LEGISLATIVE FISCAL ESTIMATE TO

SENATE COMMITTEE SUBSTITUTE FOR

SENATE CONCURRENT RESOLUTION Nos. 41 and 60

STATE OF NEW JERSEY

DATED: JUNE 20, 1996

      Senate Committee Substitute for Senate Concurrent Resolution Nos.41 and 60 of 1996 amends the State Constitution to dedicate an amount equal to four percent of the annual revenues from the Corporation Business Tax (CBT) for certain costs involved with hazardous discharge remediations, underground storage tank improvements, and surface water quality projects. One-sixth of the dedicated amount, or $5,000,000, whichever is less, is dedicated to financing the cost of water quality point and nonpoint source pollution monitoring, watershed based water resource planning and management, and nonpoint source pollution prevention projects. One-third of the dedicated amount is dedicated for the provision of loans or grants for the upgrade, replacement, or closure of underground storage tanks that store or were used to store hazardous substances. This one-third dedication expires on December 31, 2008, after which this portion of the dedication may be used for any of the purposes of the Constitutional amendment. Lastly, one-half of the dedicated amount is dedicated for financing costs incurred by the State for the remediation of discharges of hazardous substances. Administrative costs for this remediation are limited to nine percent of the total Constitutional dedication.

FISCAL IMPACT:

      The Department of the Treasury and the Office of Management and Budget have not provided a fiscal estimate of the cost of this concurrent resolution. The Office of Legislative Services (OLS) estimates that, upon approval by the voters of the State of New Jersey, Senate Committee Substitute for Senate Concurrent Resolution Nos.41 and 60 will dedicate approximately $48 million of previously unrestricted General Fund revenue in Fiscal Year 1997. The dedication could range from $38 million to $53 million annually depending on actual CBT collections.

      It is possible that a portion of the dedicated amounts for surface water quality projects and hazardous discharge remediation could replace General Fund money that is currently appropriated for these purposes. However, the dedication for underground storage tank improvements would largely result in additional costs to the State above current expenditure levels.

ASSUMPTIONS:

      It appears the dedication would apply to both the regular CBT and the smaller CBT Banks and Financials tax. According to public testimony by the Treasurer before the Senate Budget and Appropriations Committee and the Assembly Appropriations Committee on May 22, 1996, the CBT and the CBT Banks and Financials tax will collect $1,200 million combined in FY 1997. Based on this estimate, the four percent dedication would yield approximately $48 million in Fiscal Year 1997. This revenue source tends to be relatively volatile from year to year, changing with corporate profits. In the last 10 fiscal years, CBT collections have ranged between $911 million to $1,230 million and CBT Banks and Financials tax collections between $44 million to $94 million. Based on this range, the four percent dedication could yield between $38 million and $53 million in future years.

      The 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.