Hillsborough Joins State Effort on Municipal Funds

The Township Committee authorized a resolution supporting a State League of Municipalities effort to end programs that do not provide intended property tax relief.

The resolution, and League of Municipalities efforts, targets the state’s Energy Tax Receipts Property Tax Relief program, which provides funds in lieu of property taxes for sites holding public utility structures, such as power lines, natural gas utilities, private water and sewer corporations and telecommunications utilities.  Since municipalities cannot collect property taxes on land used for public utilities, the program is meant to compensate for the lost revenue.

In an attempt to balance its budget, the state has suspended or withheld the energy tax funds, calling it state aid for municipalities.

However, the League of Municipalities contends that the programs were not meant as state aid, but instead as revenue replacement—meaning the programs were meant to keep taxes from getting worse, according to the township.

“This practice by the state has largely affected local budgets and has had major impact on local purpose tax levies because it has deferred municipal property tax relief funding to other state priorities” Mayor Gloria McCauley said.  “Taxpayers will likely see real property tax relief if the state can be convinced to comply with its own revenue replacement funding statutes.”

The Energy Tax Receipts Property Tax Relief program replaces the Gross Receipts and Franchise Tax program, which initially provided tax relief to municipalities.

“I think it’s a very worthwhile endeavor,” Finance Liaison Carl Suraci said.  “I hope the state will take seriously the municipalities.  This has had an effect on us.  .  .over the last four years, a cumulative effect of $3.6 million. That’s a lot of money that the state owes us.”