SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 1525

STATE OF NEW JERSEY

DATED: MARCH 10, 1997

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 1525 (1R) of 1996.

      Senate Bill No. 1525 (1R) amends the "Spill Compensation and Control Act," to change the way the tax imposed upon certain owners or operators of major facilities is calculated.

      The act currently imposes a tax on facilities that produce, refine, store, handle transfer or transport hazardous substances, to ensure compensation for cleanup costs and damages due to the discharge of petroleum products and other hazardous substances. The tax is capped for a taxpayer that paid the tax in 1986 at 125% of the tax due for the 1986 calender year plus $0.0025 per barrel of hazardous substance transferred.

      This bill would change that calculation for certain taxpayers for taxes due after January 1, 1996. In computing 125% of taxes due and payable by the taxpayer during the 1986 tax year, a taxpayer will include in the 1986 base only taxes arising out of the operations of major facilities that caused the taxpayer to incur a tax liability in 1986 and continue to cause the taxpayer to incur a liability during the current year.

      Also, the bill changes the tax rate for any transfer of a hazardous substance that is, or contains, elemental phosphorus from the greater of $0.015 per barrel or 1% of fair market value plus $0.0025 per barrel to a flat $0.015 per barrel. In computing taxes for the 1986 tax year for purposes of determining the 125% of 1986 liability cap amount, the 1986 taxes for any transfer that is, or contains, elemental phosphorus will be recalculated at a rate of $0.015 per barrel.

      As reported, this bill is identical to Assembly Bill No. 1668 (1R) of 1996 (Kavanaugh/Corodemus).

FISCAL IMPACT

      In a legislative fiscal estimate prepared by the Office of Legislative Services (OLS), the OLS states that it cannot calculate the fiscal impact of this bill on corporate taxpayers or on the level of tax revenues collected by the New Jersey Spill Compensation Fund due to the unavailability of tax, facility and hazardous substance records dating back to 1986. It can be assumed, however, that the bill would result in lower tax revenues collected by the "spill fund" which, in turn, may further limit its ability to support various programmatic and claims activities.

      The "spill fund" balance at the end of Fiscal Year 1996 was $25.5 million. In Fiscal Year 1996, the fund collected $15.4 million in taxes, plus an additional $18.3 million in license and other fees. Fund expenditures totaled $37.5 million in FY 1996. The fund's balance at the end of FY 1997 is estimated at $26.6 million.