SENATE CONCURRENT RESOLUTION No. 104

STATE OF NEW JERSEY

214th LEGISLATURE

 

INTRODUCED MAY 20, 2010

 


 

Sponsored by:

Senator  JOSEPH M. KYRILLOS, JR.

District 13 (Middlesex and Monmouth)

 

 

 

 

SYNOPSIS

     Proposes constitutional amendment to impose strict 2.5 percent cap on tax levy increases by local units of government.

 

CURRENT VERSION OF TEXT

     As introduced.

  


A Concurrent Resolution proposing to amend Article VIII, Section I, of the New Jersey Constitution by adding a new paragraph 8.

 

     Be It Resolved by the Senate of the State of New Jersey (the General Assembly concurring):

 

     1.    The following proposed amendment to the Constitution of the State of New Jersey is hereby agreed to:

 

PROPOSED AMENDMENT

 

     Amend Article VII, Section II by adding a new paragraph 8, to read as follows:

 

     8.    a.  A county or other local taxing district with a local purposes tax rate of more than $0.10 per $100 of assessed value for the previous tax year shall not adopt a budget in which the amount to be raised by taxation for real property is increased by more than 2.5 percent over its previous year’s local purposes tax levy amount, plus the product of the taxable value of any new construction, improvements, and other property added to the tax rolls during the tax year, times the previous year’s tax rate.

     b.    This 2.5 percent increase limit shall not apply to amounts required to be raised by taxation for debt service and capital expenditures as those terms may be defined by law.

     c.     This 2.5 percent limit may be exceeded in any local budget year by approval, at a public referendum, to be held at such a time and manner as determined by the Legislature, of a question specifying a higher percent increase by at least 60 percent of the number of registered voters of the county or other local taxing district, as applicable, participating in the referendum election.

     d.    The Legislature may provide for a process where unused capacity under the tax levy increase limit in any local budget year may be carried forward and used in any one of the next three succeeding local budget years.

 

     2.    When this proposed amendment to the Constitution is finally agreed to pursuant to Article IX, paragraph 1 of the Constitution, it shall be submitted to the people at the next general election occurring more than three months after the final agreement and shall be published at least once in at least one newspaper of each county designated by the President of the Senate, the Speaker of the General Assembly and the Secretary of State, not less than three months prior to the general election.


     3.    This proposed amendment to the Constitution shall be submitted to the people at that election in the following manner and form:

     There shall be printed on each official ballot to be used at the general election, the following:

     a.     In every municipality in which voting machines are not used, a legend which shall immediately precede the question as follows:

     If you favor the proposition printed below make a cross (X), plus (+), or check (a) in the square opposite the word "Yes." If you are opposed thereto make a cross (X), plus (+) or check (a) in the square opposite the word "No."

     b.    In every municipality the following question:


 

 

 

2.5% CONSTITUTIONAL LIMIT ON PROPERTY TAX LEVY INCREASES BY LOCAL UNITS

 

YES

Do you approve of the proposed amendment to the State Constitution prohibiting most counties and other local taxing districts from increasing their property tax levy on real property, that is not new construction or improvements, added to the tax rolls since the previous year, by more than 2.5 percent over the previous year’s tax levy, except when authorized by public referendum approved by at least 60 percent of the participating voters?

 

 

INTERPRETIVE STATEMENT

 

NO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This amendment to the State Constitution will establish a cap of 2.5 percent on the permitted increases of county, municipal, school district, and other local taxing district property tax levies over each entity’s previous year’s levy.  It would apply to those local taxing districts with a local purposes tax rate in the preceding year of more than $0.10 per $100 of assessed value.  The value of new construction, improvements, and other property added to the tax rolls during the tax year, would be subject to the previous year’s tax rate.  The only automatic exclusions from the cap would be for debt service payments and capital expenditures.  Local units may use the amount of any budget year’s unused tax levy increase in any of the three subsequent local budget years.  Otherwise, a public referendum, approved by at least 60 percent of the participating voters, would be required to exceed the 2.5 percent cap for a particular local budget year.

 

 

STATEMENT

 

     This proposed amendment to the State Constitution would impose a cap of 2.5 percent on permitted increases to the property tax levies of counties, municipalities, school districts, fire districts, and other local taxing districts, over their levies for the previous tax year.  This constitutionally required cap, similar to the statutory 2.5 percent cap in Massachusetts, was recommended by the Governor as part of this FY 2011 budget address, in a document entitled “FY 2011 Budget Solutions:  Foundation for Long Term Reform Protecting Taxpayers and Enforcing Fiscal Discipline.”  Currently, statutory law imposes a 4 percent cap on levy increases by those entities, with about a half-dozen exclusions and opportunities for waivers granted by the Local Finance Board.  Under the proposed constitutional amendment, the 2.5 percent levy cap would be a more “honest” cap than the levy cap imposed by current law because the only permitted automatic exclusions from the cap would be for taxes need to be raised for debt service payments and for capital expenditures.  The assessed value of new construction, improvements, and other property that was added to the tax rolls during the tax year would be multiplied by the previous year’s tax rate and then added to the amount subject to the 2.5 percent cap (the previous year’s levy) to determine each local unit’s total permissible levy tax increase.  The unused portion of a local unit’s allowable tax levy increase could be carried forward and added to the permitted increase in any of the subsequent three local budget years.  Otherwise, a local unit could exceed the 2.5 percent cap in a tax year only through approval, by at least 60 percent of the participating voters, of a public question specifying the higher increase.