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New Jersey again balancing budget with municipal revenues

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BY WILLIAM G. DRESSEL, JR.
COMMENTARY

There is no good way out of an $11.2 billion budget hole. But the best way will inevitably involve broadly shared sacrifices.

Municipal officials are braced to do their part, recognizing that their property taxpayers need to be insulated, as much as possible, from the impact of those sacrifices.

Accordingly, we are gratified that Governor Christie intends to provide local officials with meaningful tools to limit the, otherwise devastating, impact of the cuts announced (Monday). And we salute Governor Christie for his leadership on this.

Binding Arbitration reform, which requires arbitrators to recognize local caps and the impact of awards on property taxes, and Civil Service reform, that allows local governments to opt out of the system, are reforms long been sought by the League. Combined with the pension and benefit reforms currently moving through the Legislature, they represent real progress.

But let the record be clear. The state is, once again, balancing its budget with municipal revenues. In order to avoid increasing State administered taxes, the Administration intends to use municipal property tax relief funding to bridge the gap.

In fact, most of the Consolidated Municipal Property Tax Relief Act (CMPTRA) and all of the Energy Tax Property Tax Relief (Energy Tax) funding is revenue replacement funding. It is supposed to replace revenues that were originally collected by municipalities for local use.

Those alternative revenues delivered municipal property tax relief for a long time, before various 'reforms' took them away from our cities, towns, townships, boroughs and villages – always accompanied by the solemn, statutory vow that we would be "held harmless."

Further, pursuant to a ten-year-old State law, which has long been honored more in the breach than in the observance, CMPTRA and the Energy Tax are supposed to be annually adjusted to account for the effects of inflation. Instead, they will be cut by $271 million, in the Governor's proposal.

A 20 percent cut will present a serious challenge to local budget makers, struggling to provide essential municipal services, effectively and efficiently. Still, as we have stated many times, there are other ways for the State to help us deliver property tax relief. Chief among these is by providing immediate and significant mandates relief.

We will continue to support the Governor and Lieutenant Governor during this economic crisis in addressing issues that result in high property taxes, such as unfunded mandates.

We will continue to work with Red Tape Review Group as we head toward the April 20 deadline for their final recommendations. This 20 percent cut in property tax relief funding will cripple municipal services, without real mandates relief. And a 2.5 percent cap is unworkable, unless local officials are given effective tools with which to address municipal costs-drivers.

William G. Dressel, Jr. is the Executive Director of the New Jersey League of Municipalities

 

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