New Jersey’s longtime status as the state with the highest property taxes in the nation is so entrenched in our psyche that we have become numb to the prospect of little to nothing being done to ease the pain. There is something, however, that would give many towns a fighting chance to at least stabilize taxes, if not lower them altogether. The Energy Tax Receipts (ETR) may hold the key to lower property taxes in many New Jersey towns.
The ETR is a longstanding source of revenue originating from utility companies to municipalities. It was originally intended to compensate towns for the loss of land used by utilities to situate power line corridors, substations, underground utility lines and other associated uses that result in removing publicly owned property from the tax rolls.
Initially, the payments were made directly from the utility company to the individual municipality. This all changed in 2002 when the powers that be in Trenton had the bright idea to have the payments made to the state, who would then forward the payments to the towns. What could possibly go wrong? To the surprise of no one, only a fraction of the payments eventually made it to the affected towns, with smaller towns having no utility presence also sharing in the proceeds.
The results have been disastrous. The cumulative losses to municipalities range from hundreds of thousands of dollars to tens of millions of dollars. By virtue of their scale, towns with the largest land mass are those suffering the largest losses. For example, as of 2024, Middletown Township in Monmouth County’s LD 13 has lost $12,565,996.00. This pales in comparison, however, to Woodbridge Township, which lost a whopping $23,511,121.28. Even a comparatively small municipality like Neptune City Borough, roughly one square mile in area, lost $483,564.09. The biggest losers are the residents and businesses who are forced to cover the lost revenue through higher taxes.
Thankfully, there is a move to reverse this unfair policy. Assemblywoman Vicky Flynn and I have introduced A-1498 which, “Revises Energy Tax Receipts Property Tax Relief Aid program; requires all energy taxes to be paid directly to municipalities.” This would ensure that each respective municipality would get the full value payment for the use of property within their boundaries. This is only fair since the municipality still must maintain the infrastructure, plow and repair the roads and provide police and fire protection in the area among other services.
As long as the current system of funding education, and county and municipal services mainly through property taxes is in place, New Jersey will always rank at or near the top in property tax costs nationally. That does not mean that there are not things we can do to give mayors a fighting chance to deliver services and maintain municipal infrastructure while lessening the burden on the long-suffering New Jersey taxpayer. Passing A-1498 would be a gamechanger for taxpayers across the state looking for relief from the onerous New Jersey tax burden.
