SENATE, No. 1728

 

STATE OF NEW JERSEY

 

INTRODUCED DECEMBER 16, 1996

 

 

By Senator BENNETT

 

 

An Act eliminating a restriction on gross receipts and franchise tax distributions to municipalities with low municipal purpose tax rates, amending P.L.1980, c.10 and P.L.1980, c.11.

 

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

    1.    Section 2 of P.L.1980, c.10 (C.54:30A-24.1) is amended to read as follows:

    2. The director shall annually apportion to each municipality the amount to be apportioned to it pursuant to section 9 of P.L.1940, c.4 (C.54:30A-24), sections 12 and 13 of P.L.1940, c.5 (C.54:30A-60 and 54:30A-61), and section 19 of P.L.1991, c.184 (C.54:30A-61.2), except that[: a. no municipality which in the three next preceding tax years had a municipal purposes tax rate of $0.10 or less shall receive a total amount pursuant to those sections greater than it received in 1979, plus 50% of the difference between the amount it received pursuant to those sections in that year and the greater amount it would have received pursuant to those sections in the year for which the apportionment and payment is made; and, b.] in no year shall any municipality receive an amount pursuant to those sections greater than an amount equal to $700 per capita. [Any contiguous municipalities wherein there are located electric generating stations included in the scheduled property of a public utility, both or all of which municipalities would be affected by a. above but would not be limited by b. above, shall not be affected by the apportionment limitations of this section. Any municipality which has had a municipal purposes tax rate of $0.10 or less for any three tax years affecting its apportionment pursuant to this section shall be required to have a municipal purposes tax rate in excess of $0.10 for three consecutive tax years before its apportionment shall cease to be affected pursuant to this section.]

    If in 1980 or any year thereafter, the application of the $700.00 per capita limitation under this section would reduce the amount received any municipality pursuant to those sections to less than 50% of the amount received pursuant to those sections in 1979, then, not withstanding that limitation, the municipality shall receive in 1980 an amount equal to 50% of the amount received in 1979, and in any year thereafter an amount equal to 75% of the amount received in 1979; but in 1981 and each year thereafter such municipality shall annually appropriate and pay to the county in which it is located an amount equal to 35% of the amount received in that year, to be used for county purposes.

    For the purposes of this section in determining per capita amounts the most recent population estimates published by the New Jersey Department of Labor shall be utilized.

    Amounts apportioned in each year to each municipality shall be annually paid to them by the State Treasurer, 25% thereof on July 5 next following the date of certification of the apportionment by the direct 40% thereof on or before September 1, and 35% thereof on or before December 1 next thereafter. Any portion of the balance set forth in section 9 of P.L.1940, c.4 (C.54:30A-24), sections 12 and 13 of P.L.1940 c.5 (C.54:30A-60 and 54:30A-61), and section 19 of P.L.1991, c.184 (C.54:30A-61.2) remaining after the apportionments and payments are determined pursuant to this section shall be deposited in the "Municipal Purposes Tax Assistance Fund," established pursuant to P.L.1980, c.12 (C.54:1-46 et seq.), to be used exclusively for the purpose of that fund.

    Notwithstanding the provisions of the "Local Budget Law" (N.J.S.40A:4-1 et seq.), any county, or municipality affected by the $700.00 limitation set forth in this section, to which a payment is made pursuant to this section may anticipate the amount of such payment in its annual budget for the year in which such payment is made, and any municipality which is required to make an annual appropriation pursuant to this section shall make such appropriation in its annual budget for the year in which it shall receive the payment a portion of which it is required to appropriate. The Director of Local Government Services shall establish rules or regulations necessary to effectuate the purposes and provisions of this section.

(cf: P.L.1991, c.184, s.21)

 

    2. Section 4 of P.L.1980, c.11 (C.54:30A-61.1) is amended to read as follows:

    4. The director shall annually apportion to each municipality the amount to be apportioned to it pursuant to sections 12 and 13 of P.L.1940, c.5 (C.54:30A-60 and 54:30A-61), section 9 of P.L.1940, c.4 (C.54:30A-24) and section 19 of P.L.1991, c.184 (C.54:30A-61.2), except that[: a. no municipality which in the three next preceding tax years had a municipal purposes tax rate of $0.10 or less shall receive a total amount pursuant to those sections greater than it received in 1979, plus 50% of the difference between the amount it received pursuant to those sections in that year and the greater amount it would have received pursuant to those sections in the year for which the apportionment and payment is made; and, b.] in no year shall any municipality receive an amount pursuant to those sections greater than an amount equal to $700.00 per capita. [Any contiguous municipalities wherein there are located electric generating stations included in the scheduled property of a public utility, both or all of which municipalities would be affected by a. above but would not be limited by b. above, shall not be affected by the apportionment limitations of this section. Any municipality which has had a municipal purposes tax rate of $0.10 or less for any three tax years affecting its apportionment pursuant to this section shall be required to have a municipal purposes tax rate in excess of $0.10 for three consecutive tax years before its apportionment shall cease to be affected pursuant to this section.]

    If in 1980 or any year thereafter the application of the $700.00 per capita limitation under this section would reduce the amount received by any municipality pursuant to those sections to less than 50% of the amount received pursuant to those sections in 1979, then, notwithstanding that limitation, the municipality shall receive in 1980 an amount equal to 50% of the amount received in 1979, and in any year thereafter such municipality shall annually appropriate and pay to the county in which it is located an amount equal to 35% of the amount received in that year, to be used for county purposes.

    For the purposes of this section in determining per capita amounts, the most recent population estimates published by the New Jersey Department of Labor shall be utilized.

    Amounts apportioned in each year to each municipality shall be annually paid to them by the State Treasurer, 25% thereof on July 5 next following the date of certification of the apportionment by the director; 40% thereof on or before September 1, and 35% thereof on or before December 1 next thereafter. Any portion of the balance set forth in sections 12 and 13 of P.L.1940, c.5 (C.54:30A-60 and 54:30A-61), section 9 of P.L.1940, c.4 (C.54:30A-24) and section 19 of P.L.1991, c.184 (C.54:30A-61.2) remaining after the apportionments and payments are determined pursuant to this section shall be deposited in the "Municipal Purposes Tax Assistance Fund," established pursuant to P.L.1980, c.12 (C.54:1-46 et seq.), to be used exclusively for the purposes of that fund.

    Notwithstanding the provisions of the "Local Budget Law" (N.J.S.40A:4-1 et seq.), any county, or municipality affected by the $700.00 limitation set forth in this section, to which a payment is made pursuant to this section may anticipate the amount of such payment in its annual budget for the year in which such payment is made, and any municipality which is required to make an annual appropriation pursuant to this section shall make such appropriation in its annual budget for the year in which it shall receive the payment a portion of which it is required to appropriate. The Director of Local Government Services shall establish rules or regulations necessary to effectuate the purposes and provisions of this section.

(cf: P.L.1991, c.184, s.20)

 

    3. This act shall take effect immediately.

 

 

STATEMENT

 

    This legislation repeals the restriction on gross receipts and franchise tax distributions to municipalities with low municipal purpose tax rates. Under current law, this restriction requires that municipalities with a municipal purposes tax rate of $0.1 or less receive a reduced level of gross receipts and francise tax aid than they would have received had their municipal purpose tax rates exceeded $0.1. This restriction punishes municipalities that practice fiscal restraint and may tempt them to artificially inflate their tax rates to avoid the restriction.

 

 

                            

Eliminates restriction on gross receipts and franchise tax distribution to municipalities with low municipal purpose tax rates.