Put an end to energy tax diversion

By Mayor Janice Mironov, East Windsor Township, and Mayor John Bencivengo, Hamilton Township (Mercer),

Over the past two years, Governor Christie and Legislative Leaders of both parties have made tough choices and progress on difficult issues, such as unfunded mandates, pension reform and arbitration reform. We believe that these steps will help make our State a more affordable place.

These actions have taken leadership and discipline. On behalf of property taxpayers and Mayors around the State, we thank them for actions geared to get a better handle going forward on the many local costs imposed by past State actions.

What we ask of State officials this year will take similar discipline. This year, we want them to begin to end the State’s chronic dependence on our local revenues to balance the State budget. We want them to begin now to restore to local budgets the dollars that have been unfairly diverted for many years to State purposes.

New Jersey’s two main formula-driven general municipal property tax relief programs are the Energy Tax Receipts Property Tax Relief program (Energy Tax) and the Consolidated Municipal Property Tax Relief Aid program (CMPTRA). Though often referred to as “State Aid” programs, both are actually revenue replacement programs, intended to replace property tax relief funding that was collected, specifically, to fund municipal programs and services.

The laws are clear. No one can dispute that these funds have always been intended to supply local elected officials with resources to meet local needs, without having to lay greater burdens on property taxpayers.

Yet over many years, State budget-makers have dipped into these property tax relief reservoirs to plug gaps in the State budget and to fund other State programs. This diversion of dollars has happened because a State Supreme Court decision allows the annual budget to trump other laws.

Recent diversion of funds has increased with total municipal property tax relief funding reduced by about $32 million in 2009, followed by dramatic losses of about $271 million in 2010.

Instead of being spent on local programs and services and used to reduce property taxes, the money has for years been spent as successive Legislatures and Administrations have seen fit. 

The funds may well have been put to good use and spent on good programs. But they are not State funds and they are not the uses expressly intended in the original laws.

The cumulative impact of years of underfunding has left many municipalities with serious needs and burdensome property taxes. Whether related to deferred investments in local infrastructure, the loss of public safety personnel, dangerously low fund balances, and other serious gaps, local elected officials are in the best position to make the decisions. And bottom line, these monies were always intended to fund local programs and services, while relieving property taxes.

Diverting more of these funds to State programs will not fix one road or bridge. It will not put another officer on the street or another fireman on duty. It will not promote modernization of our environmental infrastructure. It will provide no property tax relief to our residents and local business owners. And it will not promote responsible budgeting by locally elected and locally accountable municipal officials.

Almost every year, the State collects more from energy taxes. Yet the amount distributed to municipalities for property tax relief has shown little, if any, growth for the past twenty years; while the proceeds going to the State’s budget have grown significantly.

The time has come to begin to put those revenues to the use for which they have always been intended.

The diversion of municipal resources to cover State spending needs to end. We call on the Legislature to provide us with this most important tool to relieve the worst-in-the-nation property tax burden borne, for too long, by the people of New Jersey.

Again, we commend Governor Christie and legislators for their leadership in advancing efforts to bring discipline to State spending and in considering common sense solutions to local cost drivers. It will take the same leadership and discipline to now wean the State off of these local revenues and restore them to municipalities.

Janice Mironov is NJLM First Vice-President and Chairperson, NJLM Energy Tax Restoration Committee

John Bencivengo is  Vice-Chairperson, NJLM Energy Tax Restoration Committee

Put an end to energy tax diversion