A bill that would have required taxpayers to pay energy tax receipts directly to a municipality rather than to the state has been held by the Legislature.
The bill, A2753, was due to be heard today by the Assembly Housing and Local Government Committee.
The bill, sponsored by Mercer County Assemblymen Wayne DeAngelo and Dan Benson, sought to ensure that municipalities receive the receipts from energy taxes directly rather than have the money collected by the state, which has kept an increasing percentage of the funds it has collected in recent years.
The state “skim” of the money does not sit well with local elected officials who say they are due the money by law. Many say they have been forced to raise taxes as a result of the state skim, even as Gov. Chris Christie proposes a tax cut.
Municipal officials say by law they are due the receipts, which for decades were collected directly by local governments to offset lost tax revenue due to power company infrastructure in their towns.
Once the state began collecting the money, local officials charge, it became fair game and beginning in the 1980s was diverted in ever increasing amounts to the state’s general fund. The result was a drop in what was once considered untouchable municipal revenue.
In 1997, energy deregulation led to a change in the structure, and a law passed at the time codified the state’s entitlement to some of the money while at the same time capping the skim. A 1999 law required the state to phase in an increased payout to municipalities and added an inflation boost each year. The law also required that aid levels never drop below the amount paid in 2002. The law included a “poison pill” that required the state to meet its requirements or forfeit the right to collect the money.
But instead of steadily increasing aid to municipalities, what actually happened is the state began siphoning money from another pool – CMPTRA aid – to increase the energy tax receipts. Because the CMPTRA aid was not protected by the poison pill, it was targeted by governors seeking to side-step their obligations on energy tax receipts, league officials and local mayors charge. The result was a steadily shrinking CMPTRA pool that has dropped from $786,932,761 in fiscal year 2000 to a proposed $207,486,291 in fiscal year 2013. That number represents a $297.9 million transfer from CMPTRA to the energy tax pool in the upcoming budget.
During that time the energy tax receipts paid out as state aid rose from $750 million to $1.086 billion while the state skim has risen from $246.9 million to a proposed $735 million in the upcoming fiscal year, a fact which enrages some league and municipal officials.
Earlier this year, the governor vetoed a measure that would have required the return of about $330 million in energy receipts back to local governments