Sponsored by:
Assemblywoman LINDA R. GREENSTEIN
District 14 (Mercer and Middlesex)
Assemblyman WAYNE P. DEANGELO
District 14 (Mercer and Middlesex)
Assemblywoman NELLIE POU
District 35 (Bergen and Passaic)
Assemblyman PAUL D. MORIARTY
District 4 (Camden and Gloucester)
Assemblyman LOUIS D. GREENWALD
District 6 (Camden)
Co-Sponsored by:
Assemblymen Milam, Albano, Senators Buono and Gordon
SYNOPSIS
Requires a State tax expenditure report be included in the Governor's annual budget message.
CURRENT VERSION OF TEXT
As introduced.
An Act requiring a State tax expenditure report be included in the Governor's annual budget message and supplementing Title 52 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. In addition to the requirements of section 11 of article 3 of P.L.1944, c.112 (C.52:27B-20), and any other provisions of law, the Governor's budget message transmitted annually to the Legislature shall include a State tax expenditure report setting forth estimates of the tax expenditures under existing State law for the last completed fiscal year, the current fiscal year and the fiscal year to which the budget message applies. The tax expenditures report shall take into account projected economic factors, and any changes in State tax expenditures as may be enacted or reasonably expected to be enacted for any fiscal year.
b. The State tax expenditures report shall:
(1) list each State tax expenditure,
(2) identify the statutory authority for each State tax expenditure, and the year in which it was enacted or the tax year or tax period in which it became effective,
(3) describe the objective of each State tax expenditure,
(4) detail in columnar enumeration for each State tax expenditure an estimate of the amount of State revenue loss for the last completed fiscal year, the current fiscal year and the fiscal year to which the budget message applies,
(5) determine whether each State tax expenditure has been effective in achieving the purpose for which the tax expenditure was enacted and currently serves, including an analysis of the persons, including corporations, individuals or other entities, benefited by the expenditure,
(6) the effect of each State tax expenditure on the fairness and equity of the distribution of the tax burden, and
(7) the public and private costs of administering the State tax expenditures.
c. As used in this section:
"State tax expenditure" means those revenue losses attributable to provisions of State tax law which establish special tax treatment, including but not limited to tax law definition, deduction, exclusion, exemption, deferral, credit, preferential tax rate or other special tax provision resulting in a reduced tax liability for certain persons, individuals, types of income, transactions or property from the liability which would be presumed to exist without the State tax expenditure.
d. The Division of Taxation in the Department of the Treasury shall advise and assist the Governor in the preparation of the State tax expenditure report.
2. This act shall take effect immediately and apply to budget messages transmitted on and after enactment.
STATEMENT
This bill requires that the Governor's annual budget message include a State tax expenditure report. State governmental policy objectives are sought to be achieved by both the granting of direct expenditures of governmental funds and by the granting of special and selective tax relief or tax expenditures. Both direct expenditures of governmental funds and tax expenditures affect the ability of the State government to set tax rates and collect State tax revenue and implement the functions of government through the expenditure of governmental funds. The Legislature's review of the Governor's annual budget messages examines the fiscal soundness and effectiveness of proposed State spending decisions. However, there is no regular and comprehensive review by the Legislature of the granting of special and selective State tax relief.
While all tax expenditures are initially designed to promote the public good through the encouragement of certain economic activities or the reduction of tax liabilities in special circumstances, the passing of time may change the effect of tax expenditures to something other than their original purposes. The Legislature cannot begin to adequately assess the public policy impacts of tax expenditures, and the accomplishment of the Legislative intent of tax expenditures, until sufficient empirical data exists as to the financial effects of the tax expenditures. The best way to ensure that adequate data is regularly available on the financial effects of State tax expenditures is to require that the Governor include such data in the annual budget message to the Legislature.