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Mayor Barrella's Remarks Before the N J Assembly Budget Committee

To hear the live broadcast from April 2, 2009, logon to 'http://www.njleg.state.nj.us/media/archive_audio2.asp?KEY=ABUB&SESSION=2008' and click on 'LISTEN' for the April 2, 2009 session. Move the bar at the top of the screen to 2:18 pm. The Mayors comments start somewhere between 2:18 and 2:19 pm.

Remarks of
Mayor Vincent R. Barrella
Point Pleasant Beach
Before the
Assembly Budget Committee
April 2, 2009

My name is Vincent Barrella and I am the Mayor of Point Pleasant Beach, a shore community of 5,300 residents that hosts approximately two million visitors each year. We are different from other shore communities in that we do not own our beaches. They are privately owned and produce no revenue for the municipality.
Those who visit us come not only from New Jersey, but from surrounding states like Pennsylvania and New York as well. Our tourism industry has grown and thrived because as a municipality we have year in and year out provided a quality product - a clean and safe environment. Consequently, the State derives substantial amounts of sales and income tax revenue from Point Pleasant Beach.
Point Pleasant Beach can no longer alone shoulder the burden of providing that environment. This year in developing a budget that meets state mandated requirements and minimizes property tax increases, significant cuts in police and sanitation services have been proposed. These cuts will leave us less safe and dirtier, thus putting at risk our status as one of the top tourist destinations in the State.
Moreover, these cuts present the very real possibility of a ripple effect which could result in deeper cuts in future years. If this happens, the adverse effects on our tourism industry will certainly be felt in Trenton, as the tax revenue sent to the State will be substantially diminished.
The borough's proposed budget is well below the appropriations cap, with spending this year less than that of last year. Our proposed tax levy, on the other hand, is well above the 4%levy cap, primarily because those who enjoy the services we provide are not contributing to the cost of those services.
Clearly, New Jersey's municipalities are much too dependent on property taxes in order to deliver required services. For municipalities like Point Pleasant Beach our dual town status exacerbates this problem. For example, according to state police statistics, we should have 12 to 13 full-time police officers. We have 24. In addition, we hired approximately 60 special officers last year. These numbers are directly related to the needs of our local tourism industry.
In light of the tens of mullions of dollars in tax revenue the State derives from our local tourism industry I request that the budget appropriate $1.5 million dollars for Point Pleasant Beach to cover the additional cost we incur for police and sanitation services in support of that industry.
There are alternatives, however, which would address the problem without burdening New Jersey taxpayers who choose to seek recreational opportunities elsewhere. See, for example, the Op-Ed piece attached as Exhibit A, Which consistent with Borough Resolution 2008-0304 calls for legislative authority to levy local fees on various forms of discretionary spending.
A simpler solution would be for the legislature to authorize municipalities bordering on the Atlantic Ocean and which have a permanent population of less than 10,000 to voluntarily choose to levy up to a 2% impact fee on all tourism related activities. Exhibit
B sets forth the type of activities which could be covered by this impact fee.
Borrowing from the findings of this legislature made in conjunction with it unanimous adoption of changes to NJSA 40:54D in 2002, I respectfully submit:
The provision of services and the maintenance of facilities related to tourism "is especially difficult for public entities [such as Point Pleasant Beach. In these municipalities] where a relatively small permanent population combines with a relative lack of diversification in the economic base to present special obstacles for [these small municipalities] which seek to undertake and fund [tourism] without damaging the economic prosperity of the locality by imposing onerous taxes on permanent residents or businesses."
"These special public finance measures which are not generally available to other local units in the State, are appropriate to address the particular economic conditions of [small municipalities, such as Point Pleasant Beach], and are not necessary or appropriate in areas of larger population base and more diversified economic structure, which are not so heavily affected by the seasonal fluctuations of a tourism based economy."
I submit that locally imposed impact fees represent the fairest solution to the problem confronting municipalities such as Point Pleasant Beach. These fees will not hurt tourism. Their financial impact on individual visitors to Point Pleasant Beach will be negligible. They will, however, provide meaningful property tax relief to our taxpayers, while allowing us to preserve the clear safe environment that has allowed our tourism industry to thrive. The inability of the borough to provide essential services because of escalating property taxes poses a far more serious threat to the well-being of our tourism industry.
There have been objections raised in the past to the grant of similar authority to municipalities within the state. For the reason's set forth in Exhibit C, these objections are without merit.
I, therefore, request that this committee and the legislature as a whole, acting in a bipartisan manner and without concern for political interests, take the action suggested here today. Such action would represent a significant first step in ending our dependency on property taxes and would free up scarce state resources for use in other communities within the state and for other worthwhile programs.
I thank you all for listening and welcome any questions the committee may have.




