Eliminates Energy Tax Receipts Property Tax Relief Aid and Consolidated Municipal Property Tax Relief Aid; establishes Municipal Property Tax Relief Fund.

A1209

ASSEMBLY, No. 1209

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman ALEXANDER "AVI" SCHNALL

District 30 (Monmouth and Ocean)

Co-Sponsored by:

Assemblyman Kearney

SYNOPSIS

���� Eliminates Energy Tax Receipts Property Tax Relief
Aid and Consolidated Municipal Property Tax Relief Aid; establishes Municipal
Property Tax Relief Fund.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
concerning State Aid to municipalities, supplementing chapter
27D of Title 52 of the Revised Statutes, and repealing sections 1 through 4 of
P.L.1997, c.167 and section 2 of P.L.1999, c.168.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.� a.� Commencing July 1,
2025 there is established the "Municipal Property Tax Relief Aid
Fund" as a special dedicated fund in the State Treasury into which there
shall be credited annually, commencing in State fiscal year 2026, the amount determined
pursuant to subsection d. of this section from the following:

���� (1)� net payments under the
"Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.) from
sales and use of energy or utility services;

���� (2)� net payments under the
Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.) from
gas, electric, and gas and electric public utilities, whether municipal or
otherwise, that were subject to tax pursuant to the provisions of P.L.1940, c.5
(C.54:30A-49 et seq.) prior to January 1, 1998,

���� (3)� net payments under the
Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.) from
telecommunications public utilities that were subject to tax pursuant to the
provisions of P.L.1940, c.4 (C.54:30A-16 et seq.) as of April 1, 1997,

���� (4)� net payments under
P.L.1940, c.5 (C.54:30A-49 et seq.) from sewerage and water corporations, net
payments under the "Transitional Energy Facility Assessment Act,"
sections 36 through 49 of P.L.1997, c.162 (C.54:30A-100 through C.54:30A-113),
and

���� (5)� such sums from the
General Fund or the Property Tax Relief Fund as may be necessary to provide
that the annual amount credited to the fund shall equal the amount determined
pursuant to subsection d. of this section.

���� b.� Notwithstanding the
provisions of P.L.1940, c.4 (C.54:30A-16 et seq.), P.L.1940, c.5 (C.54:30A-49
et seq.), or any other provision of law concerning the apportionment and
distribution by the State of taxes paid by public utilities to the contrary, there
shall be paid during the State fiscal year 2026 and during each fiscal year
thereafter from the "Municipal Property Tax Relief Aid Fund" to the
municipalities of the State the amount determined pursuant to subsection d. of
this section.� A portion of the amount determined pursuant to subsection d. of
this section shall be allocated in a manner that provides that each
municipality shall receive an amount not less than the amount received by the
municipality from the distribution of proceeds from the Energy Tax Receipts
Property Tax Relief Fund in calendar year 2024, or State fiscal year 2025 for a
municipality that utilizes a State fiscal year budget cycle, and shall be
distributed annually to municipalities on the following schedule:

���� On or before August 1, 45
percent of the total amount due; September 1, 30 percent of the total amount
due; October 1, 15 percent of the total amount due; November 1, 5 percent of
the total amount due; December 1 for municipalities operating under a calendar
year fiscal year, 5 percent of the total amount due; and June 1 for
municipalities operating under the State fiscal year , 5 percent of the total
amount due; provided, however, that notwithstanding the provisions of any law
or regulation to the contrary, the Director of Local Government Services, in
consultation with the Commissioner of Community Affairs and the State
Treasurer, may direct the Director of the Division of Budget and Accounting to
provide such payments on an accelerated schedule if necessary to ensure fiscal
stability for a municipality.� The Director of the Division of Budget and
Accounting shall provide, on the date on of approval, notice to the Legislative
Budget and Finance Officer of each accelerated payment authorized pursuant to
this subsection.

���� c.� The allocation set forth
in subsection d. of this section shall be adjusted to increase each appropriate
municipal distribution by the amount necessary to make corrections to
apportionment valuations or distribution values made by the Director of the
Division of Taxation in the Department of the Treasury pursuant to R.S.54:30-2.
Notwithstanding any other provision of this section or any other provision of
law to the contrary, in the event a municipality pays a county an amount for
county purposes from the amount it received from its apportionment of taxes
according to the limitations on the municipalities apportionment under section
4 of P.L.1980, c.11 (C.54:30A-61.1), the highest amount of that payment during
calendar years 1994, 1995, and 1996 shall be paid annually directly to that
county by the State Treasurer and be deducted from that municipality's
distribution otherwise determined pursuant to subsection d. of this section.

