Mayors lament withheld energy tax receipts
Asbury Park Press - APP.COM April 29, 2012
By Bob Makin, Staff Writer
This the first in a two-day series on energy tax credits. Part 2 will be published on Monday.
Like the teacher’s union before them, mayors throughout the state are taking aim at the financial tactics of Gov. Chris Christie.
Using a Supreme Court ruling that says state budget law supersedes statuary law, Christie has been holding onto a larger portion of the taxes that utility companies are required to pay municipalities for use of their land for power lines, transformers and other operations.
Since the mid-1990s, under Gov. Christie Todd Whitman, life was made easier for the utility companies by paying a lump sum to the state, rather than being billed by each municipality. Since then, governors have “skimmed” 1 or 2 percent of energy tax receipts before returning them to municipalities as “state aid,” a rather erroneous term, municipal authorities said.
But Christie has been holding onto an unprecedented 20 percent of utility tax receipts, signified in deep cuts to “state aid,” some mayors contend. With a state-mandated 2 percent cap on annual municipal tax levies, municipalities have been hamstrung to provide efficient and effective services without the full amount of the energy tax receipts, municipal and some state authorities said. Providing services with the energy tax receipts is a form of tax relief because the tax levy doesn’t need to be raised, they said.
Senate President Stephen Sweeney, D-Gloucester, Deputy Majority Leader Sen. Paul Sarlo, D-Bergen, and Assemblyman Jay Webber, R-Morris, responded that they would prefer to see that money in the hands of cash-strapped taxpayers rather than spendthrift politicians.
Chairman of the Senate Budget and Appropriations Committee, Sarlo is drafting legislation that would return the money to municipalities, provided they give it to taxpayers. Sweeney and Webber said they are among the legislators who support the bill.
“When municipalities argue that they need money sent back to them to provide property tax relief, I can’t help thinking that there’s a better way to do it by sending money directly back to the taxpayers,” Webber said. “The municipalities are saying, ‘Give me the money, and I’ll provide the relief,’ but I look at that with skepticism. If the municipalities want to provide property tax relief, they should not take the people’s money in the first place, but lower expenses and taxes. I’d rather give the money back to the people, not the politicians.” Sweeney added, “Mayors are elected for their ability to provide more services for a better price, more efficient and effective services with the money they have. If they were to get the money back, I would not give it back to them to spend, but I would support it going back to them as long as they turned around and gave it to the taxpayers. Sen. Sarlo rightfully said he would like to see the money get back into the mayors’ hands, not to spend, but to reduce taxes. They’re providing services now, and we’re hearing that it’s hard, but they’re providing them. But it’s hard paying that property tax. It’s really hard on seniors on fixed incomes.”
Mayors fire back
Mayors say they desperately need the money to staff a sufficient amount of police officers and fix dangerously damaged roads and disgustingly damaged sewers.
Edison Mayor Antonia Ricigliano, a Democrat, and Branchburg Township Administrator Gregory J. Bonin, whose mayor, John Sandler, is a Republican, said this is a nonpartisan issue. Ricigliano testified about the issue before the State Assembly Budget Committee with Republican mayors and a representative of the New Jersey State League of Municipalities, which has launched a campaign to raise awareness about excessive energy tax receipts withheld by the state.
“This has nothing to do with politics. It has to do with fairness and direct property tax relief,” Bonin said.
“When we appeared before the Assembly Budget Committee, it was because many of us who serve in public office, particularly the mayors, meet on a monthly basis with the League of Municipalities,” Ricigliano added. “We discuss the common problems that we share. It doesn’t matter whether you’re a large town or small, whether you’re Democrat, Republican or independent. There are very common problems that exist, and there are common ways to resolve some of these problems.”
From Edison, $14 million in energy tax receipts have been withheld during the past three years of the Christie administration, Ricigliano said. The fifth-largest municipality in the state, with a population of nearly 100,000, is staffing a police division down 45 officers to 170 since 2006 and a fire division down 36 firefighters to 111 since 2007, the mayor said.
In the early 1980s, when the population of Edison was only 60,000 residents, the fire division had seven more firefighters than it does now, Ricigliano said.
