STATE OF NEW JERSEY
PRE-FILED FOR INTRODUCTION IN THE 2008 SESSION
Assemblyman DAVID C. RUSSO
District 40 (Bergen, Essex and Passaic)
Assemblywoman LINDA R. GREENSTEIN
District 14 (Mercer and Middlesex)
Assemblyman JOSEPH VAS
District 19 (Middlesex)
Assemblyman GORDON M. JOHNSON
District 37 (Bergen)
Removes appropriations for municipal library purposes from the four percent municipal property tax levy cap.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act concerning an exception to the municipal tax levy cap and amending P.L.2007, c.62.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 9 of P.L.2007, c.62 (C.40A:4-45.44) is amended to read as follows:
9. For the purposes of sections 9 through 13 of P.L.2007, c.62 (C.40A:4-45.44 through C.40A:4-45.47 and C.40A:4-45.3e):
"Adjusted tax levy" means an amount not greater than the amount to be raised by taxation of the previous fiscal year, less any waivers from a prior fiscal year required to be deducted by the Local Finance Board pursuant to section 11 of P.L.2007, c.62 (C.40A:4-45.46), and all amounts appropriated in the previous fiscal year for library purposes, with that result multiplied by 1.04, to which four percent of the amounts appropriated in the previous fiscal year for library purposes plus the sum of exclusions defined in subsection b. of section 10 of P.L.2007, c.62 (C.40A:4-45.45) shall be added.
"Amount to be raised by taxation" means the property tax levy set in the annual budget of a local unit.
"Local unit" means a municipality, county, fire district, or solid waste collection district, but shall not include a municipality that had a municipal purposes tax rate of $0.10 or less per $100 for the previous tax year.
"New ratables" means the product of the taxable value of any new construction or improvements times the tax rate of a local unit for its previous tax year.
(cf: P.L.2007, c.62, s.9)
2. Section 10 of P.L.2007, c.62 (C.40A:4-45.45) is amended to read as follows:
10. a. In the preparation of its budget the amount to be raised by taxation by a local unit shall not exceed the sum of new ratables, 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).
b. The following exclusions shall be added to the calculation of the adjusted tax levy:
(1) increases in amounts required to be raised for (a) all debt service and (b) lease payments with county improvement authorities pursuant to leases in effect on the effective date of P.L.2007, c.62 (C.18A:7F-37 et al.);
(2) increases in amounts required to be raised to replace State formula aid due to a reduction in State formula aid from the previous local budget year;
(3) increases in amounts for certain pension contributions set forth in section 5 of P.L.2003, c.108 (C.40A:4-45.43) for the years set forth in that section;
(4) with respect to municipalities, any increase, greater than four percent, in the reserve for uncollected taxes that is required by law;
(5) 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 four percent 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[.] ;
(6) amounts appropriated for library purposes.
c. Notwithstanding the other provisions of [this] subsection b. of this section, when the appropriation for all debt service is less than the amount appropriated for all debt service in the prior fiscal year, the amount of the difference shall be deducted from the sum of the exclusions listed in paragraphs (1) through [(5)] (6) of this subsection. 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 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 paragraphs (1) through [(5)] (6) or directly reduce the adjusted tax levy if there are no exclusions.
(cf: P.L.2007, c.62, s.10)
3. This act shall take effect immediately.
This bill is intended to remove amounts required to be appropriated for library purposes from the municipal cap on increases to the property tax levy, recently enacted by P.L.2007, c.62. Prior to that law, expenditures for library purposes were exempted from the cap on municipal expenditures (N.J.S.A.40A:4-45.3). P.L.2007, c.62 did not extend the library cap exception to the cap on increases to the municipal property tax levy, and so, increases in library funding that result merely from operation of N.J.S.A.40:54-8 use up part of the municipality's permissible four percent annual property tax levy increase. Therefore, when the market causes the equalized assessed valuation of property in a municipality to increase, funding for the municipal free library also increases automatically under the statutory formula in N.J.S.A.40:54-8, with that funding increase being charged against the municipality's permissible annual four percent property tax levy increase.
There are 233 municipalities with municipal free libraries and another 12 municipalities with joint municipal free libraries. All of these municipalities would be affected by any increase in the equalized assessed valuation of its property, as described above. This bill is intended to place these municipalities on an equal footing with municipalities that participate in a county library system funded by a separate tax levy. Many of these municipalities also provide their libraries with an additional appropriation, because the statutory formula may not provide sufficient revenue to support the library. This bill would also ensure that those additional appropriations, required to support the municipal free library, is outside of the property tax levy cap and does not erode the use of the permissible annual four percent property tax levy increase for other purposes.