New Jersey mayors and municipalities say the funds will help towns provide much-needed property tax relief for their residents.

Last month, Gov. Phil Murphy unveiled a record $48.9 billion proposed state budget for FY 2023, which includes a full pension payment of $6.82 billion, an additional $1.3 billion in debt reduction and a record proposed surplus of $4.2 billion, almost double last year’s total.

From a local government perspective, the governor’s proposal calls for new funding for direct property tax relief, increases in school funding, new funding for a program aimed at revitalizing Main Street economic activity devastated by the pandemic, and an allocation of money from the American Rescue Plan to use toward municipal approved affordable housing.

Despite fears that COVID would decimate the state economy, New Jersey’s fiscal picture is the best it has been in decades largely due to unprecedented federal funding through the American Rescue Plan and sound borrowing decisions by our state leaders, but also thanks to prudent decisions such as ending revenue diversions and restructuring long-term debt. The results of these decisions have resulted in the first credit rating upgrade for this state in over 15 years.

However, the same is not true for many local governments.

Coming out of the pandemic, many continue to struggle with increased costs associated with COVID, increased costs due to inflation, and a reduction in revenues as a result of the devastating blow to many local businesses during the pandemic. While local governments welcome any constructive moves from Trenton aimed at controlling property taxes, it’s more efficient when local governments can rely on direct reoccurring revenue when preparing local budgets to help control property taxes at the source.

That’s why our leaders in Trenton must work to restore funding for reoccurring revenue sources previously promised to and belonging to local governments that have been diverted to plug deficits in the state budget.

One such area is Energy Tax Receipts, which are taxes paid to host municipalities by utilities for transmission lines and facilities located in communities throughout the state. The state government has been collecting these taxes but withholding payments to municipalities for over a decade costing local governments over $3.4 billion in direct property tax relief. And for years, mayors have actively fought to restore that funding only to be told that the state cannot afford to do so.

Thankfully, bipartisan legislation (S-330) sponsored by state Sen. Troy Singleton and state Senate President Nicholas Scutari to restore full payment of these energy tax receipts to municipalities has already passed the full Senate by a vote of 39-1.

This new law would end state government’s reliance on this local revenue and allow municipal governments to properly budget for these dollars, which they are able to allocate toward reducing property taxes.

In the coming months, the Senate and Assembly will be conducting hearings to develop a final state budget to be adopted before June 30. We have learned from the non-partisan Office of Legislative Services that the anticipated revenue for the current and prospective fiscal years will likely be higher than what the governor has predicted. That is excellent news for our state but as history has shown us, this rosy revenue picture won’t last forever.

Now is the time for Trenton to wean itself from these funds and allow municipal governments to use this and other local revenue to help control property taxes at the source. We are hopeful that our legislative leaders and the governor enact this important change to give municipal leaders the tools they need to help control our residents’ tax burden.

But hope is not a strategy, which is why the New Jersey Conference of Mayors in conjunction with our partners at the New Jersey League of Municipalities is actively working to educate legislators and the administration as to the importance of this fix.

Mayors and governing bodies from all around the state are adopting resolutions urging their legislators and the governor to return this funding back to local governments. As the state posts record revenue surpluses and seeks to continue to put its fiscal house in order, it’s time that Trenton allows the municipal governments the promised “energy receipts” municipal funding toward these same goals.

Original Article