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League Weighs In on the State Budget

Restore Energy Tax Funds
to Municipalities

Mayor Arthur Ondish, League President
By Arthur Ondish
NJLM President
Mayor, Mount Arlington

League President Arthur Ondish presented testimony to both the Senate and Assembly Budget Committees on the proposed state budget for FY ’12-’13. His testimony before the Assembly on Monday, March 19, at the University of Medicine and Dentistry of New Jersey in Newark follows. The Senate testimony, presented Tuesday, March 13 at Montclair State University in Montclair, was similar.

See caption below
League President Arthur Ondish testifies before the Senate Budget Committee on Tuesday, March 13 as the host mayor, Jerry Fried of Montclair looks on

On behalf of Mayors all around the state, and the citizens they represent, thank you Chairman Prieto and every member of the Assembly Budget Committee for allowing me to add my voice to those of the Mayors you heard from two weeks ago in Trenton.

The League’s top property tax relief priority for 2012 is the restoration of funding diverted from Energy Taxes intended for local use.

You know that the statutes provide for the distribution of all but a fraction of the energy taxes back to local governments. You also know that, despite the statutes, over the years, the state has taken more. From $72 million in state Fiscal Year 2005, to $505 million in state Fiscal Year 2011, the state’s portion of the sales tax on energy and the energy utilities Corporation Business Tax has continued to grow.

We know that the state has the right to over-ride the statutory dedication of these revenues to local governments. The state needs to have that right, in order to deal with emergencies and crises. But the state should not exercise that right automatically. It should be the exception. But it has become the rule.

As you move forward with your deliberations on the state’s next budget, please remember that keeping the money in the State Budget doesn’t save one taxpayer one dime. It only changes the level of government that spends the money. And it also changes the purpose for which the money is spent.

Instead of being spent on local programs and services and used to offset property taxes, the money has for the past ten years, and for many years before that, been spent as successive Legislatures and Administrations have seen fit.

We don’t doubt that it was put to good use and spent on good programs. But they are not the uses intended in the original laws.

We ask you to recognize that the time has come to end local taxpayer subsidies of the state budget. For this year, we ask that you restore at least $271 million and distribute the funding so that every municipality receives the amount that was distributed in the 2010 Fiscal Year.

We know that you were forced to deal with a major deficit that year. But the emergency is over and the recovery has begun. We urge you to restore that funding back to local governments to provide for vital municipal revenue replacement programs.

The cumulative impact of years of underfunding has left many municipalities with unmet needs. Whether related to deferred investments in local infrastructure, the loss of public safety personnel, dangerously low fund balances, or any other local need, local elected officials are in the best position to decide. Further, these monies were always intended to fund local programs and services.

see caption below
Pictured following a meeting of the Senate Budget Committee on March 13 at Montclair State University are Senator Kevin J. O’Toole, NJLM President and Mayor of Mount Arlington Arthur Ondish, Montclair Mayor Jerry Fried and Senator and Chair of the Senate Budget Committee Paul A. Sarlo.

Keeping these funds in the State Budget will not fix one road or bridge. It will not put another officer on the street or another firefighter on duty. It will not promote modernization of our environmental infrastructure. It will provide no benefit to our local business owners. And it will not promote prudent budgeting by locally elected and locally accountable municipal officials.

It will take leadership and it will take discipline to restore these municipal property tax relief dollars to local budgets. We sincerely hope that it can begin in this year in this Committee.


Originally published in New Jersey Municipalities, Volume 89, Number 5, May 2012

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