East Brunswick Mayor Asks State To Release Energy Tax Money To Township

EAST BRUNSWICK, NJ — Mayor Brad Cohen has joined over 400 mayors from across the state, in urging Gov. Phil Murphy and the legislature to release thousands of dollars they say the state is withholding from local government.

In an open letter, mayors cutting across party lines have argued that the state is accumulating utility fees that rightfully belong to the local governments.

This money, the mayors say, is a necessary first step in addressing property tax affordability and offsetting other costs.

The letter was issued by the New Jersey State League of Municipalities (NJLM), the New Jersey Conference of Mayors (NJCM), and the New Jersey Urban Mayor’s Association (NJUMA).

The request is not unique. The elected officials are simply asking the state to fully fund the Energy Tax Receipts Property Tax Relief Act in the FY24 state budget. The mayors are seeking over $350 million in utility tax, which has been annually diverted from towns, to be included in the 2024 budget.

Years ago, municipalities collected taxes from utility companies that utilize the public rights-of-way. These taxes were no different than property taxes that are paid by people who own land in the township.

In the 80s the state made itself the collecting agent for these taxes, promising to return the proceeds to municipalities for property tax relief. But that has not happened.

“They ended up collecting it, keeping a fee, and then paying the townships their money," Cohen said. “It's not state money. It's not state aid. It's our money. It's always been our money.”

Cohen explained that the money was not the same as school state aid which is discretionary.

“It's always been town money. And we just want back what we should have been getting all along,” he said.

Some mayors have been asking the state to return the money due to them for years now. But now that the state sits on a surplus, more mayors have joined the chorus in urging the legislature to return the funds.

For years, State officials from both sides of the aisle have diverted funding from Energy Taxes to plug holes in the State budget and to fund State programs. The mayors believe the restoration of this funding to municipalities is long overdue and it would bring funding for all municipalities back to 2008 levels.

“If I had the money that was coming in from the energy tax credit, I wouldn't have had to have a tax increase at all,” Cohen said. “If we had that money back, we think it would go a long way towards reducing the dependency on property taxes. For the time I've been mayor, I probably would not have had to do any tax increase on the municipal budget, because that would have plugged a lot of the gaps that I now had to depend on raising taxes to do.”

Many Municipal governments across the state are facing financial challenges and difficulties, including the dramatic hike in healthcare premium costs for employees, huge pension increases, skyrocketing costs for solid waste and recycling collection and disposal, increased insurance costs, new state environmental mandated costs, and much more. All these costs will ultimately be borne by property taxpayers without relief, the mayors argue.

"Just as municipalities collect property taxes for the benefit of school districts, counties, and other entities; the State is supposed to collect Energy Taxes for the benefit of municipal governments," the mayors said in their letter.

"Local officials are clearly committed to limiting their reliance on increased property taxes while bearing the responsibility to provide for local needs including critical public safety and health needs of the community."

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