State continues a bad tradition – underfunding Highland Park and other towns

Accounting for inflation, Highland Park has sustained a 40.6 percent cut in state aid over the past decade. As reported by NJ Spotlight www.njspotlight.com, only major cities would see significant boost in funding under Gov. Christie’s proposed budget. Most municipalities – including Highland Park – received no aid increase over last year. This flat funding continues the aid strategy of the Christie administration that has been implemented for the past six years. See: Most Towns Receive Less State Aid Than They Received in 2006

The breakdown for Highland Park is as follows:

  • Total aid 2016: $ 981,547 
  • Total aid 2015: $ 981,547 
  • Change: 0%
  • Total aid 2010: $ 981,547 
  • Change: 0%
  • Total aid 2006: $ 1,407,270 
  • Change: -30.3
  • 10-year change with 17.5% inflation: -40.6%

Since 2010, only a dozen municipalities have received a net increase in state aid. Furthermore, in his first year in office, Gov. Christie cut municipal aid by 18 percent, so all but 12 communities stand to get less in aid this year than they did in 2009, the year before Christie took office. And 97 percent of the state’s municipalities are likely to get less in local aid than they did in 2006, as is the situation for Highland Park.

“Level property tax relief funding makes it harder to deliver essential services for more municipalities each year,” said Jon Moran, senior legislative analyst with the NJ State League of Municipalities. Mr. Moran said that if the state increased aid, towns could use that to offset costs in pensions, health benefits, debt and emergencies “over which local officials have no control, and help more towns to keep the (property tax) levy increases under two (2) percent.”

Municipal officials have been complaining for years that the state is keeping some of the energy tax revenue it receives to help balance its budget, rather than returning it all to towns. That diversion would continue under Gov. Christie’s budget proposal. Highland Park Mayor Gayle Brill Mittler has been a municipal leader is this battle to force the state to turn over the energy tax revenue. Local officials are pushing legislation, approved last month by the Assembly State and Local Government Committee, that would return, beginning July 1, $331 million of the energy tax money kept by the state in 2009-2011.

“Through the League of Municipalities, Highland Park is part of a coalition of more than 500 towns looking to recover state funds in Energy Tax Rebates. We are owed more than $5 million in Highland Park alone—more than one-third of our annual budget! We cannot fight this battle to obtain the money ourselves and our coalition will continue to put pressure on our legislators and the governor to return that money to all of us,” Mayor Brill Mittler said.

“Once again, some local Energy Tax Receipts funding will be redirected to cover unspecified state priorities,” Joseph Tempesta Jr., the mayor of West Caldwell and NJ League of Municipalities president, told the NJ Assembly Budget Committee at a hearing Wednesday in Montclair. “For the sixth straight year, local property taxpayers will be denied the benefit of annual inflationary adjustments that are required by state statute in both CMPTRA (Consolidated Municipal Property Tax Relief Aid) and Energy Tax funding …. The cumulative impact of years of underfunding, going back well before those cuts, has left many municipalities with unmet needs.”

For 2016, Highland Park is supposed to receive a CMPTRA payment of $121,583 and an Energy Tax payment of $859,964.

Another provision of the budget that could hurt municipalities is the fact that Gov. Christie’s budget proposes delaying the distribution of the final CMPTRA and Energy Tax payments, the two largest categories of aid to towns. Instead of distributing the final five percent of this aid on December 1, as is usually the case, this proposal delays the distribution of the final 15 percent until December 20.

“We have heard that the change will assist in addressing some state cash-flow problems,” Mayor Tempesta said. “But not giving municipalities their final aid payment until the year is almost over — and increasing the amount of aid the state withholds until the end of the year — could create cash flow problems in some municipalities.”

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CMPTRA aid and Energy Tax Receipts Property Tax Relief (also known as the “energy tax reform replacement aid”) are the two largest programs of State aid to municipalities.

CMPTRA aid was established by the FY1996 appropriations act by the consolidation into one program of 14 separate programs of State aid to municipalities, including such categories as business personal property tax replacement aid, municipal revitalization aid, supplemental municipal property tax relief (“SUMPTR”) aid, and urban aid.

Energy tax reform replacement aid was established in conjunction with the 1997 law that revised the taxation of energy-related public utilities. The tax reform measure replaced taxation of these utilities under the gross receipts and franchise tax (“GRFT”) with a tax regime that facilitates energy deregulation. The elimination of GRFT on energy utilities required a change in the State aid program because most GRFT revenues had been dedicated for distribution to municipalities. The energy tax reform replacement aid program provides for more than full replacement of the aid that municipalities lost in GRFT revenue by requiring the State to pay into an “Energy Tax Receipts Property Tax Relief Fund”, for distribution to the municipalities, aid in the amounts of $740 million in FY1998, $745 million in FY1999, $750 million in both FY2000 and FY2001, and $755 million in each State fiscal year thereafter. In both FY1998 and FY1999, the required amounts were appropriated.

 

 

 

 

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