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Van Drew: Latest Fund Diversion Demonstrates Need For Constitutional Amendment That Would Suspend Tax Collections For Raided Funds

Senator Says Diversion of Cable TV Tax Revenue Is Another In A Long Line of Fund Raids

TRENTON – Senator Jeff Van Drew today said the state’s diversion of revenue from a tax intended to help poor senior citizens and people with disabilities with their cable television bills demonstrates the need for a resolution he sponsored proposing a constitutional amendment that would suspend tax or fee collections if revenue is not used for its intended purpose.

“For years, governors and legislatures have raided dedicated funds. They’ve raided the unemployment insurance fund, the temporary disability insurance fund, the beach replenishment fund, the clean energy fund, and now a fund meant to help low-income seniors and people with disabilities with their cable bills,” said Senator Van Drew (D-Cape May/Atlantic/Cumberland). “We can’t keep telling people that a tax or a fee is for a specific purpose, and then after collecting the money, pull a bait-and-switch. If the state isn’t going to spend tax revenue the way it was intended, we shouldn’t be collecting the money at all.

“A blanket ban on fund diversions is long overdue. And to ensure it’s followed, my legislation also proposes a poison pill that would suspend the tax or fee if the fund is raided. Quite simply, this isn’t something we should have to legislate, but given this most recent raid it’s clearer than ever that such a bill is necessary.”

The Cable Television Universal Access Fund was created in 2006, under a law dedicating a portion of a 4 percent tax on cable companies to helping people enrolled in Pharmaceutical Assistance to the Aged and Disabled (PAAD) with their cable bills. According to The Star-Ledger, which reported the diversion Sunday, none of the revenue collected for the tax – $9.2 million – has gone to help low-income cable customers. The Administration instead used the funding to help close last year’s budget gap, according to the report.

Senator Van Drew’s resolution (SCR-23) proposes a constitutional amendment to prohibit diversions from all dedicated funds. If a diversion takes place, the resolution calls for suspending collection of the dedicated tax, fee, fine, interest or surcharge for the following fiscal year. The bill would prohibit the fee or tax from again taking effect unless an appropriation is made to use the dedicated revenue for the established purpose.