Dear Mayor:

This is the third of our three letters on the latest developments in the Special Session.

Yesterday, the Joint Committee for Constitutional Change considered bills dealing with three major issues.

A-3/S-41 would establish an independent Office of the State Comptroller. We have no objections to a State Comptroller bill. But, we must, first, be assured that no new administrative burdens are imposed on local governments, which are already subject to stringent financial regulation by the Division of Local Government Services, in DCA, and to substantial regulation in other areas by various State Departments, Divisions, Offices, Boards and Commissions. And, we must, second, be assured that the bill’s costs are accurately estimated and that the benefits to be provided justify those costs. This bill fails both of those tests.

Section 10 presents huge procedural problems. It would give the Comptroller the power to subject any contract of $2 million, or more, to the Comptroller’s prior approval. It provides that, whenever a municipality anticipates soliciting bids on a contract of $2 million, or more, it must so notify the State Comptroller. It, then, gives the Comptroller 10 days to decide if the award of that contract would be subject to the Comptroller’s prior approval. Presumably, the bid process would then move forward, until the municipality opens the bids and accepts one. At that point, the process would stop and the contract could not be awarded, until the Comptroller decrees it so.

The bill sets no objective standards, according to which the Comptroller would decide, at the outset, whether or not to subject the award of a contract to prior approval, nor does it give a municipality any guidance on what objective standards the Comptroller would apply, at the end of the process, in denying approval of an award. And it sets no time limit on the Comptroller’s final decision to approve or prevent a contract award.

We cannot be sure that the Comptroller will have sufficient staff to act in a timely manner on the many municipal contracts that would be subject to this Section, while at the same time, dealing with county contracts, school districts contracts, contracts to be bid by municipal authorities, and all the anticipated contracts of the myriad State Departments, divisions, offices, boards, commissions, agencies and authorities. And, in addition to the contract approval power, the Comptroller would, by this bill, also be responsible for various other important duties and functions.

Sufficient staff to exercise all of these powers in a timely manner will be costly. And the benefits of this added layer of over-sight on municipal fiscal affairs, which are already heavily regulated, are questionable.

A-6/S50 would create a Tax and Fiscal Policy Study Commission. We have no objections to the creation of a tax policy study commission. And we commend the members of this Committee for recognizing that after the dust has settled on this Special Session, there will remain a lot that could be done to accomplish meaningful and sustainable property tax reform for the people of our Garden State.

We believe that a tax policy study commission should include formal representation by the League of Municipalities, by the New Jersey Municipal Managers Association, by the Assessors Association, by the Government Finance Officers Association and by the Tax Collectors and Treasurers Association. Further, the legislation should include a mechanism whereby the commission could put its recommendation directly before the voters, should the legislature fail to embrace essential reforms. Finally, we object to the provision that disqualifies and elected municipal official from full voting membership on the body.

ACR-4/SCR-121 proposes a constitutional amendment to permit the Legislature to increase the farmland assessment roll-back tax period in certain cases. We support a reform of farmland assessment roll-back provisions. It is long overdue. But we need to be assured that the reform will better promote the two purposes of the roll-back tax – to discourage the conversion of farmland to other uses, which would increase municipal costs, and to provide some recompense to the taxpayers in the municipality who do not benefit from farmland assessments.

Though no bills have yet been introduced, and though no testimony on this topic has yet been taken, be aware that this Committee will be responsible for the proposed new property tax levy cap.

When the caps were originally imposed, they were intended to sustain the property tax reduction that was to be delivered by our State’s new income tax. So the original cap was justified as an accessory to a major change in one of the essential variables of the property tax equation – the availability of other revenues.

In reviewing the special session’s entire plan, we see new revenues to provide relief for school districts. That is a good thing and it will help our property taxpayers. We see a commitment to new revenues to provide relief directly for our residential property taxpayers, in your 20% credit proposal. Obviously, that would be a good thing, too. But we see no new revenues for municipal or county governments that could justify the imposition of more stringent caps, thereon.

Please speak to your State Legislators about these matters.