State to withhold $20.7 million in aid payments to municipalities

by: Jason Springer

Mon Nov 30, 2009 at 08:22:36 PM EST

To help close an unexpected budget gap, the state plans to withhold $20.7 million in aid payments to municipalities, a move that could force cuts in service or higher property taxes, according to three legislative sources briefed on the move.

The decision to place the final aid installment in reserve rather than distribute it to towns is expected to be announced by the Corzine administration Tuesday along with other budget-trimming moves, according to the sources, who requested anonymity because they were not authorized to discuss it.

The payment represents 5 percent of the total annual aid authorized for municipalities under the Consolidated Municipal Property Tax Relief Act. But that is enough to throw into turmoil the budgets of more than 400 towns that prepare their budget on the calendar year schedule, forcing them to scramble for last-minute cuts, said William Dressel, executive director of the state League of Municipalities.

Of the 421 towns that adopt budgets on the calendar year schedule, 243 receive more than $100,000 annually in CMPTRA aid, Dressel said. The city expecting the highest payment today is Newark, at $3 million, Dressel said. A spokeswoman for Newark Mayor Cory Booker declined to comment last night.

David DelVecchio, mayor of Lambertville, said the state was abandoning the promises made to cities and towns.

"The state made a commitment, and the state's walking away from the commitment," said DelVecchio. "This has never happened. We've had aid go up, aid go down, but we've never had aid cut back once it was committed."