FISCAL NOTE TO

SENATE, No. 1185

STATE OF NEW JERSEY

DATED: JANUARY 23, 1997

      Senate Bill No. 1185 of 1996 allows a municipality with a population of more than 84,000 and fewer than 87,500 in a county of the second class with a population of more than 470,000 and fewer than 503,000 (according to the latest federal decennial census) and having an entertainment facility with at least 5,000 fixed seats which began operation on or after January 1, 1994 to establish by ordinance a Municipal Development Financing District. One-half of the sales tax collected by the State within the district derived from retail sales with certain exceptions would be returned to the municipality by the State Treasurer to be used for municipal operating purposes. The remaining half of the sales tax collected would be placed in an account designated for the municipality by the State Treasurer, to be used subsequently by the municipality to fund capital projects. These projects are broadly defined as any capital project or other public improvement which furthers the municipality's economic revitalization goals.

      The population restrictions of the bill have the effect of restricting the bill's application to the City of Camden.

      The Division of Taxation in the Department of Treasury stated that there will be an indeterminable and continuing loss of sales tax revenue to the General Fund. The loss in revenue will depend upon the amount of State sales tax revenues diverted to Camden, which will depend on the dimensions and composition of the district established. The Office of Legislative Services (OLS) concurs with the Division of Taxation in being unable to estimate the full amount of sales tax revenue to be redirected to Camden under the bill. However, the OLS notes that the Pavilion Partners, a joint-venture group involved in the development of the district in Camden, has previously estimated that Camden will obtain $1,350,000 in redirected sales tax revenues from the first full year of operation of the arts center complex that opened in May, 1995, which is intended to be the centerpiece of the Municipal Development Financing District in Camden. The OLS had no access to the data used by Pavilion Partners and cannot verify these projections.

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