LEGISLATIVE FISCAL ESTIMATE

SENATE CONCURRENT RESOLUTION No. 81

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: AUGUST 6, 2024

 

 

SUMMARY

 

Synopsis:

Proposes constitutional amendment to increase amount of veterans’ property tax deduction from $250 to $2,500 over four years.

Type of Impact:

Increased annual State costs to the Property Tax Relief Fund; annual net local government revenue gain.

Agencies Affected:

Department of the Treasury.

Municipalities.

 

 

Office of Legislative Services Estimate

Fiscal Impact

FY 2026 

FY 2027

FY 2028

FY 2029

FY 2030

 

State Cost Increase

$89.0 MM

$140.4 MM

$186.0 MM

$226.3 MM

$214.1 MM

 

Local Net Revenue Gain

$1.7 MM

$2.8 MM

$3.6 MM

$4.4 MM

$4.2 MM

 

   Property Tax Loss

$87.2 MM

$137.6 MM

$182.3 MM

$221.8 MM

$209.9 MM

 

   State Reimbursement

   Gain

$89.0 MM

$140.4 MM

$186.0 MM

$226.3 MM

$214.1 MM

 

 

 

 

·         The Office of Legislative Services (OLS) estimates that the bill will result in additional State costs of $89.0 million in FY 2026 and increase to $226.3 million in FY 2029, due to the four-year phase-in of the increase in the veterans’ property tax deduction, before declining to $214.1 million in FY 2030.

·         The total number of veterans’ property tax deduction recipients has declined by about 5.4 percent annually, and this estimate assumes that this downward trend will continue. 

·         Local governments will realize annual net revenue gains from statutorily-mandated reimbursements from the State equal to 102 percent of the amount of the veterans’ property tax deduction.

 

BILL DESCRIPTION

 

      The New Jersey Constitution mandates an annual $250 property tax deduction to veteran homeowners who were honorably discharged from active service in any branch of the Armed Forces of the United States, and their surviving spouses.  The bill proposes a constitutional amendment to increase the amount of the property tax deduction from $250 to $2,500 over four years. 

      The bill increases the amount of the deduction to $1,000 in tax year 2025, $1,500 in tax year 2026, $2,000 in tax year 2027, and $2,500 in tax year 2028 and each year thereafter.  The voters of the State last approved an increase in the amount of the deduction in 1999, from $50 to $250, over four years.  The amount of the deduction has been $250 since 2003.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS estimates that the bill will result in additional State costs of $89.0 million in FY 2026, attributable to tax year 2025 property tax deductions.  Since the deduction would increase to $2,500 over a four-year period, these additional costs will increase to $226.3 million in FY 2029, attributable to tax year 2028 property tax deductions, and then decline to $214.1 million in FY 2030.  The total cost of the veterans’ property tax deduction is expected to decrease because the steady, long-term decline in the number of recipients is expected to continue.  These amounts represent the increased cost of State reimbursements to municipalities for the veterans’ property tax deduction plus an additional two percent to cover the administrative expenses of the municipalities.  These statutorily-mandated reimbursements from the State will result in local government net revenue gains estimated at $1.7 million in FY 2026 and increasing to a peak of $4.4 million in FY 2029.

      The total number of veterans and surviving spouses receiving a property tax deduction has steadily declined since FY 1979, the earliest year for which information is readily available.  In FY 1979, some 462,220 received a property tax deduction; in FY 2024, some 130,283 did so.  More recently, the number of veterans and surviving spouses receiving a property tax deduction has declined by about 5.4 percent annually since tax year 2019.  This analysis assumes that the downward trend in deduction recipients will continue through FY 2029.  Accordingly, the total cost of the veterans’ property tax deduction is expected to decline beginning in FY 2030, as the amount of the deduction would remain constant and the number of recipients would decrease.

      The chart below illustrates the actual and projected trends in the cost of the veterans’ property tax deduction and the number of deduction recipients from FY 2020 through FY 2034.

 

 

Section:

Revenue, Finance, & Appropriations

Analyst:

Scott A. Brodsky

Staff Fiscal & 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.).