The Department of Community Affairs (DCA) is set to inform all 564 municipalities in New Jersey that state aid for municipal budgets will be reduced by $150 million. This reduction results from the elimination of a “Municipal Relief Fund,” previously funded through income tax collections and distributed according to a fair funding formula.
The municipalities will not be informed that the state budget has redirected this $150 million, and more, to fund special line items. These allocations were made outside any established fair funding formula.
Republican senators have expressed their concerns to the Governor, arguing that diverting funds away from a fair formula-based system violates the New Jersey Constitution. They have committed to supporting any taxpayers, municipalities, schools, or counties willing to challenge this decision legally.
The relevant section of the New Jersey Constitution was approved by voters in 1975. It mandates that taxes on personal incomes must be used exclusively for reducing or offsetting property taxes through formulas established by the Legislature.
