Bill Aims to Limit Tax Hikes at Local Level in Light of Deflated Revenues
TRENTON – A bill sponsored by Senate President Richard J. Codey (D-Essex) that would give local governments a temporary cushion to help avert tax hikes during the current economic crisis was approved by the Senate Budget and Appropriations Committee today.
“Many local governments are looking down the barrel of a loaded gun right now because revenues have declined so drastically,” said Sen. Codey. “Until we can come up with other solutions or procure additional federal aid, this will help provide immediate assistance to towns and counties.”
Bill S7 would give municipal and county employers the option of deferring a portion of their annual pension contribution to the Public Employees’ Retirement System (PERS) and the Police and Firemen’s Retirement System (PFRS) beginning with the next fiscal year – FY 2009. Full pension contributions would again be required beginning in FY 2012.
Local employers would be required to make minimum pension contributions of the following amounts for the next four years:
> FY 2009 – 50% of full pension contribution
> FY 2010 – 60% of full pension contribution
> FY 2011 – 80% of full pension contribution
> FY 2012 – 100% of full pension contribution
The bill was first proposed by Governor Corzine at last month’s League of Municipalities Convention and designed, not as a cure-all, but as a modicum of relief for local governments grappling with declining revenues and rising pension obligations.
The bill would also allow local governments to deposit funds in the State Division of Investment’s special reserve fund, where it would then be invested in a manner consistent with other common pension funds. Lastly, the bill would provide some relief from levy and spending caps for local governments.
The bill now heads to the full Senate for a vote.
# # #