There will be a new governor in New Jersey soon, but the call from the League of Municipalities will be the same for Mikie Sherrill as it has been for Gov. Phil Murphy and others:
“Give us back our energy tax receipts.”
More specifically, the Municipal Relief Fund Aid was established to partially restore the relatively recent history of the state diverting energy tax revenues intended for towns.
In the FY24 budget, $150 million in energy tax receipts did go back to municipalities.
But in the two budget cycles since, that money went into the General Fund, despite more than a combined $1 billion in late, add-on projects for those budgets.
At the League of Municipalities conference in Atlantic City this week, the refrain from mayors was the same.
But the expectations of actually getting those funds back were not high, given what is expected to be a very tough budget in Sherrill’s first year as governor.
“Look, I served 20 years in local government, and I understand how difficult it is with finite resources to run a municipal budget and to keep the taxpayer in mind,” Assembly Minority Leader John DiMaio said during a Legislative Leaders panel. “This money belongs to the municipalities.
“Someone in the state got this great idea – because the money used to go from the energy companies directly to each municipality at one point in time – and they said, "We'll just collect it all for you, and we'll just get the money to you.’ And it never happened that way. This $300 million should be appropriated back to the municipalities where it belongs.”
DiMaio and Majority Leader Lou Greenwald agreed the money should go back to the municipalities and even on the one string that should be attached.
“The only proviso I would put on the bill would be that whatever each municipality receives as their share should be an immediate tax levy cut, and then you can use it from there,” DiMaio said. “So, you see your taxes go down from it and then over time, as you appropriate new budgets, it would be used within the law and the cap laws.”
“I agree with the recommendation that it comes off the tax levy, so that we understand how we are trying to control the cost for the taxpayers and not have it then go up again,” Greenwald added.
“I would also like to see it used for, because of where it is coming from infrastructure improvements around utilities to help offset that and modernize those systems that we see failing. And use that as a means to pay for those as opposed to going through the taxpayers for those costs, as well.”
Despite that agreement, Republican Leader Anthony Bucco did not signal optimism.
“I wish I could tell you that relief is on the way,” Bucco said. “But Governor-elect Sherrill is going to have one heck of a budget cycle she's going to face next year.
“We're looking at estimates ranging from $2 billion to $4 billion structural deficit in this budget. And once the state takes it away, it's very hard to give it back, especially when you're looking at a structural deficit in the billions of dollar range.”
NJBIA Chief Government Affairs Officer Christopher Emigholz said businesses in municipalities could really use that municipal aid.
“It is essentially property tax relief for all taxpayers including businesses instead of only for select homeowners, and businesses pay a lot of property taxes,” he said.
“When you consider New Jersey’s property taxes are the highest in the nation and they represent the largest state and local tax that businesses pay, it’s important that these dollars go back to their rightful place.”
