SCR18

A Concurrent Resolution proposing to amend Article VIII, Section I, paragraph 7 and Article VIII, Section II of the Constitution of the State of New Jersey.

Be It Resolved by the Senate of the State of New Jersey (the General Assembly concurring):

1. The following proposed amendment to the Constitution of the State of New Jersey is hereby agreed to:

7. a. No tax shall be levied on personal incomes of individuals, estates and trusts of this State unless the entire net receipts therefrom shall be received into the treasury, [placed] deposited in a perpetual fund and be annually appropriated, pursuant to formulas established from time to time by the Legislature, to the several counties, municipalities and school districts of this State exclusively for the purpose of reducing or offsetting property taxes. In no event, however, shall a tax so levied on personal incomes be levied on payments received under the federal Social Security Act, the federal Railroad Retirement Act, or any federal law which substantially reenacts the provisions of either of those laws.

b. There shall be credited annually to a special restricted reserve account in the perpetual fund, on or before the last day of the sixth month of the State fiscal year, and in addition to any sums appropriated to the special restricted reserve account, an amount equal to 50% of the difference, if any, between the amount of revenue actually deposited in the perpetual fund of the fiscal year immediately preceding the fiscal year in which a credit is to be made and the amount of anticipated revenue for the perpetual fund certified by the Governor upon approval of the annual appropriation act for the fiscal year immediately preceding the fiscal year in which a credit is required.

If in any fiscal year preceding the fiscal year in which a credit is required, there is a law enacted which will increase the revenue to the perpetual fund, the yield from that increase for that preceding fiscal year in which the increase is in effect shall be disregarded in determining the amount to be credited to the special restricted reserve account.

c. The Governor shall include in the annual budget message to the Legislature an estimate of the credit to be made to the special restricted reserve account as a reduction of the estimated undesignated fund balance in the perpetual fund as of July 1 of the fiscal year for which the Governor is making the budget recommendations. The amount estimated by the Governor for this purpose shall not be less than 50% of the difference between the amount of revenue for the perpetual fund certified by the Governor upon approval of the annual appropriation act for the fiscal year immediately preceding the fiscal year for which the budget recommendations are being made and the amount of revenue anticipated for the perpetual fund for that preceding fiscal year as reflected in the annual budget message for that preceding fiscal year. The Governor shall provide a report of the status of the special restricted reserve account to the Legislature periodically, but not less often than annually in the annual budget message to the Legislature.

d. Balances in the special restricted reserve account shall not be available for appropriation except as provided in this paragraph. Balances in the special restricted reserve account may be appropriated by the Legislature only: (1) upon separate certification by the Governor that anticipated revenues in the perpetual fund are estimated to be less than those certified by the Governor upon approval of the annual appropriation act; or (2) upon a finding by the Legislature, based on its research, that to offset revenue declines anticipated in the perpetual fund an appropriation from the special restricted reserve account is a more prudent fiscal policy than imposing new taxes or increasing any rate of tax or otherwise modifying the tax structure, including elimination or modification of deductions, exclusions or exemptions.

e. If in any fiscal year there is enacted an appropriation from the special restricted reserve account pursuant to subparagraph d. of this paragraph, there shall not be enacted any imposition of new taxes or increases in existing tax rates or tax structure modifications having the effect of increasing revenues of the perpetual fund; provided however, that there may be such a tax enactment in any such fiscal year if there is a decline in revenue collections in the perpetual fund that is greater than 2% of the total available resources in the perpetual fund as certified by the Governor upon approval of the annual appropriation act for the fiscal year in which that revenue decline is anticipated and if the appropriation is found to be in the best interest of the fiscal condition of the perpetual fund.

f. Notwithstanding the restrictions on the appropriation of the balances in the special restricted reserve account imposed by subparagraph d. of this paragraph, if balances in the account exceed an amount equivalent to 2.5% of the amount certified by the Governor as total anticipated revenues in the perpetual fund upon approval of the annual appropriation act, the Governor shall send written notice of the amount of that excess to the Legislature. The excess amount as identified in the notice from the Governor shall be available for appropriation by the Legislature in accordance with subparagraph a. of this paragraph.

g. The amendments set forth in subparagraphs b. through g. of this paragraph shall apply to the fiscal year beginning on July 1 next following its approval by the people pursuant to Article IX, paragraph 1 of the Constitution, and each fiscal year thereafter.