EXHIBIT A:

Op-Ed Piece Published in the
June 7, 2008 edition of the
Asbury Park Press


Local taxes equitable way to pay for services
By VINCENT R. BARRELLA
The May 22 edition of the Asbury Park Press contained an editorial titled "No new frontiers, please" criticizing a proposal to allow local option taxes. The editorial elevated faux-popularisrn to a new level.
Both state Treasurer David Rousseau and Assemblyman Louis Greenwald, D-Camden, were responding to a request made by myself, a Republican, for legislation to allow municipalities such as the one I represent to levy taxes.
Rousseau and Greenwald deserved better for their well-reasoned and cogent responses than the derisive and uninformed comments of the Press editorial. More importantly, the taxpayers of New Jersey and Press readers deserve better than editorial page grandstanding.
I do not believe local option taxes are simply a means of creating another source of money to fuel additional spending. It is essential that revenue generated by local taxes remains in the municipality that generates it, and it should be dedicated to property tax relief.
Municipalities are subject to constraints on spending by virtue of the cap the Legislature has imposed upon them. Ensuring that the revenue local option taxes generate will go directly to property tax relief would require some revision of these rules.
Point Pleasant Beach is a desirable tourist destination for residents of central and northern New Jersey, New York and Pennsylvania. It is Atlantic City without the casinos.
The state derives substantial revenue from the tourist industry through sales and income taxes. The host community derives only one-third of a penny from every tourist-related dollar spent here. The money we do receive comes mainly from municipal parking fees and court revenue.
To put it in perspective, if a visitor to Point Pleasant Beach spends $300 going to the beach and boardwalk, dining, entertainment and shopping, but parks legally for free on our streets, the municipality does not derive one dime of revenue from that visitor.
Local taxes on discretionary spending would provide substantial property tax relief to our taxpayers. Such taxes could include a 2 percent excise the on the sale of alcoholic beverages, an impact fee on the sale of beach badges ---beaches are privately owned in Point Pleasant Beach so the municipality derives no revenue from them --- or a tax on private parking lots as Atlantic City, Newark and other municipalities are allowed to bevy.
The only local option tax we have is the hotel/motel tax, which could be extended to seasonal rentals to equalize the unfair advantage those who rent seasonally now have over those who operate our motels.

These levies would increase the financial burden slightly on visitors. However, the nearly 2 million tourists who frequent this municipality each year do so because they are provided with a safe, clean environment.

For example, we employ about 25 full-time police officers (for towns of our size and population, the number should be around 13) and nearly three times that many special officers in the summer.
We receive no revenue from the sale of beach badges, yet we maintain and repair the boardwalk. It is reasonable to ask visitors to contribute to the cost of providing that environment. It is unreasonable to ask the 5,300 residents and taxpayers of the municipality to continue to shoulder these costs. Local option taxes would remedy that fundamental inequity.
Serious cost-cutting is an important element of fiscal responsibility, but government, like a business, cannot cut itself to a position of fiscal stability. It also must develop additional revenue sources that more fairly and equitably distribute the cost of providing services.
What would be the effect of a local tax levy in Point Pleasant Beach? A 2 percent excise tax on the sale of alcoholic beverages alone would produce an amount between 15 percent to 25 percent of our municipal tax levy. That is real property tax relief.
Municipalities are able to levy local taxes in 43 states. This is not "a new frontier." Most of those states have lower property taxes and overall tax burdens than New Jersey.
While local option taxes might not represent a panacea for every New Jersey municipality, to ignore their value to municipalities because they may not be the solution in every case is irresponsible. If we await perfection, nothing will get done.
Local elected officials should have the authority to determine what works best for each of their municipalities. They are also the most accountable to the electorate. To the extent they fail to respond to the needs and desires of their constituents, no doubt, and properly so, they soon will be ex-elected officials.


