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June 12, 2012

Re: Clarification Regarding the State’s Statutory Obligations for Energy Tax and CMPTRA Funding

Dear Mayor:

Press reports and discussions with elected and appointed officials indicate that there is still some confusion concerning the State’s statutory obligations regarding annual Energy Tax Receipts and CMPTRA funding. We have been asked to provide clarity.

If the term “statutory obligations” means the obligations imposed by the statutes, then we believe that the State has been missing the mark.

N.J.S.A. 52:27D-442 reads, in part:

In each State fiscal year, each municipality shall receive Consolidated Municipal Property Tax Relief Aid equal to the amount of Consolidated Municipal Property Tax Relief Aid received in the prior State fiscal year multiplied by the sum of 1.0 and the index rate or zero, whichever is greater.

The statute goes on to state, “The Director of the Division of Local Government Services shall promulgate annually the index rate to apply in the next following fiscal year which shall be the same as the index rate determined pursuant to section 4 of P.L. 1983, c. 49 (C.40A:4-45.1.a.)”

That statute, as we read it, obliged the State to increase the SFY 2008 CMPTRA distribution of $710.7 million by 5% in SFY 2009. Instead, the SFY 2009 distribution decreased to $631.1 million.

The statute, as we read it, would then have obliged the State to increase that year’s $631.1 million CMPTRA distribution by 6.5% in SFY 2010. Instead, the SFY 2009 decreased to $536.1 million.

That sum, according to the obligation imposed by the statute, should have remained level in SFY 2011. Instead, it decreased to $264.7 million.

As has been noted in the past, in part, these reductions have been used to allow the State to meet its Energy Tax obligations and, thus, avoid the ‘poison pill.’

We realize that the CMPTRA distribution law is not self-executing, and that the State Legislature has the ability to avoid, if necessary, its statutory obligation to distribute these revenues to local governments in its annual appropriations act. The State needs to have that ability, in order to deal with emergencies and crises that may occur, and to balance its budget.

The State, however, should not exercise that option automatically. It should be the exception. Instead, going back over a number of Administrations and Legislatures, it has become the rule. By consistently failing to meet statutory obligations regarding CMPTRA, municipal property taxpayers have been denied the relief to which they are statutorily entitled.

In about two 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.

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. And the application of ‘poison pill’ protection to SFY 2012 combined Energy Tax and CMPTRA funding will help to further restrain the appetites of future State policy makers for municipal property tax relief resources.

Please contact your State Legislators, in both the State Senate and the General Assembly. Please urge them to support State budget bill amendments modeled on the provisions of S-1900 and A-2921.

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

Very truly yours,


Hon. Janice Mironov, First Vice President, NJLM
Chairperson, Energy Receipts Restoration Task Force and
Mayor, East Windsor Township

William G. Dressel, Jr.
Executive Director




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