Interactive Map: State-Aid Landscape Basically Unchanged, Frozen and Flat

Colleen O'Dea | February 27, 2015 | Budget, Map of the Week, Maps
Funding to municipalities virtually unchanged for fifth straight year under Christie budget

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Aid would remain flat for the fifth straight year for nearly all New Jersey municipalities under the budget Gov. Christie proposed on Tuesday, making it harder for all but a handful of communities to keep pace with inflation.

Christie’s budget would provide $1.4 billion in formula aid in 2015 to help defray property tax increases — $18 million more than last year. Five municipalities — Atlantic City, Trenton, Camden, Penns Grove and Beverly — would share that additional money as transitional aid designed to help communities in financial distress. More than half of that money, or $10 million, is earmarked for Atlantic City, struggling to cope with the loss of tax ratables and revenue due to the closure of casinos and decline in gaming.

The good news for local officials is that no municipality would lose aid. The bad news is that the continuing flat funding since 2010, on top of an 18 percent aid reduction in Christie’s first year in office, would leave municipalities still getting less than they did more than a decade ago.

Municipal aid would amount to about 12 percent less than towns received in 2009, the year before Christie took office.

Only 11 of the state’s 565 municipalities would get more aid this year than they did before 2010, with Camden being the biggest beneficiary — getting nearly twice as much aid this year, $101 million in total, than the city received in 2009.

Aid levels certainly have not helped municipalities deal with inflation – an 8.9 percent increase since 2009. On average, communities would get 19 percent less this year than they would have had needed to keep pace with inflation.

Still, there was no widespread aid cut, and that is what the Christie administration touted in releasing the funding numbers on Thursday. The Department of Community Affairs’ press release stated that aid is being held stable at $1.5 billion, although the so-called formula aid distributed to all communities totals just $1.39 billion, according to the data the department released.

“This administration recognizes that municipal governments are once again facing tough choices, which is why municipal state aid is a core priority in this budget,” said Christie in the press release. “I recognize that municipal governments are facing decreased revenues and fewer resources in this tough economy. That’s why we are asking local communities to do their part.”

“As we continue to advance reforms to deliver sustainable, long-term property tax relief, we urge local governments to continue finding ways to operate more efficiently and reduce costs,” said DCA Commissioner Richard E. Constable III in the same statement.

The release states that the 2 percent cap on property taxes and interest arbitration awards, combined with pension and health-benefit revisions that Christie enacted in 2011, are helping municipalities balance their books.

Jon Moran, senior legislative analyst with the New Jersey State League of Municipalities, agreed, but said local officials deserve credit, as well.

“They have pruned budgets, pursued savings, engaged in tough negotiations, reduced the workforce, shared services, cut spending, applied best practices, emptied reserve accounts and deferred investments,” Moran said. “They did this as property values declined, tax appeals increased, development and economic activity stalled, employment slumped and property tax relief funding was diverted to the State budget. And they did it despite some devastating storms that added unanticipated burdens to local budgets.”

All of the major aid programs — Consolidated Municipal Property Tax Relief Aid, Energy Tax Receipts aid and Watershed Moratorium Offset aid — would remain flat under Christie’s proposed budget. To qualify for additional transitional aid, municipalities must apply, demonstrate they are in fiscal distress, and agree to greater state oversight of the funds.

“The state has been a good partner to us this year,” said Terry McEwen, business administrator in Trenton, which is slated to get nearly $4.9 million in extra transitional aid this year. “We have gotten some federal grants that have helped us.”

The city is still recovering from budget problems that led to nearly 300 layoffs from 2009 through 2011.

Today’s municipal-aid system bears little resemblance to its origins, due to legislative changes and the state’s skimming of money meant to defray local property tax increases.

This year, 308 municipalities are slated to get CMPTRA funds — meant to be a compilation of 13 separate programs, some of which were need-based, when it was started in the early 1990s.

In 2004, 549 municipalities – nearly every one in the state — got at least some CMPTRA funding.

Over time, to comply with a state law mandating that municipalities get stable energy-receipts tax aid, the state has shifted money from CMPTRA to the energy-receipts aid category, which means CMPTRA now has no relation “to anything rational,” said Marc Pfeiffer, the former longtime head of the state Division of Local Government Services.

Pfeiffer, now assistant director and research fellow at the Bloustein Local Government Research Center at Rutgers University, said increased municipal aid has been rare in modern-day New Jersey.

“The first three years of ETR had fixed statutory amount increases,” he said. “There were one or two years when CMPTRA went up under (Acting Gov. Donald) DiFrancesco, but not more than that.”