5. a. There shall be credited annually to a restricted reserve fund created in the general fund of the State government to be known as the Surplus General Revenue Fund, on or before the last day of the sixth month of the State fiscal year, and in addition to any sums appropriated to the Surplus General Revenue Fund, an amount equal to 50% of the difference, if any, between the amount of revenue actually deposited in the general fund in the fiscal year immediately preceding the fiscal year in which a credit is to be made and the amount of anticipated revenue for the general fund certified by the Governor upon approval of the annual appropriation act for the fiscal year immediately preceding the fiscal year in which a credit is required.

"Anticipated revenue" means the amount of revenue certified by the Governor as estimated to be realized in a fiscal year as general fund resources to support appropriations made, including taxes, license fees, other miscellaneous departmental revenue, and revenue transfers to the general fund from other funds in the State Treasury, but excluding any funds that are not certified as available to support appropriations, and excluding any fund balances, whether designated, undesignated or reserved.

If in any fiscal year preceding the fiscal year in which a credit is required there is a law enacted which will increase the revenue to the general fund, the yield from that increase for that preceding fiscal year in which the increase is in effect shall be disregarded in determining the amount to be credited to the Surplus General Revenue Fund.

b. The Governor shall include in the annual budget message to the Legislature an estimate of the credit to be made to the Surplus General Revenue Fund as a reduction of the estimated undesignated fund balance in the general fund as of July 1 of the fiscal year for which the Governor is making the budget recommendations. The amount estimated by the Governor for this purpose shall not be less than 50% of the difference between the amount of anticipated revenue for the general fund certified by the Governor upon approval of the annual appropriation act for the fiscal year immediately preceding the fiscal year for which the budget recommendations are being made and the amount of revenue anticipated for the general fund for that preceding fiscal year as reflected in the annual budget message for that preceding fiscal year. The Governor shall provide a report of the status of the Surplus General Revenue Fund to the Legislature periodically, but not less often than annually in the annual budget message to the Legislature.

c. Balances in the Surplus General Revenue Fund shall not be available for appropriation except as provided in this paragraph. Balances in the Surplus General Revenue Fund may be appropriated by the Legislature only: (1) upon separate certification by the Governor that anticipated revenues in the general fund are estimated to be less than those certified by the Governor upon approval of the annual appropriation act; or (2) upon a finding by the Legislature, based on its research, that to offset revenue declines anticipated in the general fund an appropriation from the Surplus General Revenue Fund is a more prudent fiscal policy than imposing new taxes or increasing any rate of tax or otherwise modifying the tax structure, including elimination or modification of deductions, exclusions or exemptions.

d. The provisions of this paragraph shall not be construed to render balances in the Surplus General Revenue Fund unavailable for meeting the costs of any emergency identified by the Governor. Balances in the Surplus General Revenue Fund are available for that purpose, provided however, that the Governor shall notify the Legislature of the Governor's determination that balances in the fund are required to meet an emergency, describing the nature of the emergency and the intended use of the funds in meeting the emergency. After notification of the Legislature, such expenditures shall be deemed approved by the Legislature and appropriated for such emergency use, if the Legislature does not disapprove such use within 10 days of receipt of the Governor's notification through the passage of a concurrent resolution rejecting the proposed emergency use. The termination of a second annual session of the Legislature pursuant to paragraph 3 of Article IV of this Constitution shall not preclude the next commencing Legislature during that 10 day period from disapproving of such emergency use. As used in this subparagraph, "emergency" means any condition or occurrence which requires an immediate response in the protection of the life, safety or well-being of the citizens of this State, or any of them, or in the protection or restoration of property, public or private, endangered, damaged, or destroyed as a result, actual or potential, of such condition or occurrence.

e. If in any fiscal year there is enacted an appropriation from the Surplus General Revenue Fund pursuant to subparagraph c. of this paragraph, there shall not be enacted any imposition of new taxes or increases in existing tax rates or tax structure modifications having the effect of increasing revenues of the general fund; provided however, that there may be such a tax enactment in any such fiscal year if there is a decline in revenue collections in the general fund that is greater than 2% of the total available resources in the general fund as certified by the Governor upon approval of the annual appropriation act for the fiscal year in which that revenue decline is anticipated and if the appropriation is found to be in the best interest of the fiscal condition of the general fund.