“We have applied for Safer Grants to hire more firefighters, but we have been denied because we, as a township, are willing to make the sacrifices necessary in these very trying economic times,” she said. “Therefore, we have been penalized as we are not laying off, as some other towns are doing. But the negative impact of attrition on our aging public-safety employees is just as dramatic.”
Piscataway Mayor Brian C. Wahler said the township is down $3.5 million in energy tax receipts during the past three years. That, combined with the 2 percent cap on tax levies, has forced the township to reduce its Police Department by seven officers, Wahler said.
The mayor said he is concerned about having an adequate force to combat potential gang violence.
“Who am I going to send out there to police the streets, crossing guards?” he asked. “I’m not going to be able to fix the streets that desperately need to be done before total failure. This town is unsafe because of this. These are huge quality-of-life issues around the state.”
Damaged roads also have become a danger in Branchburg, Bonin said. Yet, the township doesn’t have enough money to fix them, he said, partly because $924,000 in withheld energy tax receipts accounts for 1/16th of a conservative $16 million municipal budget.
“That’s a lot,” Bonin said. “In our opinion, we run a fiscally prudent environment. We’ve never bloated our budget. We reduced staff before there was a 2 percent cap and always have had a modest employee base. We’ve never expanded employees just for the sake of doing it. We’ve cut people because we want to remain fiscally conservative.”
As a result of its fiscal status, Branchburg recently improved to a AAA bond rating by insurance companies, based on Standard & Poor measures that determine risk factors in municipalities’ ability to bond, Bonin said. Yet, the state’s bond rating has decreased, he said.
Unprecedented economic circumstances going into the fiscal year 2011 budget necessitated reductions to municipal aid, Christie spokesman Kevin Roberts said. The cuts were part of an effort to close the $11 billion projected budget deficit, Roberts said.
“Since making those hard choices and getting the state’s fiscal house in order, the governor has protected consistent levels of state municipal aid while also providing historic reforms that have resulted, and will continue to result, in cost savings for towns, including interest arbitration reform and pension/health benefits reforms for public employees that provided $267 million in local government savings in the first year of their implementation,” he said. “These reforms alone will yield $43 billion in savings to local taxpayers over the next 30 years.”
Let taxpayers decide
Should the state government find a way to return energy tax receipts directly to taxpayers, they should be the ones to decide if and how the municipalities spend the money, Webber said.
He said the issue arose when the League of Municipalities disingenuously launched its awareness campaign cloaking budget subsidies as tax relief.
“The money doesn’t belong to the municipalities, it belongs to the taxpayers,” Webber said. “The league and the mayors have to be honest about what they’re asking for. They want the money to subsidize their budgets, not provide property tax relief. I’d be more than happy to work with them to directly provide tax relief, but don’t couch one in the guise of the other.
“Who should we be empowering in the first place?” he continued. “If the state has a decision to make here, if the state can send some portion back, who should it empower, taxpayers or politicians? I say taxpayers. The league wants to empower politicians. I disagree.”
Jon Moran, the league’s senior legislative analyst, differs on the definition of tax relief.
Moran said tax relief can come in the form of municipalities using energy tax receipts to provide services rather than raising property taxes.
Bonin questioned how state authorities can say they want tax relief when they’re taking money from local communities.
“How can you argue both sides?” he said. “You can’t say locals are being inefficient and then take money away from them.”
Ricigliano said she is pleading with legislators to put pressure on the Senate and Assembly to demand that the governor release the outstanding energy tax receipts. She is urging Edison residents to do the same.
Wahler said mayors throughout state are taking similar measures.
“Shame on any state legislator who doesn’t get on the side of their local mayors,” Wahler said. “If they don’t, local mayors should withhold their support for them no matter what their political stripes are.”
State Sen. Barbara Buono, D-Middlesex, said she supports Ricigliano “wholeheartedly.”
Assembly Deputy Speaker John Wisniewski, D-Middlesex, another of several legislators sympathetic to the economic plight of mayors, said he wasn’t confident in a bill that would return money to taxpayers because Christie probably would veto it.
The governor doesn’t have a position on the legislation Sarlo is drafting, Roberts said, because it’s too early in the process to know the specifics of it.
“As with any other piece of pending legislation, it will receive careful scrutiny and review by our counsel’s office prior to the governor taking action,” he said. “If and when the bill reaches the governor’s desk, it will receive that review in the 45-day period for the governor to take action.”