to restrain municipal spending. Accordingly, we support more stringent caps. But for those caps to work, we call on the Legislature and the Administration to join in efforts to restrain municipal costs. Our Executive Board is united in calling for management reforms and mandates relief, in order to allow municipalities to work within any new cap, without jeopardizing essential local services. Meaningful cost containment measures have got to be a part of the package that will limit future spending.

We need reforms to limit local costs, before we have to deal with caps to limit local spending.

Based on Press accounts of the agreement, and on information derived from other sources, we remain concerned with the specifics and the timing of this development. In the coming days, we urge you to focus on these outstanding issues:

  1. Local governments need cap exclusions for increases in the reserve for uncollected taxes, in excess of the cap rate.
  2. Local governments need cap exclusions for the costs of pre-existing labor contracts, in excess of the cap rate.
  3. Local governments need assurances regarding an end to the diversion of vital municipal revenue replacement funding, such as the Energy Tax, which was never intended for State use. If the State will not provide such assurances, at a minimum, local governments need cap exclusions to account for reductions in municipal property tax relief funding.
  4. Local governments need assurances that the Local Finance Board will continue to have the authority to grant emergency cap waivers.
  5. Local governments need to see action on the toolkit management reforms and on mandates relief initiatives BEFORE the Governor signs any new caps.
  6. Local governments need assurances that the provisions of the new local government cap will mirror the provisions of a new State spending cap.

The Governor has said, “New caps without the toolkit are unworkable.” He is right.

But now, having reached agreement on unworkable new caps, policy makers should not be tempted to declare victory in the ongoing struggle against oppressive, regressive property taxes, just as was done after the 2006 Special Session for Property Tax Reform.

If the momentum for reform lags in Trenton after passing new caps, but before passing management reforms and mandates relief initiatives, the real losers will be the people of New Jersey.  Our taxpayers will be forced to choose between higher taxes or a steady and certain deterioration of vital local services. Vital services will be reduced or eliminated, or taxes will go up, unless cost containment measures are enacted or municipal revenue replacement funding is restored, before the Governor signs the new caps into law.   

Absent cost containment initiatives or an end to the diversion of municipal revenue replacement funding, these new caps will only shift the burden of deciding whether to slash vital municipal services or increase property taxes from local elected officials to the citizens who elected them.

No one can declare a victory for real property tax reform until the toolkit and other reforms are enacted. 

Please put a complete package of property tax reforms on the Governor’s desk, before action on any new caps.

 

 

 

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