SENATE URBAN POLICY AND PLANNING COMMITTEE

STATEMENT TO

SENATE, No. 467

STATE OF NEW JERSEY

DATED: MARCH 14, 1996

      The Senate Urban Policy and Planning Committee reports favorably Senate Bill No. 467.

      Senate Bill 467 extends to December 31, 1999 the expiration date of the local payroll tax authorized by the "Local Tax Authorization Act," P.L.1970, c.326 (C.40:48C-1 et seq.) and limits its further imposition to those municipalities which have within two years prior to July 1, 1995, the beginning of the current State fiscal year, collected payroll taxes or enacted an ordinance imposing a payroll tax. The bill would preserve Newark's, but remove Jersey City's, power to impose the payroll tax.

      The "Local Tax Authorization Act" permits any municipality with a population in excess of 200,000 to adopt an ordinance imposing a liquor tax, a payroll tax, and a parking tax. The original law authorizing these taxes in 1970 set forth separate expiration dates for each tax. The parking tax has been extended to December 31, 1999, under P.L.1991, c.288, and the payroll tax and liquor tax were extended to January 1, 1996 under P.L.1994, c.28.

      Under section 15 of P.L.1970, c.326 (C.40:48C-15), any authorized municipality may by ordinance impose and collect an employer payroll tax at a rate of one percent for general municipal purposes. "Employer" is defined as any of a number of specified entities with a payroll in excess of $2,500 in any calendar quarter, with certain enumerated exceptions, which include public employers.

      Jersey City and Newark are the only municipalities in the State with populations which exceed 200,000. Jersey City has a parking tax in effect, but not a liquor tax. Jersey City did adopt an ordinance on December 7, 1995 imposing a payroll tax. Newark has imposed a parking and payroll tax.