FISCAL NOTE TO


[First Reprint]

SENATE, No. 357


STATE OF NEW JERSEY

 

DATED: NOVEMBER 27, 1996

 

 

      Senate Bill No. 357 (1R) of 1996 would increase the annual deduction from property taxes assessed against or attributable to the dwellings of citizens and residents of the State, who are 65 years of age or older, or permanently and totally disabled, from $250 to $500, and would increase, from $10,000 to $15,000, the annual income limitation for eligibility to receive the $500 deduction.

      The Department of the Treasury (Treasury) has estimated that the cost to the State of this bill will be a continuing one, and will represent a negative impact on the Property Tax Relief Fund, because municipalities are reimbursed from the fund for the cost of these property tax deductions. In 1995, 148,619 deductions were granted by the various municipalities and reimbursed by the State. Those reimbursements (148,619 x $250) cost the State approximately $37.1 million. Prior to the committee amendment which changed the proposed increase from $50 to $250, Treasury indicated that the annual additional expenditure for this $50 benefit would be approximately $7.5 million.

      The Office of Legislative Services (OLS), using Treasury's data that indicate that in 1995, 148,619 deductions at a value of $250 were granted by the various municipalities and reimbursed by the State, estimates that a doubling (from $250 to $500) of the deduction will increase the cost to the Property Tax Relief Fund by an additional $37.1 million, to approximately $74.2 million.

      The Treasury did not provide a cost estimate for the portion of the bill providing an increase in the income limit for eligibility to receive the property tax deduction from $10,000 to $15,000. The OLS estimates that an increase in the income limit from $10,000 to $15,000 will cost the Property Tax Relief Fund an additional $23.5 million. Using Treasury's data, the OLS notes that in the period from 1978 to 1988, the number of senior citizens, permanently and totally disabled residents and their surviving spouses with incomes between $10,000 and $15,000 increased by approximately 42 per cent. Assuming the same rate of increase between 1988 and 1998, the OLS estimates that approximately 47,000 additional persons will be eligible under the terms of the bill to receive the $500 property tax deduction. Therefore, the OLS estimates that those reimbursements will cost the State approximately $23.5 million.

      Noting that the increase in the deduction from $250 to $500 is estimated to cost the State $37.1 million, and the increase in the income limit from $10,000 to $15,000 is estimated to cost the State $23.5 million, the OLS anticipates that the provisions of this bill will increase the State's required reimbursements to municipalities by approximately $60.6 million in 1998. The total cost to the State of the senior and disabled persons' property tax deduction in 1998 is estimated to be $97.7 million.  

This fiscal note has been prepared pursuant to P.L.1980, c.67.