EXHIBIT B:

Sales of Products and Services
That Could Be Made Subject to
Proposed Impact Fee

Sales of Products and Services That Could Be
Made Subject to Proposed Impact Fee
1) Rent for every occupancy of a room or rooms in a hotel, motel or boarding house to the extent covered by the existing hotel/motel tax with said fee to be in lieu of the existing local portion of said tax;
2) Rent for seasonal occupancy of house, apartment or room for a period of less than 150 days not covered under 1), above;
3) Admission fee or similar charge relating to the use of a privately owned beach or bathing facility, including any charge for a locker or changing facility whether or not shower or similar services are provided;
4) License fee or similar charge in connection with the parking of a vehicle in a privately owned parking lot or facility as currently permitted in other municipalities within the State;
5) Receipts from the sale of alcoholic beverages in or by restaurants, taverns, or other similar establishments as currently permitted in other municipalities within the State; and
6) All activities presently addressed for the benefit of other municipalities within the State pursuant to NJSA §40:54D-1, et. seq.










Article Published in the
March 2009 edition of
New Jersey
EXHIBIT C




As I See It

Towns Have a Right to Tax More than Property
By Mayor Vincent R. Barrella
Point Pleasant Beach Borough


Local Option Taxes Targeting Discretionary Spending Can Play a
Significant Role in Curbing the Escalating Property Tax Burden
For many Municipalities within the State


A dramatic shift in thinking at the state level regarding the way that municipalities raise revenue is essential. Home rule is a hollow concept when it applies only to the requirement that our municipalities pay for unfounded mandates and local services, while at the same time denying them access to revenue sources within their borders that would provide meaningful property tax relief to their taxpayers. This is especially so given the scarcity of state resources, promised cuts in municipal aid and indications that the levy cap will be strictly adhered to going forward.

Local option taxes targeting discretionary spending can play a significant role in curbing the escalating property tax burden for many municipalities within the state. Point Pleasant Beach, for example, would be able to reduce its municipal property tax burden by 30 to 50 percent were it able to levy fees on discretionary spending. While these fees may slightly increase the financial burden on the nearly two million tourists who frequent us, it is these same two million visitors that require the borough to employ twice as many full time police officers than population statistics would indicate, and nearly triple that amount of special officers in the summer. It is unreasonable to ask the approximately 5,300 resident and taxpayers of the municipality to continue to shoulder these costs. Imposing user fees would remedy this fundamental inequity.

Objections to granting local taxing options to municipalities vary. One objection is that local option taxes essentially represent a “zero sum game.” This is predicated on a belief that there is a direct correlation between the increased tax burden local option taxes would impose upon residents of a municipality and the property tax savings recognized by those same residents.

While this assumption may be valid with respect to some municipalities, it is flawed when the argument is advanced globally. While local taxing options will not represent a panacea for every New Jersey municipality, to ignore the value of accessing these user fees to the many municipalities that would benefit from them because they are not a statewide solution is shortsighted. For example, it ignores the savings that would derive from the ability to shift costs from residents and taxpayers to the users of services, many from out-of-state, that our localities host each year. Moreover to the extent that some municipalities are able to “cook for themselves,” it will release state resources to assist taxpayers in communities that cannot do so.

The benefits are not limited to taxpayers in tourist communities. Taxpayers in other municipalities, such as those with substantial commercial and industrial activity, would also see a reduction in their property tax burden were they able to tap into their resources.

Another objection is the specter of local governments tripping over themselves as they pursue alternative revenue sources. As evidenced by the fact that only a handful of shore communities have chosen to adopt a local hotel/motel tax the contrary would be true. Local governments would need to be both judicious and thoughtful in deciding whether to add additional levies so as not to put themselves at a competitive disadvantage.

Some harbor a concern that local option taxes would expand the size of municipal government. This concern is not unreasonable; however, because of the spending cap, a municipality, when debating whether to adopt a particular levy, would have to consider additional costs that would be incurred. Thus, there exists a strong deterrent against the adoption of inefficient revenue measures.

Finally some are concerned that local option taxes would interfere with state revenue policies and uniformity. Any perceived interference and lack of uniformity already exists since larger municipalities such as Newark, Atlantic City and Jersey City, to name a few, already possess the power to levy local taxes. There is no justification for denying taxpayers in our smaller municipalities, like Point Pleasant Beach, the same relief from property taxes currently afforded those in their larger counterparts.

The real impediments to change are fear and distrust. This fear would be ameliorated if our elected state officials would get past their partisan distrust. Acting in a bipartisan manner they would represent a target that even those who are least informed would be hesitant to engage.

It is essential that New Jersey adopt a new approach that lessens our reliance on property taxes. The time for real home rule through the grant to local elected officials – those most accountable to the electorate – the right to consider and implement levies they deem reasonable, necessary and appropriate is now.


Published April06, 2009 | Announcements | 767


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