SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 849

STATE OF NEW JERSEY

DATED: MARCH 7, 1996

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 849 of 1996.

      Senate Bill No. 849 provides that if the Director of the Division of Taxation makes a deduction from, or addition to, a municipality's apportionment of the public utility gross receipts and franchise taxes due to an error or omission concerning information provided to the director, the adjustment must be made in ten equal installments over ten consecutive years if the amount of the addition or deduction is equal to or in excess of 50% of the apportioned taxes received by the municipality in the year immediately prior to the year in which the addition or deduction is taken.

      The primary purpose of this bill is to avoid the imposition of a significant financial hardship upon a municipality that will suffer a loss in public utility gross receipts and franchise taxes due to erroneous overpayments in prior years. Such municipalities may have no option but to resort to increases in property taxes to make up the unexpected loss in revenues. This bill provides a procedure for the correction of errors or omissions in the apportionment of public utility taxes.

      This bill was introduced by the sponsor in response to a significant estimated reduction in the apportionment of gross receipts and franchise taxes for Allendale Borough in Bergen County for calendar year 1996 from the calendar year 1995 amount. Along with Allendale Borough, twenty-six other municipalities in Bergen, Passaic and Sussex counties will experience reductions or additions due to errors in apportionments relating to a public utility serving those communities.

FISCAL IMPACT

      This bill will not have an impact on State revenues or expenditures.