TRENTON, N.J. — The New Jersey Department of Community Affairs (DCA) will soon notify all 564 municipalities that state aid for their upcoming budgets will be reduced by $150 million, officials announced.
The funding cut comes from the elimination of the Municipal Relief Fund, which had been financed through income tax collections and distributed using a fair funding formula.
What municipalities will not be told, according to Sen. Declan O’Scanlon (R-13), is that the state budget redirected those funds to support special line items outside of the established formula.
Republican senators have raised concerns, arguing that the move violates the New Jersey Constitution.
“The diversion of fair formula-based funding to special line items awarded based on the law of the jungle and outside of a formula is not only bad policy – it violates the NJ Constitution,” Senate Republicans wrote in a letter to Gov. Phil Murphy.
They pledged to support any taxpayers, municipalities, schools, or counties willing to litigate the matter.
New Jersey’s 1975 constitutional amendment mandates that income tax revenues be placed in a Property Tax Relief Fund and distributed exclusively to local governments based on legislative formulas to offset property taxes.
As municipalities prepare their budgets, the loss of state aid is expected to intensify debates over local taxes and funding priorities.