���� d. For State fiscal year 2026,
the amount credited to the "Municipal Property Tax Relief Fund" shall
be $1,455,000,000 multiplied by the sum of 1.0 and the index rate or zero,
whichever is greater, which shall be distributed pursuant to paragraph (1) of
this subsection.� For State fiscal year 2027 and for each fiscal year
thereafter the amount equal to the amount credited in the prior fiscal year
multiplied by the sum of 1.0 and the index rate or zero, whichever is greater,
which shall be distributed pursuant to paragraph (1) of this subsection.� As
used in this subsection, "index rate" means the rate of annual
percentage increase, rounded to the nearest half-percent, in the Implicit Price
Deflator for State and Local Government Purchases of Goods and Services,
computed and published quarterly by the United States Department of Commerce,
Bureau of Economic Analysis, calculating the annual increase therein at the
second calendar quarter which occurred in the next preceding State fiscal
year.� The Director of the Division of Local Government Services shall
promulgate annually the index rate to apply in the next following State fiscal
year which shall be the same as the index rate determined pursuant to section 4
of P.L.1983, c.49 (C.40A:4-45.1a).

���� (1)�� No municipality shall
receive less than the amount received in Energy Tax Receipts Property Tax
Relief Aid in calendar year 2024 or State fiscal year 2025 for a municipality operating
under the State fiscal year.� Any amount of aid� distributed to municipalities
in excess of the amount of aid distributed to municipalities from the �Energy
Tax Receipts Property Tax Relief Fund in State fiscal year 2025 shall be
distributed to municipalities pursuant to a formula developed by the
Commissioner of Community Affairs that shall include:

���� i.���� population according to
the most recent federal decennial census;

���� ii.��� median household income
according to the most recent estimate by the United States Bureau of the
Census;

���� iii.�� equalized property
valuation per capita;

���� iv.�� the ratio of the average
equalized value of residential property� in the municipality to the average�
equalized value of residential property Statewide ;

���� v.��� the value of State�
property that is exempt from ad valorem taxation as a percentage of the total
value of property in a municipality;

���� vi.�� the ratio of assessed
value to true value of real property of the municipality, as published in the�
table of equalized valuations by the Director of the Division of Taxation in
the Department of the Treasury, pursuant to section 1 of P.L.1954, c.86 (C.54:1-35.1),
in relation to a minimum ratio of 85 percent;

���� vii.� the level of distress
experienced by a municipality as measured by the Municipal Revitalization Index
established by the Department of Community Affairs; and

���� viii.� a spending restraint
factor calculated as the difference between estimated and actual spending,
based on criteria established by the Commissioner of Community Affairs that
predict such spending.

���� e.� Annually, within two days
of the transmittal of the State budget message to the Governor pursuant to
section 11 of P.L.1944, c.112 (C.52:27B-20) the Director of the Division of
Local Government Services shall notify each municipality of the amount of
Municipal Property Tax Relief Aid payable to the municipality in the succeeding
fiscal year pursuant to the provisions of P.L.���� , c.��� (C.������ ) (pending
before the Legislature as this bill).

���� f.� Any amount of aid
distributed to a municipality from the �Municipal Property Tax Relief Aid Fund�
in excess of the amount distributed to the municipality from the "Energy
Tax Receipts Property Tax Relief Fund" during� State fiscal year 2002
shall be used solely and exclusively by each municipality for the purpose of
reducing the amount the municipality is required to raise by local property tax
levy for municipal purposes.

���� g.� As used in this section:

���� �State property� means land
and improvements owned by the State and includes, but shall not be limited to,
State offices, hospitals, institutions, schools, colleges, universities,
garages, inspection stations, warehouses, barracks, and armories together with
abutting vacant land held for future development for the same purposes.� State
property shall not include that used or held for future use for highway,
bridge, or tunnel purposes.

���� 2.� If, in any State fiscal
year, net payments under the "Sales and Use Tax Act," P.L.1966, c.30
(C.54:32B-1 et seq.) from sales and use of energy or utility services, net
payments under the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1
et seq.) from gas, electric, and gas and electric public utilities, whether
municipal or otherwise, that were subject to tax pursuant to the provisions of
P.L.1940, c.5 (C.54:30A-49 et seq.) prior to January 1, 1998, net payments
under the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et
seq.) from telecommunications public utilities that were subject to tax
pursuant to the provisions of P.L.1940, c.4 (C.54:30A-16 et seq.) as of April
1, 1997, net payments under P.L.1940, c.5 (C.54:30A-49 et seq.) from sewerage
and water corporations, net payments under the "Transitional Energy
Facility Assessment Act," P.L.1997, c.162 (C.54:30A-100 through C.54:30A-113)
exceed $1,425,000,000, 75 percent of that amount of net payments in excess of
$1,425,000,000 shall be credited to the "Municipal Property Tax Relief Aid
Fund" in addition to the amount credited pursuant to section 1 of P.L.���
, c.�� �(pending before the Legislature as this bill), for distribution to
municipalities as additional aid.

