Bettering Plainfield with the facts since 2005

Thursday, March 22, 2012

Plainfield taxpayers would benefit if state stopped skimming utility monies

Utilities are taxed for using the public right of way.

Budget time is upon both Plainfield and the state.

Under a push by the NJ League of Municipalities, a longstanding and outrageous practice of skimming utility tax payments intended for local governments is being challenged with the goal of returning these monies to the municipalities as originally intended.

Going back to the 19th century, utilities were assessed taxes based upon use of the rights of way in local municipalities for poles, transmission lines and other means of communication.

Over the years, as pointed out in an excellent background paper on the matter prepared by the League (see here), the state gradually began to take on the role of collector of these taxes, which were then to be distributed back to the municipalities.

And then -- perhaps no surprise -- the state began cutting itself into the deal, siphoning off large amounts of the revenues for the state's use, thus depriving the municipalities of direct aid and helping balance the state budget without appearing to raise taxes.

A high point was reached in 2010, when $217 million was skimmed from local distribution, and this year is on target to see $252 million diverted by the state from municipalities (see NJ Spotlight article here).

The potential that could be recouped for Plainfield and other communities could run into millions of dollars, depending on the geographical size of the community and the utility infrastructure affected.

With all the pressure both the Robinson-Briggs administration and the City Council are facing over this year's budget, let's hope the League has some success.

Plainfield taxpayers would certainly benefit from it.


-- Dan Damon [follow]

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