May sue for more energy cash

By Ron Leir
Observer Correspondent 


Public Service Electric & Gas pays about $18 million a year in Energy Tax Receipts (ETR) aid to the state for its properties in Kearny and the state passes that money along to the town’s coffers.

That’s nearly a quarter of the town’s overall budget but Mayor Alberto Santos – who’s looking to extract as much revenue as he can to soften the local tax impact for property owners – said Kearny deserves more.

“At our peak year in 2002, we were getting $21.5 million a year from the state for PSE&G,” said Santos. But since then, he said, the state has elected to keep more of the state-wide utility tax for its own budget-balancing purposes.

The mayor’s assertions are echoed in a “Friends of Local Government Policy Paper Series” March 2013 report on “Appropriating Energy Tax Receipts: The New Normal for New Jersey,” written for the N.J. League of Municipalities Educational Foundation by Alan Zalkind and Angie McGuire of the Rutgers Center for Government Services.

According to Zalkind and McGuire, the ETR “was created to be a source of local municipal funds,” to reduce local property taxes and to compensate towns for the utility’s use of the public rights of way by building power plants and transmission lines. “However, the state now retains a significant portion of the roughly $1 billion collected annually for property tax relief,” they said.

Beginning in 1982, the authors said, Trenton began keeping back a portion of the monies due the municipalities to offset its own budget crunches, until, by 2006, “municipalities were receiving about 50% of the monies collected. The state repurposed the tax, without rewriting the legislation enabling the tax.”

Said Santos: “The state budget supercedes all laws.”

Given Gov. Christie’s intent to slash payments to the state employee pension fund and make other cuts to head off a state budget shortfall, Santos is fearful that the town’s application for $3 million in state transitional aid and New Jersey Meadowlands Tax Sharing funds will meet a similar fate.

Santos acknowledged that the $18 million the town receives “is probably one of the highest” [ETR aid amounts] in the state,” but, nonetheless, insists the town should get its due share – especially in light of the utility’s recent $255 million investment in new peak power electric, gas-powered generators in South Kearny that went on line two years ago.

Problem is, Santos said, that Kearny hasn’t been able to fully tax the improvements because of state laws that exempt certain types of utility fixtures, like turbines, from taxation. “And those,” the mayor noted, “are the most expensive parts of the plant.”

“We’re looking to see if that law can be challenged,” Santos said. “We don’t believe the exemption statute would fall under the superceding language.” Any legal costs associated with that challenge would be justified, Santos said, “because the revenue now being lost could be gained, we feel would be substantial.”

Santos declined to provide an estimate of the potential windfall but, as a preliminary step to that end, the mayor and Town Council voted June 24 to hire Value Research Group Inc. of Livingston “to provide appraisals of all PSE&G-owned properties in the town at a cost not to exceed $50,000.”

Value Research was also authorized to appraise the abandoned Conrail line (formerly Erie Lackawanna) within the Passaic Ave. Redevelopment Area for $7,500. The town hopes to acquire the tract to package it with nearby property for redevelopment.

In other business at the June 24 meeting, the governing body:

• Conducted a public hearing  on the town’s revised Green Acres application for Gunnell Oval improvements. In 2012, it was awarded $600,000 for a new perimeter pedestrian path and exercise facility but now the town is asking for an additional $3 million – in hopes of supplementing that with funding from other state and federal sources – to pay for a proposed $16.9 million makeover of the Oval keyed to a synthetic turfing of the fields to serve as an environmental cap over hydrocarbons and other toxins.

• Authorized advertising  for bids in late July for paving of various streets and water distribution improvements, to be funded from the municipal capital budget. Those streets are: Elm St. (Bergen to Wilson and Quincy to King); Windsor St. (Bergen to Liberty); Forest St. (Quincy to King); Beech St. (Quincy to Midland); Laurel Ave. (Hillcrest to Passaic); and Fuller Place (entire block). If funds are available, the town plans to include: John Hay Ave. (Schuyler to dead end) and Arlington Ave. (Schuyler to dead end but no water-related improvements).

• Agreed to renew a liquor license for The Gin Mill for 2014-2015, subject to the licensee employing someone to check patrons’ ages and remove anyone under age 21, to call police about any activities that may disturb other patrons and/or the surrounding neighborhood, and to check for compliance with capacity regulations inside the bar.

• Authorized an emergency  demolition of an abandoned, unsafe structure in danger of collapse at 64 John Hay Ave. for a cost not to exceed $33,000.

• Hired Garden State Fire works of Millington to provide the July 4 fireworks display for $20,000.

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