LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
ASSEMBLY, No. 5688
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JULY 3, 2025
SUMMARY
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Synopsis: |
Imposes surcharge on hotel occupancies in certain municipalities to fund fire services; provides for appropriation. |
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Type of Impact: |
Increase in municipal revenues |
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Agencies Affected: |
Department of the Treasury; City of Newark. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
CY 2025 |
CY 2026 |
CY 2027 |
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Local Revenue |
$960,000 to $1.1 million |
$2.9 million to $3.4 million |
$2.9 million to $3.4 million |
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· The Office of Legislative Services (OLS) estimates that the bill will result in an increase in municipal revenues for the City of Newark. The amount of revenues to be realized in each calendar year was calculated using information on the number of hotel rooms in the City of Newark and the projected hotel occupancy rates.
· The bill requires the City of Newark to use the hotel surcharge revenues to fund firefighting services. However, these are available only if municipal appropriations for firefighting services increase from year-to-year. The surcharge revenues are intended to supplement, rather than replace, appropriations for firefighting services that are supported by general municipal revenues.
BILL DESCRIPTION
The bill imposes a daily, $3 per room surcharge on the occupancy of a room or rooms in a hotel located in a municipality that is classified as a city of the first class and in which there is located an international airport. The bill applies only to the City of Newark, which is the only municipality in the State in which there is located an international airport.
The bill requires the surcharge revenues to be deposited into a fire services trust fund and dedicated to support firefighting services provided by the municipality. The bill requires a municipality to appropriate the surcharge revenues only if municipal appropriations for firefighting services in the current fiscal year are higher that municipal appropriations for firefighting services in the prior fiscal year, exclusive of any amounts of revenue appropriated from the fire services trust fund. The bill defines firefighting services as the hiring, retention, and training of employees of the fire service, the acquisition of equipment for the fire service, and the undertaking of capital improvements benefitting the fire service of the municipality authorized to impose the surcharge.
The bill directs the State to collect the surcharge and remit the revenues therefrom to the municipality on a monthly basis. The surcharge imposed by the bill would be in addition to any other taxes or fees levied on hotel occupancies pursuant to State law. The bill takes effect on the first day of the second month next following enactment.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that the bill will result in a local revenue increase of $960,000 to $1.1 million in calendar year 2025 and a local revenue increase of $2.9 million to $3.4 million in calendar years 2026 and 2027. These projections are presented on a calendar year basis because Newark’s fiscal year begins on January 1 and ends on December 31.
Information available through the Greater Newark Convention and Visitors Bureau indicates that there are approximately 4,400 hotel rooms in the City of Newark. According to the 2025 State of the Industry Report prepared by the American Hotel & Lodging Association, the average U.S. hotel occupancy rate in 2024 was about 63 percent. In preparing this estimate, the OLS used a projected hotel occupancy rate of 60 percent to 70 percent. To estimate the amount of revenue generated by the hotel occupancy surcharge, the OLS multiplied the number of hotel rooms in the City of Newark (4,400) by the projected occupancy rates. The product of that calculation was them multiplied by the amount of the surcharge ($3.00) and then by 365 (the number of days in a calendar year).
The hotel room surcharge will generate less revenue in calendar year 2025 because it will not be imposed for the full calendar year. For purposes of this estimate, the OLS assumes that the bill will be enacted by July 1, 2025 and take effect on September 1, 2025. In this scenario the City of Newark would collect the surcharge from September through December 2025 and the city would receive one-third of the amount of revenue that would otherwise be generated by the surcharge during a full calendar year.
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Section: |
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Analyst: |
Staff Fiscal and Budget 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.).