By David Levinsky - www.phillyburbs.com
TRENTON — State lawmakers largely agree that the state should return more of the money it collects in lieu of property taxes from utility and energy companies.
But there are disagreements within the Legislature over how much of the money collected, called energy tax receipts, should be returned and how best to return it.
The disagreements are reflected in two competing bills vying for legislative approval.
More than $1 billion is collected by state government annually from utilities in lieu of property taxes for the use of public lands for infrastructure such as power lines, pipes, plants and substations, as well as for government services that utilities receive, notably police and fire protection.
Mayors claim the money is supposed to be returned to their communities as part of their annual state aid. However, they complain that growing sums of the revenue are being diverted to the state’s general fund at the expense of their towns, which have endured reduced or flat aid for several years.
The aid is used to pay for services and keep property taxes in check.
Both competing bills have the same objective, the restoration of more money to municipalities to help control New Jersey’s notoriously high property taxes, but they go about it in different manners.
One bill — sponsored by Assemblyman Daniel Benson, D-14th of Hamilton — would restore all the revenues by directing utilities to pay energy tax receipts directly to municipalities. The bill specifies that towns use the money for property tax relief, but it permits them to do so by using the aid to pay for expenses and services that otherwise would have to be paid for with tax dollars.
The competing legislation — co-sponsored by Assemblymen Troy Singleton, D-7th of Palmyra, and Jay Webber, R-26th of Morris Plains — proposes phasing in the restoration of about $330 million in diverted revenue over the next five years. It also mandates that any additional aid a town receives must get subtracted from the local purpose tax levy, thus ensuring it will be used to reduce property taxes rather than pay for municipal expenses.
Both measures are competing for approval by the Legislature, and it’s anyone guess if either will escape a veto by Gov. Chris Christie, whose proposed fiscal year 2014 budget again keeps aid to almost all municipalities flat.
Christie already vetoed an earlier version of Singleton’s bill last summer after it was approved by the Democratic majority in the Legislature, but that was before Webber added tougher language that mandates all additional aid get subtracted from local tax levies.
The addition of that language has garnered the bill support from several Republican lawmakers, who have signed on as co-sponsors.
Benson’s measure has only Democratic co-sponsors but has advanced through two Assembly committees (Housing and Local Government and Appropriations). It is also the bill preferred by the New Jersey State League of Municipalities, which lobbies on behalf of all 565 of New Jersey’s cities and towns.
During a hearing before the Assembly Budget Committee this week, Webber said the league should throw its support behind his and Singleton’s bipartisan bill.
“We have a proposal that will give money back to municipalities but make municipalities not spend it,” he said Tuesday after listening to testimony from league president Janice Miranov during a hearing on Christie’s budget.
“If you want property tax relief from energy tax receipts, that’s the bill that will get it there. That’s a bill I’ll fight for and members of this (Republican) aisle will fight for,” Webber said.
Singleton also asked Miranov if the league was open to supporting their measure.
Miranov responded that municipalities were willing to support any proposal that restores energy tax receipts to towns, but she reiterated their position that the revenue belongs in municipal coffers and should not be returned by the state with strings attached.
“The promise was that the state would be a pass through. That has never occurred,” said Miranov, who is the mayor of East Windsor, Mercer County. “My town collects (property) taxes for schools and counties, and we don’t get to keep some of those revenues during tough budget years.”
Budget Committee chairman Vincent Prieto, D-32nd of Secaucus, said that the issue of energy tax receipts is still a “work in progress” but that a compromise appears possible.
“There now seems to be some general recognition that those monies belong locally,” Prieto said.