New Jersey as a state has made enough money from the federal government during the pandemic to insulate itself from the current inflation crisis, but what has it done to help the municipalities struggling underneath it?
Inflation has made life challenging for households all across the Garden State and the country, but it’s also been a major challenge for local municipalities like Hammonton.
Like households, towns make their financial decisions based on what they can afford and have struggled to contain costs for their residents and businesses in a market where prices and uncertainty are both high.
Take public improvements, for example: Local officials need to prepare cost estimates for their construction projects ahead of time for state and federal grant application review. That kind of long-range planning is difficult right now as towns try to deliver on long-awaited projects in an uncertain inflationary market and where many contractors are unable to provide more than short-term quotes.
Public works departments are also seeing higher construction and maintenance costs for projects already under way, with price-tag inflation and delivery delays making it especially difficult for the smallest towns to deliver on time while containing costs.
While the state government saw massive windfalls during the COVID era, towns have watched the vise grip holding their finances get tighter and tighter — squeezed on one side by reduced revenues, and on the other end, by a growing demand to deliver essential services pent up during the pandemic.
State government has done little to help keep municipal costs low. In fact, it has contributed towards rising costs. An estimated 20-percent increase to medical premiums for state and local government workers, authorized by the State Health Benefits Commission in September, is certain to place an increasing strain on local budgets that officials will be forced to address.
The increases mean workers will pay more out of pocket and school districts and other local government units will shoulder bigger costs, which will wind up falling on the backs of property taxpayers in most localities.
If the Department of Environmental Protection moves forward with enforcement of a controversial new rule mandating electric boilers in schools and other large buildings statewide, towns could be forced to return to the taxpayers yet again to foot the cost for boiler conversions, which can run in the millions of dollars.
Then there’s the ever-persistent battle for municipalities to regain their Energy Tax Receipts - the money utilities owe towns for using their land. Decades ago, the state started collecting the money instead of each town and promised to cut a check for the full amount back, every year. Not surprisingly, that check has never makes its way fully back to the towns.
When the $50.6 billion state budget was approved by lawmakers in June, a lot was made of provisions inserted to provide temporary property tax relief to residents and boost property tax relief funding for municipalities. But the one-time $75 million appropriation of Energy Tax Receipts was far less than the total $331 million in fees that Trenton has repeatedly siphoned away from local governments every year. Ending that practice of the state stealing from the municipal property tax relief program was proposed under a bipartisan bill that stalled out and ultimately failed to make it into the final budget.
While inflation is ominous now, some view it as the calm before the storm with an economic downturn soon to follow. That worry is at the forefront of every local elected official's mind.
The state legislature should make good on the missed opportunity to provide full and lasting property tax relief to municipalities and residents, restore this badly-needed funding and end future diversions that rob towns and their residents of valuable local programs and services.
Inflation is here for New Jersey’s towns — meaningful property tax relief should be too.
Michael Torrissi Jr.
Assemblyman
8th District
Trenton