LEGISLATIVE FISCAL ESTIMATE
[Second Reprint]
ASSEMBLY, No. 4044
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: MARCH 21, 2024
SUMMARY
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Synopsis: |
Provides counties discretion related to retirement of county debt service and amount that can be raised under property tax levy cap. |
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Type of Impact: |
Potential County Revenue and Expenditure Increases. |
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Agencies Affected: |
Counties. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
Annually |
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Potential County Revenue Increase |
Varies by County |
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Potential County Expenditure Increase |
Varies by County |
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· The Office of Legislative Services (OLS) concludes that the bill will result in increased property tax levy authority for certain counties in any year in which county debt service obligations are decreased over the prior year, which could result in increased property tax revenues and, therefore, expenditures for those counties.
BILL DESCRIPTION
The bill amends the 1977 local budget cap law,
P.L.1976, c.68 to stipulate that, under the county property tax levy cap, the
retirement of debt by a county would not result in a decrease in the amount
that could be raised through property taxes in a local budget year. Debt
service is an exception to the 2.5 percent property tax levy cap. Under
current law, upon retiring debts, a county loses taxing authority that was
previously available for debt service. The bill would make those amounts and
additional amounts available for other uses by raising the maximum permissible
county tax levy by the amount of the difference in debt service appropriations
over the prior year and allowing a county to add to its adjusted tax levy the
greater of banked property taxing authority under 1977 local budget cap law and
2010 local budget cap law.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes that the bill will result in increased property tax levy authority for certain counties in any year in which county debt service obligations are decreased over the prior year, which could result in increased property tax revenues and, therefore, expenditures for those counties.
The bill provides that, instead of losing the amount of the difference in debt service obligations over the prior year in taxing authority, as would occur under current law, the amount of the difference in debt service obligations over the prior year would be available for other uses. This provision of the bill would apply only in years and only to counties in which debt service obligations are decreased over the prior year. If this provision was applied in Calendar Year (CY) 2023, the following counties would have had increased property tax levy authority over their CY 2022 permissible property tax levy: Atlantic County, Burlington County, Gloucester County, Middlesex County, Passaic County, and Warren County. The table below displays how this provision would have applied to each of the affected counties in CY 2023.
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County |
Increase in Permissible 2023 County Property Tax Levy due to Difference in Debt Service Obligations Over CY 2022 |
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Atlantic |
$1,560,430 |
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Burlington |
$2,871,621 |
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Gloucester |
$2,867,876 |
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Middlesex |
$1,885,111 |
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Passaic |
$1,336,136 |
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Warren |
$234,000 |
The bill would also allow a county to apply the greater of the two local budget cap laws’ banked levy authority. The table on the following page shows the amount of unused banked levy authority under each of the local budget cap laws for each county that would have been available CY 2023 as reported by county budget documents.
The OLS is unable to predict the specific impact of
this legislation on each county in CY 2024 and beyond, as the bill’s potential
impacts are based upon each county’s change in debt service obligation, and the
differences between the maximum allowable amount to be raised by taxation and
the actual amount to be raised by taxation in a given year. The OLS also notes
that unused banked levy authority may be carried forward for two years under
the 1977 local budget cap law and for three years under the 2010 local budget
cap law. Unused amounts would expire after those respective time periods.
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County |
Unused Banked Levy Authority Available in CY 2023 under 1977 Law |
Unused Banked Levy Authority Available in CY 2023 under 2010 Law |
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Atlantic* |
$1,018,689 |
$0 |
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Bergen |
$22,868,596 |
$0 |
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Burlington* |
$4,721,755 |
$0 |
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Camden |
$25,485,643 |
$0 |
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Cape May |
$2,054,995 |
$0 |
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Cumberland |
$2,356,659 |
$2,240,792 |
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Essex |
$6,866,830 |
$22,239,527 |
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Gloucester* |
$6,755,971 |
$1,175,125 |
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Hudson |
$26,512,523 |
$0 |
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Hunterdon |
$10,421,075 |
$0 |
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Mercer |
$24,110,276 |
$0 |
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Middlesex* |
$3,567,987 |
$4,581,970 |
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Monmouth |
$25,820,744 |
$0 |
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Morris |
$3,201,527 |
$0 |
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Ocean |
$5,671,428 |
$0 |
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Passaic* |
$17,725,054 |
$9,797,568 |
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Salem |
$87,377 |
$0 |
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Somerset |
$3,070,404 |
$0 |
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Sussex |
$3,089,711 |
$0 |
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Union |
$5,869,369 |
$17,118,383 |
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Warren* |
$5,246,567 |
$0 |
*Counties that would have benefitted in CY 2023 from the potential increase under the bill.
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Section: |
Local Government |
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Analyst: |
Associate Fiscal Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
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 (C.52:13B-6 et seq.).