2012-05-10 / Front Page
Mayor: M’town budget suffers from withheld energy taxes
Tax increase tied to state keeping energy receipt tax
MIDDLETOWN — Township officials say a potential 1.97 percent tax increase in residents’ tax bills can be attributed to the state’s failure to return crucial energy-receipt taxes to the township.
According to Mayor Anthony Fiore, the state collected $4 million in these taxes from utility companies in 2011, but has not refunded any of those funds to the municipality.
“If our state aid was not cut in excess of this energy receipt tax, you would be seeing a tax decrease this year,” Fiore said on April 30, at a public hearing on the township’s 2012-13 municipal budget.
“I have requested of the governor’s office that we get a portion of that money. It has not been something they’ve agreed to do.
“It’s not right. It’s not fair. … That’s what’s impacting our property taxes. It’s the money that’s not getting back to us that’s rightfully Middletown’s.”
The state collects energy receipt taxes from utility companies with anything from power stations to telephone poles and wires on township property, said Township Administrator Anthony Mercantante.
“The towns have to deal with the impact of those. When a tree comes down and damages those wires, our residents are out of power. When there’s a fire, our fire department, our police department has to respond,” he said on April 30.
“The whole idea of this tax was to pay something to the municipalities to offset the impacts that they generate. When there’s a fire, the state of New Jersey is not sending a fire department over there to fix it. We are.”
Fiore explained that the state used Consolidated Municipal Property Tax Relief Aid (CMPTRA) funds to refund energy receipt taxes, a diversion of two separate revenue streams.
“What the state basically does is they cut from somewhere else. They wash it out. They cut something else, such as CMPTRA,” he said.
“They can’t cut the energy [taxes] so they cut it from somewhere else. It ends up being $4 million you’re supposed to get, they cut $4 million from somewhere else and it winds up being a zero.”
The New Jersey League of Municipalities echoes similar sentiments in a May 3 open letter on its website.
“We realize that the energy tax and CMPTRA distribution laws are not self-executing. We know that the courts have accorded to the state the right to override the statutory dedication of revenues in its annual appropriations act,” the letter states.
“The state needs to have that right, in order to deal with emergencies and crises that may occur and to balance its budget. But the state should not exercise that right, year after year after year. It should be the exception, rather than the rule.”
Committeeman Gerard Scharfenberger pointed to a power station located in Middletown and the effect it has on the budget.
“The property that power station lies on is taken off the tax rolls. That’s less revenue coming in to cover the wages and other things that sometimes we have no control over because of binding arbitration or union negotiations,” he said.
Though there is no immediate relief in sight, Mercantante said some help may be coming from the Legislature.
“There’s legislation now that’s being introduced that would require the state to begin to transfer that money back to towns,” he said.
“It hasn’t gotten very far at this point but at least there’s some leg heading in the right direction.”
On May 3, N.J. Sen. Paul Sarlo (D-36th District) introduced SB 1900, which proposes the restoration to municipalities of $385 million in energy tax revenues over a five-year period.
The bill includes a clause that stipulates if the state does not restore the funds the amount of corporate business taxes the state could collect would be limited.
Resident Jim Vallas asked the committee to do whatever it could to ensure energy receipt funds could be returned to the township.
“I would like to know, since Middletown is so huge with lots of power lines and utility poles, what this body has done to go to Trenton and try to get our portion of this money back,” Vallas asked.
Scharfenberger said the township could lobby for the funds or work with other towns, but is limited in its power.
“We have no power to force the state to do anything. We’re beholden to the mandates that come down from Trenton,” he said.
Fiore said the most the township could do was continue advocating for the refund of the energy receipt tax, which the mayor has often done on behalf of the New Jersey League of Municipalities.
“I’ve protested to the best of what I can protest. That doesn’t mean it’s going to change anything,” he said.
The Township Committee put off voting to adopt the 2012-13 budget. It is next scheduled to meet on May 21.
Contact Mike Davis at firstname.lastname@example.org