Maybe the lesson to be learned is to be careful where you place control of your money.
Nevertheless, it's always been a bone to pick for Bernards Township Administrator Bruce McArthur that the township — like other municipalities in New Jersey — must allow the state to collect a gross receipts and franchise tax on utilities that formerly went directly to the muncipalites. Some of that amount is returned in the form of annual "state aid" after state government takes a cut.
Too big a cut, according to a bill, S-1900, which is due to be voted on in the state Senate. The bills calling for a greater return of at least part of that siphoned money to the municipalities in which it was collected.
The Township Committee on Tuesday night voted unanimously to support the bill co-sponsored by N.J. Sen. Paul Sarlo of Wood-Ridge (D-district 36) calling for a phased-in return of state funding, based on collections of the local utilities tax, at least to the level of 2009 state aid funding to municipalities.
"The sponsors recognize that the loss of those revenues has led to increased property taxes and has hampered local efforts to meet local needs," according to the standardized resolution approved by the committee.
"This is money we used to get," Township Committeeman John Malay said prior to Tuesday's vote.
State vote coming up
The Senate Budget and Appropriations Committee could vote on S-1900 on Thursday, with requirements phase-in the restoration of $439 million for municipal property tax relief, according to a message from Sarlo posted on the website for the N.J. League of Municipalities, a strong supporter of the proposal.
The bill needs to pass both state houses by the end of June, so that it can affect this year’s state budget, Sarlo said in the message. "Quick action is, therefore, essential."
McArthur said that if a version of the bill calling for a return to funding to 2007 levels passes the state Senate and Assembly, Bernards Township eventually would stand to gain an additional $800,000 in annual state aid.
However, political negotiations over the proposal have led to a bill in which the return of the whatever amount is returned would be phased in over a five year period. That could translate into increments of $150,000 more in state aid toward the municipal budget for the next five years, McArthur calculated on Tuesday.
State aid for Bernards Township has been consistently set at about $1.8 million for 2010, 2011, and 2012, McArthur said earlier this year.
However, in 2010, that amount represented a cut of almost $589,000 from the 2009 aid figure that is part of the annual municipal budget, McArthur said on later on Wednesday. He said that $890,000 has been cut from state aid since 2005.
McArthur said he doesn't know how much the municipality would earn if it actually went back to collecting the tax directly from utility companies for the right of placing telephone and electrical wire poles and structures within the public right of way.
However, he said Bernards Township still has a letter from former Gov. Christine Whitman promising that the amount would not go down when the state offered its services to collect the tax money.
This year's municipal budget of $35 million was approved in April, and for the first time in five years registered a slight increase in the municipal portion of the local property tax rate, as incoming revenues dwindled by about $670,000 from the previous year, according to township figures.
McArthur said state aid figures also are based on an archaic formula that recognizes the utilities located within a town decades ago, before municipalities such as Bernards experienced major growth.
Sarlo said in the message posted May 8 on the League of Municipalities website that, "We are discussing with the sponsors refinements that may be needed to account for recent changes in the statutes governing local budgets in order to provide municipalities with appropriate budgetary flexibility."
The website also includes a letter to mayors, urging their town governing bodies to pass a resolution supporting S-1900, from William G. Dressel, Jr., executive director of the N.J. League of Municipalities.
"The sponsors recognize that municipalities have long been denied revenues that they were promised, and to which they are entitled," the letter says. "They acknowledge that it was wrong for the state to rely for so many years on municipal revenues to balance its budget. They recognize that the loss of those revenues has led to increased property taxes and has hampered local efforts to meet local needs."
Other sponsors of the proposal are Linda Greenstein (D-district 14) and state Assemblyman Troy Singleton (D-district 7).
But township officials also brought up at Tuesday's meeting that there is a competing version of the bill that would tie state aid to a municipality's willingness to go along with proposals for greater shared services.
"So...the state is not adverse to theft — [and] also to blackmail," Malay observed.
Township Committeeman Scott Spitzer said the township's version of the resolution should include a clause objecting to strings being attached to "money that is rightfully ours."