Proposal may lower taxes in E.B., Milltown

Proposal may lower taxes in E.B., Milltown

Senate president

proposes Pension Cost

Stabilization Act

By nicole c. vaccaro

Staff Writer

EAST BRUNSWICK — The state Senate budget committee is considering a new proposal that would reduce 2001 property taxes in East Brunswick by 2 cents and in Milltown by 1 cent.

Senate President Donald T. DiFrancesco announced plans for the Pension Cost Stabilization Act last week during the Mayors’ Luncheon at the League of Municipalities Convention in Atlantic City.

The plan would call for the Legislature to carefully review pension costs for police officers and firefighters in an effort to help mayors keep property taxes down.

As currently drafted, the proposed act would reduce the contribution municipalities would make to the Police Firemen’s Retirement System (PFRS) in 2001 from the $225 million forecasted down to $75 million.

This reduction could lower local government costs by $150 million, which in turn could reduce municipal tax rates.

Payment levels would be leveled again in 2002 and beyond in order to avoid sudden, dramatic increases in PFRS costs.

"Municipalities across our state pay a total of $225 million annually into the PFRS. The problem, however, is that yearly costs can fluctuate rather dramatically, and payments can range anywhere from zero to $225 million, depending on the status of the fund," said DiFrancesco.

DiFrancesco also stressed that the proposal would not have any financial impact on PFRS members’ benefits.

"The proposal does not change the total of the payments that would be made into the PFRS under the current formula," he said. "It simply alters the payment schedule."

In total, the state of New Jersey would see a reduction of $150 million in 2001 property taxes should the plan pass the Legislature.

While individual savings will differ by community, DiFrancesco promised that even the lower costs would be tangible.

In April, East Brunswick Township paid $682,544 in pension costs. With the proposed Pension Cost Stabilization Act, this amount would be reduced by $454,574 in April 2001.

Likewise, the borough of Milltown, which paid $73,601 last year, would pay only $49,018 in 2001.

Property taxes would decrease in both communities, which, according to East Brunswick Business Administrator Jim White, is always a good thing.

"Any legislation that will provide other sources of revenue other than taxpayer dollars is welcome," he said. "And if you consider the amount of money municipalities have put into pension programs over the years, I would say this break is well deserved."

Bob Littell, chairman of the Senate Budget and Appropriations Committee, will schedule a public hearing on the matter sometime this month to record testimony on the proposed bill.

The Legislature will not move forward on the proposal without a thorough review, according to officials.

"New Jersey citizens want more tax relief, and they want it now. And they are right," said DiFrancesco. "If we want families to stay in New Jersey instead of searching for greener pastures, and if we want our municipalities strong, stable and prosperous, then we must act now. The long-term health of our state depends on it."