Table of Contents Impact on Municipalities Operating Programs Education Aid Special Education Non-education Aid Car Tax Proposal Smart Growth Initiatives Enhance State’s Planning Capacity Capital Programs School Construction Responsible Growth Clean Water Fund Other Bond Funds State-Local Tax Changes Phase-out of Property Tax on Most Cars Elimination of Property Tax Credit Against State Income Tax Real Estate Conveyance Tax Income Tax Increase Cigarette Tax Increase Estate Tax Cut Energy Tax Cut Appendices

Impact on Municipalities

On Wednesday, February 7th, 2007, the Governor’s proposed an FY 07-08 budget that would increase municipal revenues by a net $204.3 million (7.9%) in FY 07-08 over the current year (FY 06-07).

This net increase includes a $264.8 million (12.7%) increase in education aid and a -$60 million (-12.3%) decrease in non-education aid.1 The Governor’s proposed investment in pre-K–12 public education would be the largest on record in both dollar and percentage terms. However, many non-education grants would be level-funded, reduced or eliminated under the Governor’s budget proposal. Many of these grants were partially funded last year (FY 06-07) with one-time surplus revenue. (These cuts include this year’s $33 million Property Tax Relief grant, which was intended as one-time revenue in anticipation of the State increasing non-education aid in FY 08 and beyond. 2)

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