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~ The Legislative Blog of the NJ League of Municipalities

The Town Crier

Monthly Archives: October 2016

Atlantic City 5-Year Recovery Plan Advances

27 Thursday Oct 2016

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Atlantic City, Atlantic City 5- Year Recovery Plan

On Wednesday,  Atlantic City Mayor Don Guardian and Council President Marty Small presented the City’s 5-year recovery plan to avoid further State intervention before the Assembly Judiciary Committee. The presentation included a detailed briefing by the City’s respected consultants on economics, structural challenges, revenues, legacy liabilities and much more.

The plan document may be found here:

 http://www.cityofatlanticcity.org/docs/20161025101809-5.pdf

At the conclusion of the hearing, the Committee members gave positive remarks on the work done by the City in a short window of time.  Of particular importance about the City’s plan was its ability to balance the budget through reduction of expenses, leverage local government assets while retaining control locally, and balancing the budget while planning for steady reduction in State assistance through transitional aid.

The same plan was presented to the Department of Community Affairs (DCA)  on Tuesday.     The DCA has until next Tuesday to accept or reject the plan. Failure to accept the plan could result in a State takeover.

Contact:   Michael F. Cerra, Assistant Executive Director, 609-695-3481 x120, mcerra@njslom.org.

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Time to Dispose of E-Waste

20 Thursday Oct 2016

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e-waste, Electronic Waste Management Act

Update:  January  9, 2017

We’re pleased to report the Governor has signed S-981 into law.  For more, click here to see our January 9, 2017 update. 

Update, December 7:

On November 21, A-2375 passed the General Assembly by a vote of 60-12.    The Senate companion, S-981 previously passed the State Senate.

The legislation now awaits action by the Governor.

__________________

The League supports S-981 and A-2375, regarding so-called “e-waste.”   Specifically, this legislation would require each manufacturer of “covered electronic devices” to provide for the collection, transportation, and recycling of its market share in weight of all covered electronic devices collected in a program year.   Similar legislation advanced in the lame duck session but was pocket vetoed by the Governor.

The “Electronic Waste Management Act” intended to require manufacturers to provide for the recycling of residential covered electronic devices at no cost to taxpayers.  Unfortunately, despite the best of intentions, it has not worked out that way.   Local governments have wound up subsidizing the program with taxpayer dollars in order to ensure that 100% of the material collected is properly recycled.      A-2375 intended to address this inequity for taxpayers.

We are further encouraged that the fiscal analysis prepared by the Office of Legislative Services (OLS) anticipates costs savings to local governments, if A-2375 were to be implemented.

A-2375 will ensure that manufacturers provide for a “free and convenient” recycling program for all of the covered electronic devices that are collected and further eliminate the need for local governments, and by extension our property taxpayers, to either absorb these costs or eliminate their programs.

S-981 has passed the State Senate and joins its companion bill A-2375 at second reading in the Assembly, which means it can be posted for a final vote.   Please contact your Assembly representatives and the Governor’s Office and ask for their support of S-981 and A-2375.

Contact:   Michael F. Cerra, Assistant Executive Director, 609-695-3481 x120, mcerra@njslom.org.

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The Art and Science of Reverse Revenue Sharing

18 Tuesday Oct 2016

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CMPTRA, ETR, Property Taxes, Taxes

Property Tax Relief funds are meant to help municipalities relieve property tax burdens. But in New Jersey, that’s not always the way things happen. All too often, State-level policymakers have redirected relief resources to pay for other priorities.

In 1997, the Energy Tax Receipts Property Tax Relief Fund (ETR) replaced Public Utility Gross Receipts and Franchise Taxes (Utility Taxes). Those taxes on regulated public utilities were originally assessed and collected at the municipal level. In the early 1980s, for its own benefit and for the convenience of the tax paying utilities, the State became the collection agent for these assessments. The law that effected this change promised that the proceeds would be distributed back to the municipalities, which provide access to public rights of way and other services to utility facilities. (And only because of that access, and thanks to those services, utilities derive their profits.)

The State of New Jersey neglected that commitment, immediately diverting large and growing portions of the Utility Taxes to its own general fund.

