Senate, No. 738 State of new jersey 215th legislature




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SENATE, No. 738



STATE OF NEW JERSEY

215th LEGISLATURE

PRE-FILED FOR INTRODUCTION IN THE 2012 SESSION





Sponsored by:

Senator PAUL A. SARLO

District 36 (Bergen and Passaic)

Senator ROBERT M. GORDON

District 38 (Bergen and Passaic)
Co-Sponsored by:

Senators A.R.Bucco and Weinberg

SYNOPSIS

Excludes appropriations to reserve for uncollected taxes in excess of two percent from calculations of municipal adjusted tax levy.


CURRENT VERSION OF TEXT

Introduced Pending Technical Review by Legislative Counsel





An Act concerning the calculation of the adjusted tax levy and amending P.L.2007, c.62.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 10 of P.L.2007, c.62 (C.40A:4-45.45) is amended to read as follows:

10. a. (1) In the preparation of its budget the amount to be raised by taxation by a local unit shall not exceed, except as provided in paragraph (2) of this subsection, the sum of new ratables[,] and the adjusted tax levy[, and the total of waivers approved pursuant to section 11 of P.L.2007, c.62 (C.40A:4-45.46); provided, however, that in the case of a county, the amount to be raised by taxation shall not exceed the amount permitted by section 4 of P.L.1976, c.68 (C.40A:4-45.4)].

(2) A local unit that has not been granted voter approval for a [waiver] public question pursuant to section 11 of P.L.2007, c.62 (C.40A:4-45.46), may add to its adjusted tax levy in any one of the next three succeeding years, the amount of the difference between the maximum allowable amount to be raised by taxation [or county] for the purposes [tax, as applicable,] of the local unit for the current local budget year pursuant to paragraph (1) of this subsection and the actual amount to be raised by taxation [or county] for the purposes [tax, as applicable,] of the local unit for the current local budget year.

b. The following exclusions shall be added to the calculation of the adjusted tax levy:

increases in amounts required to be raised by taxation for capital expenditures, including debt service as defined by law; increases in pension contributions and accrued liability for pension contributions in excess of 2.0%; increases in health care costs equal to that portion of the actual increase in total health care costs for the budget year that is in excess of 2.0% of the total health care costs in the prior year, but is not in excess of the product of the total health care costs in the prior year and the average percentage increase of the State Health Benefits Program, P.L.1961, c.49 (C.52:14-17.25 et seq.), as annually determined by the Division of Pensions and Benefits in the Department of the Treasury; municipal appropriations to the reserve for uncollected taxes in excess of 2.0%; and extraordinary costs incurred by a local unit directly related to a declared emergency, as defined by [regulation promulgated by the Commissioner of the Department of Community Affairs, in consultation with the Commissioner of Education, as appropriate] and subject to procedures promulgated by the Local Finance Board.

[If there are no exclusions, then the amount of the difference shall reduce the adjusted tax levy by that amount.] Any cancelled or unexpended appropriation for any exclusion pursuant to this subsection or [waiver] voter approved public question pursuant to section 11 of P.L.2007, c.62 (C.40A:4-45.46), also shall be deducted from the sum of the exclusions listed in this subsection or directly reduce the adjusted tax levy if there are no exclusions.

(cf: P.L.2010, c.44, s.9)


2. This act shall take effect immediately.

STATEMENT


This bill provides that municipalities may exclude appropriations to the reserve for uncollected taxes in excess of two percent from their calculation of the adjusted tax levy.

Municipalities are required to provide 100% of the tax levy for their municipality, their school district, any special districts, and their county, regardless of the actual collection rate. To cover any shortfalls in the 100% collection rate, the municipality must budget a no-spending appropriation through a budget line item known as the reserve for uncollected taxes.

P.L.2010, c.44 provided exemptions to the two percent levy cap for capital expenditures, increases in pension contributions and accrued liability for pension contributions in excess of two percent, certain increases in health care costs in excess of two percent of the total health care costs in the prior year, and certain extraordinary costs incurred by a local unit directly related to a declared emergency. As a result, the increase to the tax levy for the school district, special districts, and the county could exceed two percent. Under current law, if a municipality’s collection rate is less than 98 percent, the municipality will be responsible for appropriating sufficient funds, through its reserve for uncollected taxes, to cover the shortfall for the other taxing districts that are in excess of two percent.

Consequently, municipalities are now forced to further cut their municipal levy in order to meet the two percent tax levy cap to guarantee the 100 percent collection rate for the school district, special districts, and the county. Any municipality that does not collect 100 percent of taxation annually is hampered in its ability to provide services and property tax relief due to the fact that the other taxable entities (the school district, special districts, and the county) automatically receive 100 percent of their taxes billed. This bill would redress this imbalance by excluding appropriations to the reserve for uncollected taxes in excess of two percent from calculations of the municipality's adjusted tax levy.



This bill also includes technical corrections to the law that are required for consistency with the Governor Conditional Veto to Senate, No. 29 of 2010, that was enacted as P.L.2010, c.44.


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