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In testimony before the Legislature on Monday, and again on Tuesday, State Treasurer Elizabeth Maher Muoio again cited the State’s ‘need’ to lay claim to Energy Tax (ETR) revenues that, for twenty years, have been dedicated to municipal property tax relief. We do not doubt the Administration’s commitment ‘to providing the municipalities with an equal level of support in FY ’19.’

We sincerely appreciate the fact that this ‘accounting adjustment’ will result in no reduction in property tax relief funding, this year. We have, however, asked State budget-makers to look beyond their own immediate needs. We have asked them to consider the longer-term implications of the ETR shift.

Our arguments seem to have made little headway. But there is still time to change that.

Please contact your State Legislators regarding the proposal. Remind them that:

  • Since 1997, municipalities have been able to count on annual baseline distributions from the off-budget, dedicated Energy Tax Receipts Property Tax Relief Fund.
  • Before the Fund existed, utility tax revenues, meant for municipal property tax relief, were commonly diverted in State budgets to address annual State-level concerns.
  • In order to create a dependable and predictable source of property tax relief, which would enable municipalities to engage in responsible budgetary planning, local officials, State leaders and representatives of the taxpaying utilities joined together to advocate for the creation of the ETR.
  • The proposed accounting shift, to be effected by budget language, mirrors the genesis of the Consolidated Municipal Property Tax Relief Aid (CMPTRA) program, which replaced funding from Sales and Corporate Tax sources, for a number of revenue replacement programs, with Income Tax dollars.
  • That shift led – not immediately, but inevitably – to the deterioration of CMPTRA property tax relief. (In its first year, CMPTRA was funded at $755 million. In 2001, CMPTRA’s best year, the fund provided $818.5 million. By 2010, due to cuts and the steady shift of property tax relief dollars from CMPTRA to the ETR, funding was down to $264.7 million. And this year’s budget proposal calls for the distribution of $263.3 million through CMPTRA.)

You might also want to mention the fact that unless the Legislature adjusts the proposal, this will be the eighth straight year of level ETR/CMPTRA funding. And in the three preceding years, as the State struggled to balance its budget during the great recession, the level was lowered by about $320 million. In a recent NJSpotlight story, Colleen O’Dea noted that, since 2007, the CPI has risen by 22%; while property tax relief funding from these sources has decreased by 17%.

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

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