Modernization and deregulation led to a major reform of utility taxes in 1997. That reform law validated and, supposedly, capped the State’s annual percentage of the proceeds. At the League’s urging, future ETR municipal property tax relief funding was protected by the, so-called, poison pill. The ETR “Poison Pill” provides that, if the State does not appropriate and distribute Energy Tax Receipts Property Tax Relief funding, in any year, in accordance with statutory requirements, then the State forfeits the right to collect the corporation business tax (CBT) from all corporate taxpayers that are not public utilities for that tax year.

In order to explain what would later happen with the ETR, you need to know a little bit about New Jersey’s other significant municipal property tax relief program – the Consolidated Municipal Property Tax Relief Aid (CMPTRA) program.

Throughout the first nine decades of the Twentieth Century, municipalities had access to various sources of revenue. Like the Utility Taxes, over time, the State made itself the collection agent for many of these municipal assessments. In the SFY 1996 Budget, the Whitman Administration decided to ‘consolidate’ fourteen municipal property tax relief programs. Each of CMPTRA’s component parts was distributed according to state established formulas. And many of those parts were extensions of taxes that had formerly been assessed and collected at the municipal level. These include the Financial Business Tax, the Insurance Franchise Tax, the Railroad Class II Property Tax, the Business Personal Property Tax, the Corporation Business Tax on Banking Corporations, as well as State Payments in Lieu of Property Taxes (PILOTs) on State owned properties and buildings (which, by the way, had been underfunded for several years).

Like Utility Taxes, these were all municipal revenue replacement programs. Absent these programs, local residents and businesses would have needed to cover local revenue losses caused by State actions. Revenue replacements were not meant to make things better for municipal property taxpayers. They were only intended to keep things from getting worse. In the first year, CMPTRA provided $861.4 million of property tax relief.

Due to rising costs, municipalities often need to spend more in successive years in order to maintain services and programs at a steady level. When the State provides flat property tax relief, the difference will, in many cases, have to be made up by increases in property taxes or reductions in existing services.

Realizing this, active members of the League of Municipalities battled, for years, to convince State Legislators to provide some annual inflation based increases in property tax relief funding programs. In 1999, we were successful in winning such adjustments for the Energy Tax Receipts Property Tax Relief program and in the Consolidated Municipal Property Tax Relief Aid. Because ETR distributions are protected by the “Poison Pill,” the State has needed to annually increase municipal ETR funding (or, at least, to appear to do so). Because there are no consequences for the State, should it fail to annually increase CMPTRA distributions, guess what happened next?

Beginning in SFY 2002, and in almost every year since, the State has passed budgets that ignore the law calling for inflation-based adjustments to CMPTRA. (Each annual State Budget can include provisions that supersede, during that Fiscal Year, previously passed funding laws.)   Instead, CMPTRA dollars were used to fund ETR inflationary adjustment.

The way this works is testimony to the creativity of State budget-makers.

Those budgets distributed CMPTRA funding according to CMPTRA (Revenue replacement) formulas to CMPTRA recipient municipalities. But, the State called the CMPTRA monies Energy Tax Receipts. On paper, ETR distributions increased by the rate of inflation. In reality, local budgets got flat funding. That has been the usual case, right up to and including the current State budget, except in the years when more is subtracted from CMPTRA than is added to ETR.  In those years, the State used local property tax relief money to address State level needs.

And that’s what happened in 2008, 2009 and 2010. In those years, the State saw its own-source revenues stagnate in response to the Great Recession. State budget-makers solved their problem, in part by ‘repurposing’ local property tax relief. And, over those three years, local budgets absorbed total losses of about $320 million. That $320 million loss is not a one-time loss of property tax relief. It has been reenacted, every year since 2010.

Remember that CMPTRA distributed over $861 million to the cause of local property tax relief in its first year (SFY ’96). In the State’s current budget, thanks to twenty years of State gamesmanship, including three years of actual reductions, CMPTRA will provide only about $280 million of help to municipal budgets. And a source of non-property tax revenue that was supposed to increase annually by the rate of inflation has been steadily drained.

We remember that Property Tax Relief has always been the purpose of the ETR. We know what the PTR in CMPTRA means. Now is a good time to remind the folks in the Statehouse.

