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Energy tax receipts / Pay what is owed editorial - April 18, 2012

What do you call it when someone collects money that you are owed, but - instead of turning it over to you - keeps it for himself?

Theft? Fraud?

In New Jersey, it's called business as usual, at least where energy-tax revenues are concerned.

Energy-tax receipts are the payments utilities make to municipalities in lieu of property taxes for the power plants or transmission lines a utility owns in a town.

They are meant to compensate the town for hosting gas lines, electrical towers or utility buildings, and - here's the important part - for a long time they directly offset the property taxes residents paid.

But in the 1970s, rather than pay this money directly to municipalities, utilities began paying it to the state with the understanding that it would be redistributed to the towns. After all, it was their money.

You know what happened next. At first the state took an administrative fee of a mere $25 million. Then governors, both Republicans and Democrats, started siphoning off portions of the energy money to plug holes in the state budget.

In 2005, the state held onto $72 million owed to the towns. But in recent years, the state's self-determined cut of this money has grown. In 2011, state government kept $505 million of the towns' money, about 50 percent of the total tax.

That's a hell of an administrative fee.

It's also a violation of state law. A 1999 statute created a formula that tied energy-tax payments to municipalities to an inflation index. Conveniently, the state can ignore this law by stipulating that it is doing so in the annual budget.

As Buena Vista Township Committeeman Chuck Chiarello, a past president of the New Jersey State League of Municipalities, pointed out in a recent guest column, municipalities are required to collect taxes for other entities, such as county governments and school boards, and they are required to turn over 100 percent of those funds. No skimming off the top. So why should the state be able to keep as much of the energy tax as it wants to?

This year, the League of Municipalities is pushing hard to stop the state from taking such a huge cut of the energy tax and other funds it collects on the municipalities' behalf - a practice it says has cost local property taxpayers $3.4 billion over 10 years.

Granted, there is no surplus of money at any level of government, and a more fair distribution of energy taxes means coming up with other revenue sources or cutting state programs. But what's the state's argument for keeping this money? It belongs to the towns.

Returning it to them is the single most effective way to give New Jersey residents what they consistently say they want most - property tax relief.



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