LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 4398
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JUNE 10, 2025
SUMMARY
|
Synopsis: |
Suspends sales and use tax and societal benefits charge on electric and gas public utility bills during four-month period. |
|
Type of Impact: |
One-Time State revenue loss to the General Fund, Property Tax Relief Fund, Clean Energy Fund, and Universal Service Fund. |
|
Agencies Affected: |
Department of the Treasury. Board of Public Utilities. |
|
Office of Legislative Services Estimate |
||
|
Fiscal Impact |
FY 2026 |
|
|
One-Time State Revenue Loss |
$399.6 million to $469.1 million |
|
|
|
|
|
· The Office of Legislative Services (OLS) estimates that the bill will produce a one-time State revenue loss of $399.6 million to $469.1 million in FY 2026. The revenue loss will be caused by the suspension of the sales and use tax and societal benefits charge on customer bills for electric and gas utility service from June 1, 2025 through September 30, 2025.
· The OLS estimates that purchases of electric and gas utility service during the months of June through September account for 23 percent to 27 percent of annual energy consumption.
BILL DESCRIPTION
The bill suspends the imposition of the sales and use tax and the societal benefits charge on customer bills for electric and gas utility service from June 1, 2025 through September 30, 2025.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that the enactment of the bill will result in State revenue losses in FY 2026 totaling $399.6 million to $469.1 million due to the four-month suspension of the sales and use tax and societal benefits charge on electric and gas utility service.
Energy Sales from June through September
According to U.S. Energy Information Administration data, approximately 23 percent to 27 percent of the combined annual amount of electricity sales and natural gas deliveries to consumers in New Jersey during FY 2019 through FY 2024 occurred during the months of June through September, excluding natural gas deliveries to electric power consumers.
Sales and Use Tax Suspension
The Department of the Treasury estimates that sales and use tax remittances from electric and gas utility service will total $1.1 billion in FY 2026. Assuming that 23 percent to 27 percent of these revenues will be generated from taxable sales of utility services occurring in the four-month suspension period, the OLS estimates that the bill will reduce FY 2026 sales and use tax collections by $253.0 million to $297.0 million. Of the total, $233.9 million to $274.6 million will accrue to the General Fund and $19.1 million to $22.4 million to the Property Tax Relief Fund.
Societal Benefits Charge Suspension
The societal benefits charge is embedded in customer bills for electricity and natural gas service and generates $800.0 million to $900.0 million per year with electric and gas public utilities retaining a portion thereof for several purposes.
The Executive anticipates $637.5 million in FY 2026 State societal benefits charge revenues. Assuming that the months of June through September will account for 23 percent to 27 percent of total collections yields an estimated State revenue loss of $146.6 million to $172.1 million.
State societal benefits charge collections are statutorily dedicated. Current law requires that $30 million from the charge be deposited annually into the Plug-In Electric Vehicle Incentive Fund. Accordingly, the OLS assumes that the reduction in dedicated State societal benefits charge revenues from this bill will not affect the Plug-In Electric Vehicle Incentive Fund.
Conversely, the OLS expects that the entire State revenue loss will be borne by the Clean Energy Fund and the Universal Services Fund. If the revenue loss is equally allocated to each fund, then the amount available for Clean Energy Fund programs and energy assistance programs through the Universal Services Fund will each be reduced by $73.3 million to $86.1 million.
|
Section: |
|
|
Analyst: |
Staff Fiscal and Budget 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.).