Special Commission on Municipal Relief

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Special Commission on Municipal Relief

• Meals Tax Proposal
• April 2009

EMBARGOED UNTIL 5PM APRIL 21st
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Commission Proposal

• Allow municipalities to levy a local meals tax of
  2 over the current 5 state tax.
• 50 of the new revenue will remain in the place
  of origin.
• 42.5 of the new revenue will be distributed via
  formula to all participating cities and towns.
• 7.5 of new revenue will be deposited in the new
  Regionalization Incentive Fund (detailed later).
• If adopted by all 351 cities and towns, this
  proposal would generate an estimated 230 million
  for local services.

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Commission Proposal (continued)

• Only a 2 tax could be added.
• Formula funds and Regionalization Incentive
  Grants would only be available to municipalities
  that adopt the 2 tax.
• Any municipality can adopt this tax, even if
  there are few or no restaurants in that town. 23
  towns have 10 or fewer restaurants.
• No municipality will receive more funding than
  they would have if they kept the entire 0.02
  increase.

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7.5
50
42.5
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Regionalization Incentives Trust Fund

• If all communities adopt a local option meals
  tax, approximately 17.2 million per year would
  be deposited into this fund.
• Designed to create savings and encourage
  municipal efficiency.
• Disbursements from this fund would assist
  communities in their efforts to collaborate,
  consolidate, and regionalize through the
  provision of funds to support feasibility
  studies, planning, and transitional aid.

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Regionalization Incentives Trust Fund (continued)

• This initiative would provide assistance from the
  initial concept through full implementation.
• Administered by the Secretary of Administration
  and Finance.
• Modeled after programs in New York and New
  Jersey.

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Outside Links

• New York Regionalization Program
  http//www.dos.state.ny.us/lgss/smsi/index.html
• New Jersey Regionalization Program
  http//www.nj.gov/dca/lgs/share/
• Local Communities Report http//www.mapc.org/Muni
  cipal_Finance_Task_Force/Executive20Summary.pdf
• Local Option Tax Report http//www.nlc.org/ASSETS
  /131BB38D990B4B8C9A703AFDE4B4563E/CitiesandStateFi
  scal.pdf