LEGISLATIVE FISCAL ESTIMATE

SENATE, No. 4350

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: JUNE 27, 2025

 

 

SUMMARY

 

Synopsis:

Changes certain allocations and amounts of constitutionally dedicated CBT revenues for Fiscal Year 2026 and thereafter; authorizes Garden State Preservation Trust and local governments to acquire lands in urban areas for agricultural or horticultural purposes.

Type of Impact:

Reallocation of Dedicated State Revenue. Annual State expenditure increase. Local expenditure increase and revenue impact.

Agencies Affected:

Garden State Preservation Trust; State Agriculture Development Committee; Department of the Treasury; certain local governments.

 

 

Office of Legislative Services Estimate

Fiscal Impact

FY 2026 

FY 2027 and Beyond

Reallocation of Dedicated State Revenue

Initially $25 million

Indeterminate

State Expenditure Increase

Indeterminate

Indeterminate

Local Expenditure Increase

Indeterminate

Indeterminate

Local Revenue Impact

Indeterminate

Indeterminate

 

 

·         The Office of Legislative Services (OLS) finds that the bill would annually reallocate certain constitutionally dedicated State revenue.  The bill would also result in indeterminate annual State and local expenditure increases and an indeterminate impact on local revenues.

·         The OLS notes that the bill would not impact corporation business tax revenue collections.  Rather, the bill changes the allocations for constitutionally dedicated corporation business tax revenue that is set aside for the Preserve New Jersey program for FY 2026 and thereafter.

·         Under the bill, $25.0 million of the amount credited to the Preserve New Jersey Fund Account would be deposited into the newly established Urban Agriculture and Horticulture Fund on July 1 following enactment, to be used for the purposes of the bill.

·         The State would incur annual expenditure increases for the administration of a new program to acquire land for agricultural or horticultural purposes in urban areas and for payment in lieu of taxes (PILOT) payments associated with this new program.  The PILOT payments would be made to local governments for the purpose of offsetting property tax revenue losses that may result from State acquisitions under the new program.

 

 

BILL DESCRIPTION

 

      This bill would authorize the Garden State Preservation Trust to develop a program to acquire land for agricultural or horticultural purposes in urban areas of the State through the purchase of fee simple titles in land, development easements, conservation restrictions or easements, or purchase agreements.

      The bill would require the trust to develop eligibility criteria for the acquisition of land in urban areas for agricultural or horticultural purposes, and an application process through which landowners would apply to the trust to sell a fee simple title or lesser interest in land, which would prioritize small parcels of land in designated urban areas.

      In addition, the bill would revise funding allocations for the constitutional dedication of the corporation business tax revenues for fiscal year 2026 and thereafter, such that 62 percent would be deposited into the Preserve New Jersey Green Acres Fund, 26 percent would be deposited into the Preserve New Jersey Farmland Preservation Fund, seven percent would be deposited into the Preserve New Jersey Historic Preservation Fund, and five percent would be deposited into the Preserve New Jersey Urban Agriculture and Horticulture Fund.  The bill would credit $25.0 million from the Preserve New Jersey Fund Account to the Preserve New Jersey Urban Agriculture and Horticulture Fund in FY 2026, before allocations to other Preserve New Jersey programs are made, in order to effectuate the provisions of the act.

      The bill would require the trust to establish and administer the Urban Agriculture and Horticulture Stewardship Grant Program to provide grants to qualified applicants for stewardship activity projects, including projects that improve soil health, climate resiliency, and erosion and sediment control on land acquired by the trust and preserved for agricultural and horticultural purposes.  The bill would also require the trust to prepare and submit a report to the Governor and Legislature on the progress of the grant program, which would include details about grant applicants and awards.  The bill establishes eligibility criteria and application requirements for qualified applicants applying for a grant through the program.  The trust would be required to approve applications, and award grants for up to 90 percent of the total estimated costs of a stewardship activity project, to each qualified applicant, subject to available funding.  As with other Preserve New Jersey programs, the bill requires the trust to submit to the State Treasurer a list of projects recommended to be funded with moneys from the Preserve New Jersey Urban Agriculture and Horticulture Fund.  The bill further requires the trust to submit proposed legislation appropriating moneys to funded projects for introduction to the Legislature.

      The bill would authorize the trust to utilize moneys in the Preserve New Jersey Urban Agriculture and Horticulture Fund for the fee simple acquisition or lesser interests in land, providing grants under the grant program, and paying certain administrative costs.  The bill authorizes the trust to hire staff as necessary to implement the provisions of this law.

