By James Cassella
Trenton politicians have been engaged in a rhetorical war on local property taxes for years, but their level of commitment to tax relief has never matched the high pitch of their rhetoric.
Two years ago Trenton legislators couldn’t stop patting themselves on the back for creating a 2 percent municipal budget cap long enough to realize that they failed to cut many of the state mandates that drive up property taxes – forcing local leaders, such as myself, to make tough decisions (and take the heat from residents) that Trenton leaders won’t.
The fashionable reform phrase from the state bureaucrats and legislators is now “shared municipal services and consolidation.” But, most municipalities have been sharing services and equipment for years without the state’s help. As for consolidation, the bureaucrats have produced no empirical data that demonstrates a significant cut in property taxes can be achieved by one or two towns growing into larger a town. Instead of offering meaningful help to municipalities Trenton creates new gimmicks and mandates, such as the anti-bullying curriculum, without offering a way to pay for it.
The state sets generous retirement plans for police and teachers with no say from municipal governments (or local taxpayers). For decades the state saddled local governments with a union arbitration system that was outrageously one sided against municipalities -- and after some reforms – only marginally better now.The new collective bargaining rules are set to expire at the end of 2013 and, since the entire legislature and the governor are running for re-election next year, the union bargaining reforms are likely to be short-lived.
But the truly obscene hypocrisy about Trenton’s property tax gambit is that while lawmakers and bureaucrats blame municipalities for being wasteful or extravagant, Trenton continues to dip into the pool of money that is generated locally and rightfully belongs to municipal government. – not the state
The state confiscates a sizable portion of court fees and fines, building permit fees and marriage and dog licensing fees; all generated by municipal personnel with no help from the state. Trenton is also now looking to latch on to millions of dollars in affordable housing funds that municipalities have raised because, in Trenton’s eyes the town’s didn’t spend the money fast enough to build housing during the recession.
One of the biggest confiscatory scandals in New Jersey is the way the state has been scrimping on municipal tax relief by glomming on to the taxes on gas and electric utilities that were originally collected by the hosting municipality. A few years ago, the state decided that it needed to collect this money directly and, not surprisingly, decided to keep a large chunk of it for itself.
New Jersey's two main formula-driven general municipal property tax relief programs are the Energy Tax Receipts Property Tax Relief program (and the Consolidated Municipal Property Tax Relief Act program (CMPTRA). While Trenton refers to these programs benevolently as "state aid," both are actually revenue replacement programs intended to replace property tax relief funding that was formerly generated through taxes assessed and collected to fund municipal programs and services.
State government skimmed $72 million in energy receipts in 2005 and $500 million in 2011. Instead of getting our due “state aid” from the sticky fingered state bureaucrats and politicians, municipalities suffered actual cuts in property tax relief funding of $26 million in 2008, and $271 million in 2010. Over the past decade the money directed from Trenton to municipalities has declined by over $3.4 billion(according to the NJ League of Municipalities ) and most of that sum was generated at the local level.
The state’s diversion of Energy Taxes has continued to grow from $72 million in Fiscal Year 2005, to $505 million in Fiscal Year 2011. Trenton’s rhetoric about property tax cut priorities is hollow. If the state simply complied with the state energy tax law and CMPTRA , the state would have returned $889 million to local municipal budgets in 2011. With that money, small town mayors such as me, could have funded needed programs or delivered tax relief or both.
While municipal property taxes are a big burden on homeowners, in most cases it is not municipalities that are driving up property taxes; it is the state that refuses to cut mandates and denies municipalities the funds they are entitled to. Trenton politicians can’t insist that they want to reduce property taxes and at the same time take money away from municipalities that could go to property tax relief.
James Cassella is the mayor of East Rutherford
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