Contact: Jon Moran, Sr. Legislative Analyst, jmoran@njslom.org, 609-695-3481 x121

 

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State Health Benefits Open Enrollment – Important Changes for 2017

07 Friday Oct 2016

Posted by njlmblog in Uncategorized

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Employee Health Benefits, Prescription Drug Plans, State Health Benefits Program

The State Health Benefits Program Committee has approved new plan designs for 2017 that will be available during the current open enrollment period. The annual open enrollment for the State Health Benefits Program (SHBP) has begun and continues to October 31, 2016.  Certified applications are due to the Division of Pensions and Benefits no later than November 11, 2016.  Changes made during open enrollment will take effect on January 1, 2017.

Financial Incentive For Joining Tiered Network Plan

A noteworthy change in 2017 is a pilot program to provide an incentive for joining the Tiered Network Plan.  This pilot program is optional for local employers.

First time enrollees in a tiered network medical plan beginning Plan Year 2017 and continuing for two years until December 31, 2018 will receive a financial incentive paid in the first quarter of Plan Year 2017.  The financial incentive, which is reportable income, is $1,000 for single coverage; $1,250 for member/spouse or parent/child coverage; and $2,000 for family coverage.

At the local level, the incentive can be either a gift card or cash at the discretion of the local employer.  It is important to note that the incentive must be forfeited and returned, if the employee fails to remain enrolled in the Tiered Network Plan until December 31, 2018.

If the municipality choses to participate in the Pilot Program they will need to adopt the following resolution http://www.nj.gov/treasury/pensions/epbam/exhibits/pdf/ha0992.pdf.

An employee can still enroll in the Tiered Network plan if a municipality does not offer the financial incentive.

Prescription Drug Changes

There are several changes in the prescription drug plans, with various effective dates as follows:

  • Generic Drug Substitution: When a generic drug is available for a brand name drug, an employee who wishes to have the brand name drug will be required to pay the difference in cost  plus the generic copayment.  This change takes effect December 1, 2016.
  • Formulary: Certain drugs will be excluded from coverage. If an employee is currently taking medication that will no longer be eligible for coverage, they should ask their doctor if a preferred alternative is appropriate.  The employee’s doctor may initiate an appeal by calling Express Scripts.  This change will take effect December 1, 2016.
  • Preferred Drug Step Therapy (PDST): An employee is required  to try and fail a lower cost prescription drug before approval of a high cost prescription drug in the following classes of drugs: Proton Pump Inhibitors (ulcer/reflux drugs), SSRI/SSNRI antidepressants, osteoporosis drugs, nasal steroids, and hypnotics.

Out of Network Cost of Physical Therapy

The maximum payments for Out-of-Network Physical Therapy visits will be $55 under Aetna plans and $52 for Horizon Blue Cross Blue Shield plans. If the physical therapist charges more than the maximum payment, the employee will have to pay the difference.  This change takes effect November 1, 2016.

Increase in Emergency Room Visits

Emergency room co-pays will increase by $25, where the co-pay is currently less than $100.

The following resources are available:

A plan design comparison chart for active municipal employees is available at http://www.state.nj.us/treasury/pensions/hb_open_enrollment_2016/ha0896-2016.pdf

The Division of Pensions and Benefits has also posted a Percentage of Premium Worksheet to assist employees in calculating their approximate payroll deduction for health benefits.  The worksheet is available at http://www.state.nj.us/treasury/pensions/hb-percentage-home.shtml

Rates for local employers for Plan Year 2017 are available at http://www.state.nj.us/treasury/pensions/hb_open_enrollment_2016/local-gov-with-without.pdf

We will continue to keep you posted as new information is released from the Division of Pensions.

Contact: Lori Buckelew at lbuckelew@njslom.org or 609-695-3481, ext. 112.

 

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2016 Ballot Questions Address Casinos and Transportation Funding

03 Monday Oct 2016

Posted by njlmblog in Uncategorized

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Atlantic City, Casinos, Gas Tax, Property Taxes, State FY 2017 Budget, Transportation Trust Fund (TTF)

Update, November 9:

Public Question 1, or the “New Jersey Allowance for Casinos in Two Additional Counties Amendment” regarding the allowance of two additional casino was voted down overwhelmingly  by New Jersey voters.    With almost 99% of precincts reporting,  almost 78% of voters, or 2,231,133, voted no.

On the other hand,  Public Question 2, the “New Jersey Dedication of All Gas Tax Revenues to Transportation Amendment,” which dedicates all gas tax revenues for transportation passed by a 54% (1,507,097) to 46% (1,301,192).

Click here for the NJ Spotlight story with more on the two ballot questions.

