ASSEMBLY LOCAL GOVERNMENT COMMITTEE

 

STATEMENT TO

 

ASSEMBLY COMMITTEE SUBSTITUTE FOR

ASSEMBLY, No. 2033

 

STATE OF NEW JERSEY

 

DATED: JUNE 3, 1996

 

      The Assembly Local Government Committee reports an Assembly committee substitute for Assembly, No. 2033, without recommendation.

      The general purpose of the Assembly committee substitute is to enable a municipality to reduce its reserve for uncollected taxes, thereby reducing the amount required to be raised by taxation, by selling its property tax levy. Specifically, the committee substitute amends R.S.54:4-67 to eliminate the two-tier interest rates for property tax delinquencies so that a municipality would set only one rate, up to 18%. The committee substitute also amends that statute to require the municipality to provide notice to the taxpayers with the next tax bill when it changes the interest rate for delinquencies. The purchaser of the tax levy would receive the same interest as the municipality.

      The committee substitute amends R.S.54:5-19 to permit tax lien sales and tax levy sales to occur in the last month of the fiscal year of a municipality. Currently, tax lien sales may not be held prior to April 1 of the fiscal year next following the fiscal year when the taxes became in arrears.

      Section 3 of the committee substitute provides the mechanism for a municipality to reduce its reserve for uncollected taxes when it sells its tax levy before adoption of its budget. The municipality would deduct all payments anticipated over the fiscal year from the sale of the property tax levy.

      Section 4 of the committee substitute provides the mechanism for a municipality to reduce its reserve for uncollected taxes when it sells its tax levy in the final month of the fiscal year. A municipality intending to sell its tax levy in the final month of the fiscal year would be required to pass a resolution authorizing that sale prior to the adoption of its budget. The anticipated proceeds from the sale would be treated as receipts from delinquent taxes.

      Section 5 would require the certified financial officer of the municipality to provide the governing body with a fiscal analysis of a proposed tax levy sale, showing, among other things, the effect on the reserve for uncollected taxes in the current and subsequent fiscal year. This report would be a public record. The Director of the Division of Local Government Services in the Department of Community Affairs would be permitted to issue a standard form for this report.

      Section 6 of the bill states that a taxpayer remains delinquent if he or she does not pay the taxes when due, despite the sale of the tax levy.

      Section 7 contains the operative language permitting a municipality to sell its property tax levy at public sale to the highest responsible bidder. Notice of the sale is required to be advertised at least 14 days prior to the date of the public sale.

      Section 8 contains the minimum terms and conditions that are required to be stated in a contract for the sale of the municipal tax levy. Subsection b. of that section states that a successful bidder, within a reasonable period of time after being awarded the contract, is required to post bond or an irrevocable letter of credit in the amount of the previous year's reserve for uncollected taxes or the amount actually paid by a tax levy purchaser for the previous year, whichever is greater. When the property tax levy is sold in the last month of the fiscal year the successful bidder would be required to post bond or an irrevocable letter of credit in an amount equal to the actual delinquency for the fiscal year.

      Section 9 of the committee substitute permits the Director of the Division of Local Government Services in the Department of Community Affairs to issue rules and regulations to effectuate the purposes of the committee substitute.