Energy tax receipts would be paid directly
By Lea Kahn, Staff Writer
Lawrence Township stands to receive millions of dollars in additional state aid that could be used in the municipal budget for property tax relief, under proposed state legislation that would require certain energy tax receipts to be paid directly to municipalities and not to the state of New Jersey.
The state Assembly voted 65-5-3 to approve Assembly Bill 2753 on June 20. The bill was co-sponsored by Assemblymen Daniel Benson and Wayne DeAngelo (both D-14th Legislative District) and Assemblywoman Mila Jasey (D-27th Legislative District). The next step is for the state Senate to consider a companion bill.
If the proposed law had been in place, Lawrence Township would have received $7.3 million in state aid for the 2013 municipal budget which could have been used for property tax relief. State aid for the township has been frozen at $3.9 million since 2010.
The Assembly bill provides a five-year phase-in period to change the manner in which energy tax receipts are distributed to municipalities and to eliminate the state “skim” of energy tax receipts, beginning with fiscal year 2014. At the end of the five-year period, all energy tax receipts would be paid directly to the municipalities by the utilities.
For many years, municipalities assessed a gross receipts and franchise tax on public utilities and collected the money at the local level. The gross receipts tax was based on the value of infrastructure the utilities had in each municipality.
But in the 1980s, New Jersey became the collection agency. The state was supposed to distribute energy tax receipts to the municipalities in the form of state aid, but it has skimmed off some of the money for its own use. The state also was required to increase the energy tax receipts distribution at the rate of inflation.
New Jersey has kept much of the money that was intended to be returned to the municipalities for property tax relief and has used the money to balance its own budget. That tactic has angered Lawrence Township and other municipalities, which have lost state aid.
Since the state began withholding the energy receipts tax funds in 2002, it has cost Lawrence Township about $17.8 million in lost state aid. State aid to Lawrence has been frozen at $3.9 million annually since 2010.
But under the state aid formula, Lawrence should have received $6.8 million in 2010; $6.9 million in 2011; $7.1 million in 2012; and $7.3 million this year. It has lost $12.3 million in state aid over the past four years because of the state’s decision to skim off money from the energy receipts tax.
Township Council has endorsed legislation that would restore the energy tax receipts to the municipalities, and it continues to support these efforts, Municipal Manager Richard Krawczun said Tuesday morning.
”We are pleased that the effort is continuing with the passage of the bill in the Assembly and moving to the state Senate. This type of effort will continue to bring focus to a very important issue that has an impact on the taxpayers in Lawrence,” Mr. Krawczun said.