LEGISLATIVE FISCAL ESTIMATE TO

[First Reprint]

SENATE, No. 1303

STATE OF NEW JERSEY

DATED: AUGUST 1, 1996

      Senate Bill No. 1303 (1R) would establish the State Municipal Property Tax Lien Fund in the Department of Commerce and Economic Development to purchase or take assignment of municipal tax liens. The fund as a non-lapsing, revolving fund would be credited with all proceeds from the sale or assignment of municipal tax liens pursuant to this bill. Municipalities would be able to convert their municipally held tax sale certificates into cash by selling the certificates individually or in bulk to the fund.

      The Economic Development Authority (EDA) would be authorized to administer the fund, and be empowered to service liens, manage properties, foreclose liens, sell liens individually or in bulk, and own property for the benefit of the fund. The authority would also be authorized to contract with private vendors to service these liens and manage these properties. The Department of Commerce and Economic Development is authorized to pay or reimburse the EDA for all services rendered by the authority under the terms of this bill out of moneys held in the fund for the purchase of municipally held property tax liens.

      The amendments to the bill also make clear that the monies are to be used for subsequent tax payments, not loans, to a municipality secured by property tax liens held by the fund. Finally, the amendments to the bill added one additional use for these monies, namely, to secure debt for redevelopment projects or economic development projects located in a municipality participating in the fund.

  The Office of Legislative Services (OLS) states that this bill requires no additional State funds because the Department of Commerce and Economic Development can both absorb the additional responsibilities imposed under this bill in house with its current staff and is authorized to pay or reimburse the EDA for all services rendered by the authority under the terms of this bill out of moneys held in the fund.

      The OLS also states that since this bill merely permits municipalities to convert their municipally held tax sale certificates into cash by selling them to the fund, and since this bill would represent the first time all municipal governments would have the authority to make such sales of certificates, no data are available on a Statewide basis from which to assess the financial impact on municipal governments of this bill. However, OLS notes that the Department of Community Affairs in its Fifty-Fourth Annual Report of the Statements of Financial Condition of Counties and Municipalities reports that in 1991, the most recent year for which data have been compiled, municipal governments in New Jersey held $213.2 million of tax title liens as a municipal asset. This $213.2 million represents the upper limit on moneys the fund could be asked to expend in converting municipally held tax sale certificates into cash.

      This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

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