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June 7, 2012

Re:  Join Our Final Push for Funding Restoration State Budget Deadline Three Weeks Away

Dear Mayor:

In about three weeks, the Legislature will send a budget bill to Governor Christie. We hope that budget will include provisions modeled on S-1900 and A-2921. Those bills recognize that the time has come to begin to restore to local budgets the millions that were cut to meet State needs in FY 2009, 2010 and 2011.

In State Fiscal Year 2009, combined Energy Tax and CMPTRA funding was reduced by about $26 million. In State Fiscal Year 2010, the net loss equaled about $32 million.  In State Fiscal Year 2011, the State used over $271 million of these, supposedly ‘dedicated,’ local property tax relief dollars for other purposes.

The result of those cuts was increased property taxes, increased local budget stress, deferred investments, staffing cuts and service cuts.  S-1900 and A-2921 ensure that each municipality in the State will be restored to the 2007 (SFY 2008) Energy Tax Receipts and Consolidated Municipal Property Tax Relief Aid level, over 5 years.

Both the State Treasurer and the non-partisan Office of Legislative Services agree that Energy Sales and Corporate Business in the current year missed expectations by $264.7 million. The Transitional Energy Facility Assessment (TEFA) is now slated to miss expectations by $63.8 million. This shortfall was likely caused by the following factors: two major energy disruptions, caused by the August arrival of Hurricane Irene and the October snowstorm, during which energy companies could not deliver power; the historically mild winter, which reduced demand; and dramatically lower natural gas prices, caused by a glut in supply.

Despite these revenue gaps in the current State fiscal year, and despite slower than expected growth in Income, Sales, Corporate and other taxes, the State Treasurer testified that Governor Christie and the Legislature can balance current year spending through a combination of fund lapses and reduced supplemental needs.

While other policy initiatives could be threatened by the new revenue estimates, we believe the $66 million first-year municipal property tax relief restoration embodied in S-1900 and A-2921 remains viable. Despite slight differences in magnitude, both Treasury and OLS expect Energy Tax revenues to rebound next year.

Further, the upcoming budget will reallocate revenues from the Clean Energy Fund and the Affordable Housing Fund. Those revenues will not be available in future years, as the phase-in of State pension liability payments progresses and as the planned “Pay as You Go” component of the NJ Capital Transportation Program grows.

If the restoration of municipal revenue replacement funding, provided through the Energy Tax and CMPTRA, does not begin this year, when will it ever?
Please remind your Legislators that now is the time for action that will restore this vital funding to local budgets. That is where it was always meant to be.

For more information and a link to our latest Talking Points, visit our Restoration Resource Center at http://www.njslom.org/energy-tax-resource-center.html.

If you have any questions, contact Jon Moran at 609-695-3481, ext. 121 or jmoran@njslom.com

Very truly yours,

 

William G. Dressel, Jr.
Executive Director

 

 

 

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