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March 14, 2012

RE: Senate Energy Tax Restoration Follow-up Needed

Dear Mayor:

Following yesterday’s Senate Committee testimony by League President and Mount Arlington Mayor Art Ondish, (See our previous letter at the Committee’s Chairman, Senator Paul Sarlo, indicated that he had recently attended the annual breakfast meeting of Bergen County Mayors. Senator Sarlo relayed the enthusiastic support of those Mayors for our efforts to end the State skim of Energy Taxes, which are meant to be dedicated to municipal purposes.

Just prior to Mayor Ondish’s testimony, the Committee was welcomed to Montclair by host Mayor Jerry Fried. Mayor Fried also called for the restoration of these vital property tax relief resources.


Please visit our Energy Tax Restoration resource Center for more information.

As your next steps, we urge you to consider the following:

    • Adopt a Resolution of Support. We have a Sample available at our website

 PDF is
Word is You can adapt for your municipality.
*    Reach out to your State Senator, your Assembly Representatives and the Governor, urging them to support the restoration.
*    Contact your local media and tell them what restoration would mean to your taxpayers.

As previously reported, some State Legislators have recognized the need and have introduced bills meant to provide solutions. We support these efforts and commend the sponsors.

Senator Linda Greenstein has introduced S-348.  Assemblymen Daniel Benson and Wayne DeAngelo sponsor the identical companion bill, A-1597, in the Assembly. This initiative in meant to provide each municipality with a minimum level of Energy Tax Receipts (ETR) Property Tax Relief Aid for Fiscal Year 2012.  The minimum amount of ETR Aid would be equal to the amount of ETR Aid distributed to each municipality in State Fiscal Year 2010.  If the appropriation and distributions are not made by the State, the State will forfeit the collection of corporation business tax liabilities from all corporate taxpayers that are not public utilities for that tax year. 

Pursuant to this legislation, in every year, the minimum total distribution of Energy Tax funds would be $1.029 billion.

As the sponsors of S-348/A-1597 note, in 1997 the State created the “Energy Tax Receipts Property Tax Receipts Property Tax Relief Fund” as a dedicated fund to replace the Gross Receipts and Franchise Tax.  Certain revenues generated by the Corporation Business Tax and the Sales and Use Tax are supposed to be deposited into the fund and distributed to municipalities as a means of reducing the municipal property tax levy.  ETR is provided to municipalities as a replacement for property tax revenues that they are no longer authorized to collect.

While we support this bill and commend the sponsors, it is not a final solution. As noted above, for years now, the State’s budget has shifted funding from CMPTRA to meet Energy Tax funding requirements. Passage of this bill would not end that practice. That said, passage of this bill would demonstrate the current Legislature’s recognition of the problem and intention to distribute municipal property tax relief funding to municipalities.

Senator Chris Connors, along with Assemblyman Brian Rumpf and Assemblywoman Dianne Gove, have introduced legislation (S-1059/A-656) that would, among other reforms, limit the amount of the State-use portion of total annual State energy tax revenues.  This is the portion of total energy sector-related State tax revenue that the State uses as general revenue to support the annual State budget.  The State budget would be limited to retaining the amount "skimmed" in fiscal year 1998, the first year under the 1997 energy tax reform law.  In 1998 the State retained $403 million from energy taxes and distributed $740 million to municipalities.  In 2010, the State retained $860 million, while distributing $789 million.

The bill also changes the crediting of these tax revenues to the "Energy Tax Receipts Property Tax Relief Fund," and requires a larger annual appropriation and distribution of tax revenues to municipalities to support local property tax relief.  As the sponsors note, with the price of energy and natural gas rising substantially over the last ten years, along with a steady growth in energy consumption, the related growth in energy-related State revenue has mostly accrued to the support of the growth in State budget spending.  This is demonstrated by the over 100% growth in the amount of the annual State retention of this revenue.  With the capping of this retention at the 1998 level of $403 million, and assuming only current levels of revenue, municipal aid from this source would grow by nearly $500 million.  Future revenue growth, almost assuredly attributable to increased energy consumption and widely anticipated increases in energy pricing, would be distributed for municipal aid to each municipality in proportion to each municipality's prior year property tax relief distributed from this source.

With these bills, the sponsors of S-1059/A-656 demonstrate an understanding of the property tax relief funding issues caused by the State’s dependence on municipal resources, and their commitment to providing municipal funding in a predictable and sustainable manner and protecting property taxpayers.

If you have any questions, please contact Jon Moran at 609-695-3481, ext. 121 or

Very truly yours,


William G. Dressel, Jr.
Executive Director




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