SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 437

with Senate committee amendments

STATE OF NEW JERSEY

DATED: JANUARY 14, 1997

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 437 (1R) with amendments.

      Senate Bill No. 437 (1R), as amended, requires the New Jersey Transit Corporation (NJT) to update in-lieu-of-tax payments to certain municipalities for real property acquired by NJT in 1980. Under current law, property acquired by NJT in 1980 in 20 municipalities are not subject to property taxes; therefore, NJT pays the municipalities in which these properties are located a payment in-lieu-of-taxes to defray the costs of the municipal services provided. Current law requires these payments to be based on the 1981 taxable value of the properties and the 1981 general tax rate of the municipalities in which they are located.

      This bill requires a municipal tax assessor to include with the annual assessment list filed with the county board of taxation each year a description of any NJT property located in the municipality. The county board of taxation then would estimate the sum of money the municipality would have derived during the year as tax revenue for local purposes for such property if the property were not exempt from taxation. NJT would pay annually that amount to the municipality, in two equal installments, on May 1 and November 1.

      The total annual payment to municipalities for these properties is currently approximately $850,000; the bill would increase the total annual payment to approximately $2.3 million. The additional amount would bring NJT's payments to these local communities in line with the latest assessments and tax rates within the municipalities.

      The committee released the bill with the understanding that the sponsor and NJT would meet shortly after the date of this statement to discuss this bill and, possibly, negotiate changes that would phase-in the increased in-lieu-of-tax payments required by this bill. The sponsor indicated that he would not request the posting of the bill for a floor vote until after discussions with NJT.

COMMITTEE AMENDMENTS

      The committee amended the bill to require NJT to adjust in-lieu-of-tax payments for all 20 municipalities in which certain NJT is located, rather than for just for the one municipality with the NJT property that met the criteria set forth in the original version of the bill.

FISCAL IMPACT

      The New Jersey Transit Corporation estimates that this bill will require NJT to pay an additional $1.45 million to 20 municipalities in which NJT acquired property in 1980. Current payments are approximately $850,000 annually; this bill would increase the payments to approximately $2.3 million annually.