LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 1285
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: DECEMBER 10, 2024
SUMMARY
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Synopsis: |
Makes disabled persons receiving disability payments pursuant to federal Railroad Retirement Act eligible to receive homestead property tax reimbursement. |
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Type of Impact: |
Increase in annual State costs to the Property Tax Relief Fund. |
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Agencies Affected: |
Department of the Treasury. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
FY 2027 |
FY 2028 |
FY 2029 |
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State Expenditure Increase |
$65,830 |
$124,118 |
$175,835 |
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· The Office of Legislative Services (OLS) estimates that the bill would result in increased annual State costs. The bill would not result in additional State costs until FY 2027 due to the timing of homestead property tax reimbursement payments.
· Approximately 300 additional homeowners would become eligible for the homestead property tax reimbursement program, commonly known as the Senior Freeze program, in calendar year 2024, thereby establishing a base year under the program. Thereafter, these homeowners may file a claim to receive a homestead property tax reimbursement for the difference between total property taxes paid in subsequent years and their base year.
· Although the number of railroad retirement disability beneficiaries is expected to decline over time, additional State costs are expected to increase because they are directly connected to annual increases in property taxes and the reimbursement payment is equal to the difference between property taxes paid in the base year and the “current” year.
BILL DESCRIPTION
This bill expands eligibility for the homestead property tax reimbursement to include disabled persons who receive disability payments pursuant to the federal Railroad Retirement Act.
Under current law, only disabled persons who receive monetary payments pursuant to Title II of the federal Social Security Act are eligible to receive a homestead property tax reimbursement. This bill amends current law to include Railroad Retirement Act disability payment recipients as qualified disabled persons for purposes of the homestead property tax reimbursement program. To qualify, an applicant must meet all other existing program eligibility requirements, including income limits, residency requirements, and property ownership criteria.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that the enactment of the bill would result in an increase in annual State costs associated with the payment of homestead property tax reimbursements to eligible claimants who received disability payments pursuant to the federal Railroad Retirement Act. These projected costs are $65,830 in FY 2027, $124,118 in FY 2028, and $175,835 in FY 2029. Approximately 300 persons would become eligible to file a homestead property tax reimbursement claim under the bill. The bill does not result in any additional State costs until FY 2027 due to the timing of homestead property tax reimbursement payments.
Current law provides that an eligible claimant must be 65 or more years of age or a disabled person. Under current law, a person under age 65 would not qualify as an eligible claimant by virtue of receiving railroad retirement disability payments; however, the OLS notes that certain homeowners who receive railroad retirement disability payments may already be eligible to receive a homestead property tax reimbursement because they are 65 or more years of age. Nevertheless, the OLS anticipates that the bill will increase annual State expenditures because it allows additional persons under age 65 who receive railroad retirement disability payments to receive a homestead property tax reimbursement earlier than permitted under current law.
National statistics available through the federal Railroad Retirement Board for calendar years 2018 through 2023 indicate that about 4.0 percent of retired railroad workers receive disability benefits. By applying this rate to the number of railroad retirement beneficiaries living in New Jersey, the OLS estimates that 311 beneficiaries of railroad retirement disability payments were living in New Jersey in calendar year 2023. Although the Railroad Retirement Board data indicate that the number of railroad retirement beneficiaries living in New Jersey has remained constant during that time period, at about 10,000 per year, the population of railroad retirement workers receiving disability payments has been declining by about 6.7 percent annually since calendar year 2018. Based on these data, the number of railroad retirement disability beneficiaries is anticipated to decrease to 290 persons in calendar year 2024, the base year for these newly eligible claimants.
Average residential property tax data available through the Division of Local Government Services indicate that the average residential property tax amount increased by 2.26 percent between calendar year 2018 and 2023; the data also indicate that the average residential property tax amount was $9,803 in calendar year 2023. Using these data, the OLS estimates that the average residential property tax amount will increase to $10,024 in calendar year 2024.
To determine the projected amount of additional FY 2027 State costs resulting from the bill, the OLS multiplied the estimated number of new eligible claimants (290) by the difference between the estimated average residential property tax amounts for calendar years 2024 and 2025 ($227) for a total of $65,830. These costs are expected to increase to $124,118 in FY 2028 and $175,835 in FY 2029. Although the population of railroad retirement disability beneficiaries is expected to decline, the additional State costs are expected to increase annually because each eligible claimant’s homestead property tax reimbursement payment increases annually commensurate with increases in property taxes. Newly eligible claimants would file a homestead property tax reimbursement application in early calendar year 2026. Because homestead property tax reimbursement payments are distributed beginning in July, the newly eligible claimants will receive their first payments beginning in FY 2027.
The OLS notes that the actual State costs resulting from the bill will be driven by the specific characteristics of railroad retirement disability beneficiaries living in New Jersey, including their homeownership status, current age distribution, actual property tax obligations, and the rate at which newly eligible claimants apply for a homestead property tax reimbursement.
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Section: |
Revenue, Finance & Appropriations |
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Analyst: |
Staff Fiscal & 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.).