f. Notwithstanding the restrictions on the appropriation of the balances in the special restricted reserve account Surplus General Revenue Fund imposed by subparagraph c. of this paragraph, if balances in the Surplus General Revenue Fund exceed an amount equivalent to 2.5% of the amount certified by the Governor as total anticipated revenues in the general fund upon approval of the annual appropriation act, the Governor shall send written notice of the amount of that excess to the Legislature. The excess amount as identified in the notice from the Governor shall be available for appropriation by the Legislature only for any one or more of the following purposes: to provide a reserve fund for retirement, purchase or discharge of outstanding general obligation bonds of the State, to provide appropriations for capital projects, and to provide appropriations to reduce or offset real property taxes; provided however, that excess amount available for appropriation pursuant to this subparagraph shall not exceed an amount equal to 1% of the amount certified by the Governor as total anticipated revenues in the general fund and the perpetual fund established pursuant to Article VIII, Section I, paragraph 7 of this Constitution upon approval of the annual appropriation act. The balances in the Surplus General Revenue Fund that exceed this 1% excess balance limitation shall be included in the undesignated balance in the general fund and shall be available for appropriation without the limitations imposed by this paragraph.

g. This paragraph shall apply to the fiscal year beginning on July 1 next following its approval by the people pursuant to Article IX, paragraph 1 of the Constitution, and each fiscal year thereafter.

2. When this proposed amendment to the Constitution is finally agreed to pursuant to Article IX, paragraph 1 of the Constitution, it shall be submitted to the people at the next general election occurring more than three months after the final agreement and shall ne published at least once in at least one newspaper of each county designated by the President of the Senate, the Speaker of the General Assembly and the Secretary of State, not less than three months prior to the general election.

3. This proposed amendment to the Constitution shall be submitted to the people at that election in the following manner and form:

There shall be printed on each official ballot to be used at the general election, the following:

a. In every municipality in which voting machines are not used, a legend which shall immediately precede the question, as follows:

If you favor the proposition printed below make a cross (X), plus (+) or check (•) in the square opposite the word ‘Yes’. If you are opposed thereto make a cross (X), plus (+) or check (•) in the square opposite the word ‘No’

		SURPLUS REVENUE RESERVE FUNDS
	YES	Shall the amendment to Article VIII, Section I, paragraph 7 and Article VIII, Section II, of the Constitution of the State of New Jersey, creating two separate reserve funds in the State's Treasury, one in the general revenue fund and one in the gross income tax fund, with the general revenue reserve fund to be credited annually with an amount based upon one-half of any unanticipated general State revenue collections realized in the preceding fiscal year, and the gross income tax reserve fund to be credited annually with an amount based upon one-half of any unanticipated gross income tax revenue collections realized in the preceding fiscal year, which separate reserve fund balances shall be both subject to certain appropriation restrictions concerning the fiscal conditions under which they may be spent, the procedures under which the spending may be enacted, and the purposes for which they may be spent, be approved?
		INTERPRETIVE STATEMENT
	NO	This amendment to the Constitution would create two reserve funds in the State Treasury to set aside one-half of taxes collected in excess of expected collections. The funds may be used in future years when State tax collections are lower than expected. The reserve funds may be used instead of raising taxes. Tax increases could still be enacted but these reserve funds would be available to avoid tax increases. In a year when reserve fund money is used, no tax increases may be enacted for that year, unless tax collections are in serious decline, exceeding 2% of total State resources. If the reserve funds grow large, balances can be used to reduce the State bond debt, build capital projects, or reduce or offset real property taxes.

This concurrent resolution proposes to amend the New Jersey Constitution to create two surplus revenue reserve funds, one in the State Treasury's general fund, in which most of the State's general tax revenue is deposited and one in the Property Tax Relief Fund in which the personal gross income tax revenue is deposited. Each fund would be separately credited annually with surplus state revenue collections realized from the respective fund's taxes. The annual credit amounts would be based upon one-half of any unanticipated general State revenue collections and one-half of any unanticipated gross income tax revenue collections realized in the preceding fiscal year. In this manner, one-half of all unanticipated State revenue growth during one fiscal year would be set aside as fiscal safety nets for future State fiscal years.

The funds may be used in future years when State tax collections are lower than expected. The reserve funds may be used instead of raising taxes. Tax increases could still be enacted, but these reserve funds would be available to avoid tax increases. In a year when reserve fund money is used, no tax increases may be enacted for that year, unless tax collections are in serious decline, exceeding 2% of total State resources. If the reserve funds grow large, balances can be used to reduce State bond debt, build capital projects, or reduce or offset real property taxes.

These revenue reserve funds are modeled upon the State's statutory "Surplus Revenue Fund" that exists only for general fund revenues. The Constitutional amendment would provide for a Constitutionally established fund that would supercede that statutory fund and would also establish a reserve fund in the Property Tax Relief Fund from any unanticipated, excess, gross income tax collections.

Amends State Constitution to create surplus revenue funds in the State general fund and the Property Tax Relief Fund.