      Under the bill, counties and municipalities would have expanded access to utilize existing open space trust funds for the purpose of acquiring lands in urban areas of the State for agricultural or horticultural purposes.  The bill would also revise the names of those trust funds to include “urban agriculture and horticulture.”

 

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS finds that the bill would annually reallocate certain constitutionally dedicated State revenue.  The bill would also result in indeterminate annual State and local expenditure increases and an indeterminate impact on local revenues.

 

Constitutional Dedication and Allocation of Corporation Business Tax Revenues:  The State Constitution dedicates six percent of annual corporation business tax revenues, including corporate transit fee collections, for open space, farmland, and historic preservation, water resources management, hazardous substance site remediation, and underground storage tank programs.  The State Constitution dedicates 78 percent of these revenues to the Preserve New Jersey Fund Account.

     

Statutory Allocation of the Dedicated Revenue:  Current statutory law then adds a second layer of allocations for the 78 percent of constitutionally dedicated corporation business tax revenue that is set aside for the Preserve New Jersey program: Green and Blue Acres programs in the Department of Environmental Protection (62 percent), the Farmland Preservation program in the Department of Agriculture (31 percent), and the Historic Preservation program in the Department of Community Affairs (seven percent).

     

Reallocation Proposed Under Senate Bill, No. 4350:  The OLS notes that the bill would not impact corporation business tax revenue collections.  Rather, the bill changes the allocations for the 78 percent of constitutionally dedicated corporation business tax revenue that is set aside for the Preserve New Jersey program for FY 2026 and thereafter.  The table below compares the allocations proposed under this bill to the current law allocations.

 

 

      As illustrated in the table, pursuant to the bill the Farmland Preservation program would receive 26 percent of the dedicated revenue instead of the 31 percent it receives under current law; the newly established Urban Agriculture Fund would receive five percent; and the allocations to the Green and Blue Acres programs and the Historic Preservation program (62 percent and seven percent, respectively) would remain unchanged.

 

Initial Funding for Urban Agriculture and Horticulture Fund:  Under the bill, $25.0 million of the amount credited to the Preserve New Jersey Fund Account would be deposited into the newly established Urban Agriculture and Horticulture Fund on July 1 following enactment, to be used for the purposes of the bill.  For purposes of noting the potential timing of this provision of the bill, the OLS notes that if the bill is enacted in June 2025, the $25.0 million would be deposited into the Urban Agriculture and Horticulture Fund on July 1, 2025.

 

Uses of the Urban Agriculture and Horticulture Fund:  The bill authorizes the Garden State Preservation Trust, located in but not of the Department of the Treasury, to utilize moneys from the Preserve New Jersey Urban Agriculture and Horticulture Fund for the following purposes:

·         Acquiring land for agricultural or horticultural purposes in urban areas through the purchase of fee simple titles or lesser interests in land (e.g., development easements, conservation restrictions or easements, and purchase agreements);

·         Providing grants under the Urban Agriculture and Horticulture Stewardship Grant Program; and

·         Paying certain administrative costs, including salaries, equipment, and materials.  The bill specifies that up to 15 percent may be used for administrative costs.

 

      The OLS estimates there will be an indeterminate annual State expenditure and workload increase for the trust to meet the requirements of the bill such as acquiring and preserving land in urban areas; establishing and administering the grant program; designating areas of the State as urban areas based on certain factors; establishing an application process for the lease of land and reviewing applications; submitting required reports, including a progress report within 18 months of the first grant award and an annual report to the Governor and Legislature; and submitting to the State Treasurer a list of projects recommended for funding on at least an annual basis. 

      The bill authorizes the trust to hire staff as necessary to implement the provisions of the law.

 

Local Government Considerations:  The State would also incur expenditure increases for payment in lieu of taxes (PILOT) payments associated with this new program.  The PILOT payments would be made to local governments for the purpose of offsetting property tax revenue losses that may result from State acquisitions under the new program.  The OLS cannot determine the net local revenue impact, as the amount of the potential local property tax revenue losses and associated local revenue gains from PILOT payments are unknown.

      The OLS anticipates there will be local expenditure increases for counties and municipalities that acquire land in urban areas for agricultural or horticultural purposes as authorized by the bill.

 

Section:

Environment, Agriculture, Energy, and Natural Resources

Analyst:

Anna Heckler

Assistant Fiscal Analyst

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.).