ASSEMBLY APPROPRIATIONS COMMITTEE

 

STATEMENT TO

 

[First Reprint]

ASSEMBLY, No. 2504

 

with Assembly committee amendments

 

STATE OF NEW JERSEY

 

DATED: MARCH 20, 1997

 

 

      The Assembly Appropriations Committee reports favorably Assembly Bill No. 2504 (1R), with committee amendments.

      Assembly Bill No. 2504 (1R), as amended, increases the local share of the State and local taxes on tourism related receipts levied in municipalities that have formed a tourism improvement and development district.

      Currently, certain contiguous municipalities may form a tourism improvement and development authority. In these municipalities an 8% sales tax is levied in a tourism improvement and development district on hotel rentals, restaurant food and drink sales, and admissions charges in the district. The tax is shared by the State and the tourism authority, 6% going to the State and 2% going to the tourism authority. The local share of the taxes is a funding source for the advertising, promotion, improvement and support of tourism projects and for the issuance of bonds for the acquisition, construction, maintenance and operation of a convention center or tourism project and the payment of interest and principal on those bonds. At present, this tax is only levied in support of the projects of the Greater Wildwood Tourism Development Authority.

      This bill increases the local share of the State and local taxes on tourism related receipts levied in municipalities that have formed a tourism improvement and development district. While the total rate of tax will remain at 8%, the local share of the levy supporting tourism projects will increase, going from 6% State and 2% authority to 4% State and 4% authority, until all payments for bonds have been made. Thereafter the share of tax will return to 6% State and 2% authority. For a period, the funds will be divided 3% to the State and 5% to the authority. This period will last until the 1% “extra” share to the authority yields funds to the authority equal to the additional amount that the authority would have received if the authority had received 4% of the funds for the entire period it was receiving 2% of the funds.

      Under the bill, the tax revenues available to the authority shall be not less than $500,000 for operating and administrative costs of the authority. The remainder of the funds shall be used solely for the costs of capital construction of a tourism project, defined as a convention center facility or outdoor special events arena or both, or for the issuance of bonds and payment of interest and principal on such bonds. Any excess revenues shall be placed in a sinking fund to be used to retire, prior to maturity, State authority bonds issued for the tourism projects. The municipalities within a district may increase the rate of tax in excess of 2% only if the beach fee imposed by each municipality does not exceed $2 per day.

      The bill provides that the State Treasurer shall designate the New Jersey Economic Development Authority or any other State authority to undertake the bonds financing and the construction of the tourism projects and shall review and approve the annual budget of the authority and the annual budget for any tourism project.

      The bill also reconstitutes the membership of the tourism improvement and development authority by limiting the municipal appointments to one member for each municipality, by providing six members appointed by the Governor of whom at least three shall be residents of the tourism district engaged in business subject to the tourism sales tax or to merchant fees, and by placing the State Treasurer and the Director of Travel and Tourism on the authority, ex officio. In addition, the Governor is provided with the power to appoint the chairman of the authority and review and veto the minutes of the authority.

      As reported with amendments by this committee, Assembly Bill No. 2504 (1R) is identical to Senate Bill No 1683 (2R) as reported with amendments by this committee.

 

FISCAL IMPACT:

 

      Based on calendar year funds transfer information supplied by the Greater Wildwood Tourism Development Authority, the tax currently imposed in the Wildwoods at 2 percent is expected to generate approximately $2.6 million in State fiscal year 1997. Other things being equal, the increase to a 5 percent municipal rate is expected to be an increase of $3.9 million annually, for a total municipal levy of $6.5 million annually. If the higher rate could be implemented by July 1, 1997, the duration of the 5 percent rate would be approximately 7.5 years. Thereafter, the maximum rate would be 4 percent, expected to increase the municipal levy by $2.6 million annually for the period that tourism project bonds are outstanding, for a total municipal levy of $5.2 million for each full fiscal year in which it is in effect.


COMMITTEE AMENDMENTS:

 

The committee amendments:

      a. Increase the membership of the authority from nine to eleven members, by providing the Governor with six rather than five members and by adding the Director of Travel and Tourism as an ex officio member.

      b. Require that of the Governor's appointees, three shall be public members who are residents of different municipalities in the district and three shall be tourism business members who are residents of different municipalities in the district.

      c. Provide for three year, staggered terms for appointees of the Governor and of the municipalities in the district.

      d. Require the Governor to appoint the authority chairman from among the Governor's appointees.

      e. Remove the requirement that excess annual revenues over $6,250,000 be placed in the State General Fund, and replace it with a requirement that excess annual revenues be placed in a sinking fund to be used to retire, prior to maturity, State authority bonds issued for the tourism projects.

      f. Permit the State Treasurer to allow more than $500,000 to be used for authority operating expenses pursuant to a budget approved by the State Treasurer.