Statement on Energy Tax Receipts Allocation in State Budget by:

President William Pikolycky, NJ League of Municipalities

President Mayor Janice Mironov, NJ Conference of Mayors

“As the respective Presidents of the NJ League of Municipalities and the NJ Conference of Mayors, we are disappointed that the full funding of $331 million phased over two years has not been provided.  We do appreciate the $75 million increase for this year to municipalities in the distribution of Energy Tax Receipts Property Tax Relief Fund, a legislative recognition finally after 12 years that these funds in fact are owed to our towns. This funding increase is a downpayment, representing a first step to the full $331 million restoration that we will continue to advocate for in future state budgets. Since 2001, $14 billion has been diverted from New Jersey municipalities for state budgetary purposes. It is long past time that the state stops balancing its budget with funds statutorily designated for municipalities.”

Background on the Energy Tax Receipts:

Taxes on gas and electric utilities were originally collected by the host municipalities to be used for local purposes and to compensate the public for the use of their rights of way. In the 1980’s, the State made itself the collection agent for these taxes, it promised to dedicate the proceeds to municipal property tax relief; since, just as municipalities collect property taxes for the benefit of school districts, counties and other entities, the State was obligated to collect these Energy Taxes for the benefit of municipal governments.

For years, State budget makers have diverted funding from Energy Taxes to fund State programs; and instead of being spent on local programs and services and used to offset property taxes, the money has been spent as successive Legislatures and Administrations have seen fit. The diversion of dedicated energy tax receipts to the State’s General Fund further jeopardizes this critical property tax relief funding in future years. By reducing Consolidated Municipal Property Tax Relief Act (CMPTRA), which is also comprised of revenues that should be returned to municipalities, State Budget makers have been able to continue collecting Energy Taxes, while keeping additional revenue that should have been returned to provide property tax relief. Since 2001, municipalities have been shortchanged to the amount of $14 billion.