MONTCLAIR – The League of Municipalities continued its crusade today for the restoration of funding in the form of the energy tax receipts.
The venue was the first Senate Budget and Appropriations Committee hearing on the proposed annual budget this morning at Montclair State University.
Arthur Ondish, the president of the League of Municipalities and the mayor of Mount Arlington, said the restoration of funding stemming from the energy receipts tax is “the main issue” for the League this year.
Ondish said the money, approximately $700 million, rightfully belongs to municipalities. He added that when municipalities collect local taxes, such as for the school district, the money goes right back into the schools. Ondish said he sees the current energy tax receipts issue, in which the League says the state is pocketing the municipalities’ money, the same way.
“I can’t imagine the grief and outpouring of anger and frustration if (mayors) were to say to the schools…no we’re having a hard time this year, we’ll just give you some of (the money),” Ondish testified.
The energy tax receipts in question are made up of several revenue streams, including sales tax on energy, corporate business taxes and TEFA – the transitional energy facilities assessment. The revenue streams took the place of the Public Utility Gross Receipts and Franchise tax, which was originally collected by municipalities to reimburse for rights of way containing energy towers and infrastructure within their borders.
In the 1940s, the state began collecting the tax with the understanding that the money would continue to be forwarded to the municipalities.
However, the state is within its rights to keep the money, according to a 1984 Supreme Court decision that ruled the state’s budget legislation pre-empts all others.
Ondish said the League is not looking for all the money back at once, but the money sent back to the municipalities would lead to direct property tax relief for taxpayers.
Sen. Paul Sarlo, (D-36), Wood-Ridge, told Ondish that the issue is important in Sarlo’s home county, and that all 70 municipalities in Bergen County will pass resolutions requesting the money from the state.