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March 22, 2012

RE: Energy Tax Funding Gaps, Funding Cuts and the State Skim

Dear Mayor:

Regarding the restoration of Energy Tax Receipts Property Tax Relief funding, some legislators and the media have expressed confusion about the numbers we have used in our statements and letters. It is a complicated issue. We hope this explanation helps.

There are three measures that can be used to express the magnitude of the problem. Each has been used to answer a different question.

The First Question (The Funding Gap Question) is theoretical and built on an assumption. (“If the State had complied with the statutes, then …”). This question relates to the law that requires annual inflationary adjustments to both Energy Tax and CMPTRA funding.

Question 1: If the State had complied with the law (and increased Energy Tax and CMPTRA distribution by the rate of inflation in each year) from 2002 to 2011, then how much more would municipalities have received?

Answer: $3.4 BILLION is the 10 year total. Using the same standard, we have mentioned annual funding gaps. E.g.:

2011 (FY 2012) - Statutorily Required $2,182,502,000
2011 (FY 2012) – Actual distribution    $1,293,794,000
2011 municipal funding gap                   $  888,708,000

The Second Question (The Funding Cuts Question) concerns year-to-year property tax relief cuts from combined Energy Tax and CMPTRA funding.

Question 2: How much were Energy Tax/CMPTRA distributions reduced in recent years?

Answer: Municipalities suffered actual cuts in property tax relief funding of $26 million in 2008, $32 million in 2009 and $271 million in 2010.

The Third Question (The State Skim Question) measures the amount of dedicated Energy Tax revenue that the State has used to balance its budget in a given year.

Question 3: How much of the Energy Tax, collected for municipalities, has the State kept in a given year?

Answer: From $72 million in State Fiscal Year 2005, to $505 million in State Fiscal Year 2011, the State’s diversion of Energy Taxes has continued to grow.

The bottom line is, no matter how it is measured, municipal property taxpayers have been denied the relief to which they are entitled.

For a sample resolution, talking points and additional background information on this see the Energy Tax Restoration Resource Center at: if you have any questions do not hesitate to contact Senior Legislative Analyst Jon Moran at jmoran@njslom.comor 609-695-3481 ext. 121.

Very truly yours,

William G. Dressel, Jr.
Executive Director




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