League president warns of “death spiral”

The president of the State League of Municipalities has requested the state legislature to set policies that would help municipalities, saying the strain of high health and pension costs and reduced state aid is leading municipal budgets toward “a death spiral.”

League President Chuck Chiarello, who is also mayor of Buena Vista, said municipalities are facing more and more tax appeals. A survey done by the league of 150 municipalities showed a 43 percent hike from last year. Appeals, he said, caused many towns to increase their legal defense costs, he said, a double whammy when combined with the loss of tax revenue.

The cash crunch is made worse by hikes in pension and health costs, he said, which went up 22 percent and 11 percent respectively, this year, he said.

In addition, Chiarello said towns are also seeing a higher number of homeowners not paying property taxes, forcing towns to put more money in their uncollected tax reserve funds.

The towns are particularly feeling the loss of energy tax receipts and other forms of state aid that the state kept to close budgets, Chiarello said. In last year’s budget, the towns saw hundreds of millions of dollars in lost state aid, he said.

He also criticized the plan by Gov. Chris Christie to keep sales tax revenue from Urban Enterprise Zones, which was originally to go back to distressed towns to spruce up their shopping districts.

“Never has such assistance been more needed,” he said.  

Assemblyman Declan O’Scanlon, (R-12), of Little Silver, said that while he understands the frustration towns are facing, he said it is the fiscal reality, adding that the “outrage should be directed to the people who failed to act,” in prior years.

He said Gov. Chris Christie has proposed a “toolkit” of reforms that would benefit residents, but the Legislature has to enact it.  League president warns of “death spiral”