End of update.

_______________

While the 2016 Presidential election has captured most of the public’s attention, New Jersey’s voters in November will also elect their House Representatives for the next two years and decide the fate of two important statewide ballot initiatives.  The ballot questions regard two timely issues that will impact our property taxpayers.

Public Question 1, or the “New Jersey Allowance for Casinos in Two Additional Counties Amendment” regards the possible expansion of casinos outside of Atlantic City.      Passage of this question would amend Article IV, Section VII, and paragraph 2 of the New Jersey State Constitution.

Casinos were authorized only in Atlantic City via a 1976 public referendum.  In more recent years, faced with the introduction and expansion of casinos in surrounding states, there has been an effort to permit casino gambling in Northern New Jersey.   The end result of that public campaign is Public Question 1.

The question itself is silent on the actual location of the new casino.  If passed, the Legislature would be authorized to permit two casinos, which would be located in different counties, and in municipalities that are at least 72 miles from Atlantic City.   In passing the enabling legislation, the State Legislature would need to address the type of casinos, licensing and taxation of its operations and equipment.

The interpretative statement for the questions reads as follows:

At present, casino gambling is allowed only in Atlantic City in Atlantic County. This amendment would allow the Legislature to pass laws to permit casino gambling to take place in two other counties in this State. Only one casino in each of the two counties would be permitted. Each casino is to be located in a town that is at least 72 miles from Atlantic City. The amendment would allow certain persons to apply first for a casino license. The laws passed by the Legislature would provide for the location and type of casinos and the licensing and taxing of the operation and equipment. The amendment provides that the State’s share of revenue from the operation of the two casinos and of the casinos in Atlantic City would be used for programs and property tax relief for senior citizens and disabled residents. It would also be used for the recovery, stabilization, or improvement of Atlantic City and other purposes as provided by law. Lesser portions would be used to aid the thoroughbred and standardbred horsemen in this State and each town and county in which a casino is located.

Public Question 2, the “New Jersey Dedication of All Gas Tax Revenues to Transportation Amendment,” regards the funding of transportation projects.  Passage of the question would amend Article VIII, Section 11 of the New Jersey State Constitution so to dedicate all revenues generated by the gas tax, regardless if it is raised or not, for transportation projects.

Currently, the $0.105 per gallon tax on unleaded is fully dedicated to transportation projects.    All but $0.03 of the $0.135 tax on diesel is similarly dedicated.     The purpose of the proposed amendment is to assure additional funding to the State’s Transportation Trust Fund (TTF) and to assure the public that all such revenues, including any revenues generated by a possible increase in the gas tax, will be used for these purposes and not diverted.    The passage of this question will not increase the gas tax.   The question of how to fund the TTF and the extent that the gas tax may be raised to now lies before the Legislature and the Administration.    In other words, if this amendment is ratified, regardless of the amount of the tax itself, all gas tax revenues will be constitutionally dedicated for transportation purposes.

The interpretative statement reads:

This amendment would dedicate all of the revenue from the State tax on motor fuels to the Transportation Trust Fund. The current dedication is 10.5 cents per gallon on gasoline and diesel fuel. The amendment would include an additional three cents of the tax on diesel fuel that is not currently dedicated. The total revenue from the tax on motor fuels this fiscal year is estimated to be $541 million. The amendment also dedicates all of the revenue from the tax on gross receipts of the sale of petroleum products to the Transportation Trust Fund. The current minimum dedication is $200 million per year. This fiscal year, the revenue from the tax on gross receipts of the sale of petroleum products is estimated to be $215 million. The amendment does not change the current tax on motor fuels or petroleum products gross receipts. The dedication to the Transportation Trust Fund ensures that the revenue is only used for transportation purposes.

In 2014, we surveyed League members to get their thoughts on a number of Transportation Trust Fund renewal options. One of our questions asked if they would support an amendment to the State Constitution to prevent, as much as possible, future Legislatures and Administrations from using Transportation Trust Fund revenues for anything other than transportation capital projects. Overwhelmingly, they supported the option to constitutionally dedicate TTF revenues for such work. Over 80% registered “Strong” support.  Another 11% were “Somewhat” supportive. And the survey registered only trace opposition of any kind.

Contact:

Michael F. Cerra, Assistant Executive Director, mcerra@njslom.org, 609-695-3481 x120.

 

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