ASSEMBLY APPROPRIATIONS COMMITTEE
STATEMENT TO
[Second Reprint]
ASSEMBLY, No. 4077
with committee amendments
STATE OF NEW JERSEY
DATED: JUNE 23, 2026
The Assembly Appropriations Committee reports favorably and with committee amendments Assembly Bill No. 4077 (2R).
As amended, this bill establishes the “Knowledge, Accountability, and Rights in Incarceration Markets Act,” which imposes additional taxes and fees on correctional service businesses.
Under the bill, a taxpayer that operates a correctional service business in the State is subject to an annual operations fee based on the value of the gross receipts or contract. The amount of the fee is equal to eight percent of the consideration given, gross receipts, or contracted to be given, by a public entity to the taxpayer for the provision of correctional services.
“Correctional service business” is defined as any for-profit entity that provides services including, but not limited to, dining or food services, laundry, maintenance, or transportation for any criminal or civil detention facility operating within the State. This term does not include reentry services, inmate services, or pass-through contracts, such as telecommunications services including telephone calls and video visitation, electronic communications including email, or commissary services.
The revenues collected from this fee are credited to a special, nonlapsing account within the General Fund, to be known as the “Societal Rehabilitation Support Fund,” and dedicated to supporting community-based programs related to food security, housing, recreation, job training, and youth mentorship. The monies in the account may be appropriated by the Legislature to a nonprofit organization that operates a community-based program related to food security, housing, recreation, job training, or youth mentorship to support that community-based program, including a nonprofit organization affiliated with a religious organization that has a documented history of operating such a program.
In addition, under the bill, the Director of the Division of Taxation is required to assess a regulatory cost-recovery on all correctional service businesses, set annually, based on costs to the State, including those attributable to inspection, oversight, emergency response, and public health services related to detention facilities. The revenues collected from the assessment are credited to the “Societal Rehabilitation Support Fund” established by the bill’s provisions.
Finally, under the bill, a taxpayer that operates a correctional service business in the State is to be assessed a correctional service business surtax. This surtax is imposed in addition to the corporation’s tax liability under the State’s Corporation Business Tax Act, P.L.1945, c.162 (C.54:10A-1 et seq.), in an amount equal to three percent of the corporation’s allocated taxable net income during each privilege period. The revenues collected from the surtax are generally credited to the “Societal Rehabilitation Support Fund” in support of the fund’s purposes, except that three percent of these revenues are required to be appropriated, one percent to each entity, to: 1) support programs provided by the State, 2) support programs provided by the county in which the correctional facility that is being provided services by the correctional service business is located, and 3) to support police and fire services provided by the municipality in which the correctional facility that is being provided services by the correctional service business is located.
COMMITTEE AMENDMENTS:
The committee amended the bill to:
(1) provide that “correctional service business” means any for-profit entity that provides services including, but not limited to, dining or food services, laundry, maintenance, or transportation for any criminal or civil detention facility operating within the State. This term does not include reentry services, inmate services, or pass-through contracts, such as telecommunications services including telephone calls and video visitation, electronic communications including email, or commissary services;
(2) provide that a taxpayer that operates a correctional service business in the State is subject to an annual operations fee based on the value of the gross receipts or the contract with a public entity during each year the contract is in effect; as reported by the Assembly Community Development and Women’s Affairs Committee (ACW), the bill provided that a taxpayer that operates a private correctional facility in the State and has entered into a contract with a public entity for the provision of correctional services is subject to a fee based on the value of the contract with the public entity;
(3) provide that all revenue generated from the annual operations fee is credited to the “Societal Rehabilitation Support Fund”; as reported by ACW, the revenues from a taxpayer that operates a private correctional facility were to be credited into the “Detention and Deportation Defense Initiative Fund created by the bill, which was to be dedicated and annually appropriated to the Department of Human Services for certain purposes;
(4) provide that the Director of the Division of Taxation is required to assess a regulatory cost-recovery on all correctional service businesses, set annually, based on costs to the State, which include, but are not limited to costs attributable to inspection, oversight, emergency response, and public health services related to detention facilities; as reported by ACW, the bill provided that a taxpayer that operates a private correctional facility in the State is subject to a fee based on the number of inmates who are detained at the taxpayer’s private correctional facility in the amount of $15 per inmate for each day an inmate is detained at the private correctional facility in a month;
(5) provide that a taxpayer that operates a correctional service business in the State is to be assessed a correctional service business surtax; as reported by ACW, the bill provided that a taxpayer that operates a private correctional facility in the State is to be assessed a private prison surtax;
(6) provide that nothing in the bill is to discriminate against or directly regulate the Unites States, its agencies, or instrumentalities, that the fees and taxes imposed by the bill are to be applied in a manner that is neutral as to the identity of the payer and not be measured by, or conditioned upon, the existence or value of a contract with the United States for any other public entity;
(7) provide that to the extent any provision is determined to impose a direct tax on the Untied States or its instrumentalities, that provision is not to apply to receipts or consideration paid by the United States, however the remaining provisions will continue to apply to other receipts;
(8) include a severability clause; and
(9) make other clarifying and technical changes.
FISCAL IMPACT:
Fiscal information for this bill is currently unavailable.