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Benson, DeAngelo & Jasey Bill to Return Revenue to Cash-Strapped Towns, Make Up for Years of State Diversions Gets Assembly Ok

By a vote of 65-5-3, the full Assembly on Thursday approved legislation sponsored by Assembly Democrats Daniel Benson, Wayne DeAngelo and Mila Jasey that would provide additional property tax relief to residents by restoring hundreds of millions of dollars worth of cuts to the amount municipalities received in their share of state energy tax revenue and municipal aid.

“This money belongs to our municipalities. Telling cash-strapped towns that they need to do more to reduce the financial burden on taxpayers, while taking money away that helps them do that, is disingenuous and only sets them back,” said Benson (D-Mercer/Middlesex). “This bill returns this tax revenue to municipalities to help ease the burden of property taxes on residents as it was originally intended.”

“Many towns are being forced to do more with less as they grapple with increasing costs and reduced state aid. The state has been chipping away at this money which was meant to help municipalities offset expenses. At the end of the day, the ones who pay the hefty price are the taxpayers. It’s time to put this money back where it belongs for their sake,” said DeAngelo (D-Mercer/Middlesex).

The intent of the bill (A-2753) is to ensure towns are able to collect the amount of energy tax receipts that they were originally promised when the state revised the collection and distribution process in 1997. Energy tax receipts are tax revenue collected from utilities and energy companies.

“Every dollar that has been taken from our towns in the past is an additional dollar taken from property taxpayers,” said Jasey (D-Essex/Morris). “This has resulted in the loss of scarce revenue dollars to municipalities and decreases in services. This bill will help right that wrong for cash-strapped towns struggling to get by, especially with the Governor’s cuts in state aid over the last several years.”

The bill would change the manner in which energy tax receipts are distributed to municipalities. Under current law, energy tax receipts are all collected by the state. Often, through the annual appropriations act, the state retains a portion of the energy tax receipts that are supposed to be distributed to municipalities under statutory law.

The bill would provide a five-year phase-in period to change the manner in which energy tax receipts are distributed to municipalities and to eliminate the state “skim” of energy tax receipts. Commencing with fiscal year 2014, the bill would provide for a five-year phase-out of the state’s “skim” of energy tax receipts. At the end of the five year period all energy tax receipt payments would be made directly to the municipalities by the energy taxpayers.

The bill would ensure, when fully phased-in, that each municipality receives its share of energy tax receipts in an amount equal to the difference between its total payment of Consolidated Municipal Property Tax Relief Aid and Energy Tax Receipts Property Tax Relief Aid in FY 2008 and FY 2012.

Municipalities would be permitted to use the additional state aid to reduce the amounts they are required to raise by local property tax levy for municipal purposes, to reduce municipal debt, rehire police officers and firefighters laid off in the previous four fiscal years, and for extraordinary costs related to an emergency declared by the President of the United States or the Governor.

The measure now heads to the Senate for consideration.