Mayors in Meadowlands Region See First Checks from Hotel-Tax Fund

State and local officials scramble to implement new law that consolidates three regional entities

Credit: Steven Reynolds
After six months of confusion and three months waiting for some $2.5 million in state funding, mayors in the Meadowlands District received some good news Monday night: The state will start sending out checks immediately for a portion of money a half-dozen towns have usually received from a regional planning agency.

For more than 40 years, these communities have collected a small but dependable portion of their revenue from the former New Jersey Meadowlands Commission. The so-called tax-sharing program — a regional pool of funds that was used to offset development impacts — proved controversial. But for a handful of small communities that received funds, the payouts had become a budget staple. The fund collected money from municipalities that benefited from new development and paid towns that were unable to grow, due to environmental or other land-use restrictions, based on a complex formula involving ratable growth and school enrollment, among other factors.

All that — and a number of other NJMC functions, from eco-tourism to zoning decisions — are now in flux, as state officials work to implement a law signed by Gov. Chris Christie in December to merge the former Meadowlands Commission with the New Jersey Sports and Exposition Authority. Traditionally the NJSEA focused on promoting public events, while the NJMC handled regional planning, solid waste disposal, and certain environmental protection and restoration projects. But the law, noting their “common goals” of promoting economic growth, said it was time to modernize and consolidate these entities to be more efficient and effective. (Full disclosure: The author served as communications director for the NJMC from 2008 through 2010.)

The implementation of the law has faced some hiccups — including the holdup in payments to local mayors. While the law retained many aspects of the tax-sharing program, it changed the way it was funded. Contributions from towns with new development were replaced by revenue from a new 3 percent hotel tax on rooms within the Meadowlands District, a 30-square mile region that includes parts of 14 towns in Bergen and Hudson counties. Once known as a region of swamps and burning landfills, the district’s economic and environmental health has improved significantly in recent decades.

And while partial payments to towns may now be in the mail, the message to Meadowlands mayors was not entirely positive.

The local leaders learned that the state is still more than $1.5 million short in collecting the revenue it anticipated from the new hotel tax, which was implemented in February. And, with no allocation in the state budget to cover the difference, supplemental legislation would be required to free up the funds to make these towns whole. All together, the fund was expected to pay out a total of $7.5 million this year — in three equal installments, starting May 15 — in checks ranging from tens of thousands to a few million dollars, per community.

“I guess we’re going to have to live with these birth pains,” said Fred Dressel, a former mayor of Moonachie who has served as executive director of the the Hackensack Meadowlands Municipal Committee, a group of regional mayors established four decades ago to provide formal input on development and land-use issues. The group received what it called a long-overdue update from state officials at its monthly meeting this past Monday.

“They’re not angry,” Dressel said of his members, “but they haven’t got their full confidence in this process either.”

[related]Sen. Paul Sarlo (D-Bergen) and Assembly Speaker Vincent Prieto (D-Hudson) led the whirlwind charge in December to combine the agencies. The legislators praised the work of both entities, but said time had come to modernize and streamline the way they do their jobs. The legislation also maintained the tax-sharing program, which they cited as a critical tool to ensuring effective regional development, but did away with the unpopular element — the payments required of seven “contributing” municipalities — and replaced it with a new revenue stream, from hotel taxes. The change provided significant relief to towns like North Bergen and Secaucus, Prieto’s hometown, but wasn’t supposed to affect payments to the “receiving” towns.

“Times change and commonsense reform is sorely needed to ensure the region’s future success,” Prieto said in December. Neither Sarlo nor Prieto returned multiple requests for comment.

But critics contend that the legislation was rushed through in a few weeks in a holiday season, and lacks local input. As a result, problems have cropped up that have complicated the implementation — including the missing revenue and confusion over the tax-sharing payments. The sponsors followed up with a so-called cleanup bill, which evolved this spring and was signed by Christie in early July, but some complain it did little to resolve the outstanding questions and further weakened the mandate of the combined agency.

As spring turned to summer, Meadowlands mayors grew concerned about the missing checks that they had come to count on each year. They pressed the state for answers, but — until Monday — heard little in return.

On Tuesday, Brian Aberback, a spokesman for the commission, confirmed the agency had received just under $990,000 from Treasury the day before — generated by the new hotel tax collections, from February through June — and would start sending checks out to eligible municipalities. Details of the payments were scarce, but traditionally these “receiving” communities included Kearny, Jersey City, East Rutherford, North Arlington, Ridgefield, and Rutherford.

“We are aware that the funds received from Treasury do not amount to the actual first-installment calculations for each municipality,” Aberback said, but Treasury anticipates additional hotel-tax revenue will make up some of the difference and, when the regional agency receives additional funds, it will disburse the money. No timeline was available. “A supplemental appropriation will be advanced to make up any shortfall in the amounts due to receiving communities,” Aberback said.

Dressel said unfortunately officials couldn’t give the mayors group any additional assurances about the process, or the schedule for securing an additional appropriation, if needed. The Legislature has now adjourned for the summer and won’t return to Trenton until the fall. However, his members were glad to hear the funds would be coming, at some point.

“It’s in the law and they’re going to have to obey the law,” Dressel said of Treasury’s promise to make up any shortfall in hotel-tax collections.