TRENTON, N.J. – Municipalities would gain revenue and be in a position to provide property tax relief under a bill (A3482) recently introduced by Assemblyman Gerry Scharfenberger. The legislation requires energy providers and public utilities to pay energy taxes directly to municipalities instead of the state.
“The state is acting as a collection agency and has been diverting municipal revenue for state purposes when the entirety should have been returned for property tax relief,” said Scharfenberger (R-Monmouth). “My legislation will give control back to municipalities and help them craft fairer budgets with lower taxes.”
In the 1980s, the state began to collect the energy taxes from utility companies and distributing a portion of the proceeds to municipalities as state aid. Since this practice began, and even after the state established the Energy Tax Receipts Property Tax Relief Aid in the 90s, which was designed to keep funding stable, municipalities have received millions less than if they collected the taxes directly.
“Municipalities, especially those with a larger population of utility land usage, are often impacted the hardest,” explained Scharfenberger. “For example, Middletown and Holmdel, two towns in my district, have lost out on $6.7 million and $1.1 million, respectively. By collecting the taxes, the state said they were simplifying the process for utility companies, but it has turned into a money grab.”
Under Scharfenberger’s bill, the treasurer would determine the total amount of energy tax receipt aid provided statewide, how much each municipality would receive, direct payment of energy taxes to the municipalities, and inform each municipality of the name of each energy taxpayer that would make the payments, the amounts owed, and the dates on which each payment would be provided. The bill also prevents the state from retaining any portion of these energy tax collections for other purposes.
“No property taxpayer should have to tolerate receiving less than what is owed,” said Scharfenberger. “The state is stealing money that is critical for property tax relief. These are local dollars and should be returned to local governments.”
Under the bill, if total energy taxes exceed the amount of state aid that would be provided under current law, then the difference would be distributed among all municipalities in proportion to the assessed value of property owned by all energy taxpayers located within each municipality. Alternatively, the bill also provides that if the total energy taxes is less than the amount that would have been provided under current law, then the treasurer is required to make additional payments from the property tax relief fund to ensure that each municipality receives the amount owed.
The bill has been referred to the Assembly State and Local Government Committee.