���� 3.� a. The annual
appropriations act for each State fiscal year commencing with fiscal year 2026
shall appropriate an amount not less than the amount determined pursuant to
subsection d. of section 1 of P.L.��� , c.��� (pending before the Legislature
as this bill) from the "Municipal Property Tax Relief Aid Fund"
pursuant to the provisions of P.L.��� , c.��� (pending before the Legislature
as this bill), for the purposes of that fund.

���� b.� If the provisions of
subsection a. of this section are not met on the effective date of an annual
appropriations act for the State fiscal year, or if an amendment or supplement
to an annual appropriations act for the State fiscal year should violate the
provisions of subsection a. of this section, the Director of the Division of
Budget and Accounting in the Department of the Treasury shall, not later than
five days after the enactment of the annual appropriations act, or an amendment
or supplement thereto, that violates the provisions of subsection a. of this
section, certify in writing to the Director of the Division of Taxation that
the requirements of subsection a. of this section have not been met.

���� c.� The Director of the
Division of Taxation shall, no later than five days after certification by the
Director of the Division of Budget and Accounting in the Department of the
Treasury that the provisions of subsection a. of this section have not been met
or have been violated by an amendment or supplement to the annual
appropriations act pursuant to subsection b. of this section, notify all
taxpayers that have filed a return under the Corporation Business Tax Act
(1945), P.L.1945, c.162 (C.54:10A-1 et seq.) during the previous calendar year,
other than taxpayers that are gas, electric, and gas and electric, or
telecommunications public utilities as defined pursuant to subsection (q) of
section 4 of P.L.1945, c.162 (C.54:10A-4) as amended by P.L.1997, c.162, that
the taxpayer shall have no liability pursuant to the provisions of P.L.1945, c.162
for any corporation business tax for the taxpayer's current privilege period,
notwithstanding any other provision of law to the contrary.

���� 4.� Notwithstanding the
provisions of P.L.1945, c.162 (C.54:10A-1 et seq.) or any other law to the
contrary, for a privilege period of a taxpayer, other than a taxpayer that is a
gas, electric, and gas and electric, or telecommunications public utility as defined
pursuant to subsection (q) of section 4 of P.L.1945, c.162 (C.54:10A-4) as
amended by section 2 of P.L.1997, c.162, in which the taxpayer would otherwise
have had a tax liability or minimum tax due under P.L.1945, c.162, during which
privilege period the Director of the Division of Budget and Accounting in the
Department of the Treasury makes a certification that the provisions of
subsection a. of section 3 of P.L.��� , c.�� �(pending before the Legislature
as this bill) have not been met or have been violated by an amendment or
supplement to the annual appropriations act, there shall be no liability
pursuant to the provisions of P.L.1945, c.162 for any such taxpayer's current
privilege period.

���� 5.� The following sections are
repealed:

Sections 1 through 4 of P.L.1997,
c.167 (C.52:27D-438 through 441); and

Section 2 of P.L.1999, c.168
(C.52:27D-442).

���� 6.� This act shall take effect
immediately and shall first apply to the State fiscal year beginning July 1,
2026.

STATEMENT

���� This bill repeals sections of
law providing for the distribution Energy Tax Receipts Property Tax Relief and Consolidated
Municipal Property Tax Relief Aid, and replaces the Energy Tax Receipts
Property Tax Relief Aid program with a new initiative, the Municipal Property
Tax Relief Program.� The bill requires State revenues currently deposited into
the Energy Tax Relief Property Tax Relief Fund to be deposited into the
Municipal Property Tax Relief Fund and dedicates those revenues to support
State aid payments to municipalities under the new program.�

���� For State fiscal year 2026,
the amount credited to the "Municipal Property Tax Relief Fund" is to
be $1,455,000,000 multiplied by the sum of 1.0 and the index rate or zero,
whichever is greater.� For State fiscal year 2027 and for each fiscal year
thereafter, the amount credited to the �Municipal Property Tax Relief Fund�
would be equal to the amount credited to the fund in the prior fiscal year,
multiplied by the sum of 1.0 and the index rate or zero, whichever is greater.�
Under the bill, no municipality would receive less than the amount received in
Energy Tax Receipts Property Tax Relief Aid in calendar year 2024, or State
fiscal year 2025 for a municipality that utilizes a State fiscal year budget
cycle.� State aid provided to municipalities in excess of $1,455,000,000 would
be distributed pursuant to a formula developed by the Commissioner of Community
Affairs, as specified in the bill.

���� Similar to the Energy Tax
Receipts Property Tax Relief Act, the bill includes a provision providing that
if the State does not make the appropriations and distributions required under
the bill, the State would forgo the collection of certain corporation business
tax revenues from all corporate taxpayers that are not public utilities for
that tax year.

���� Amounts distributed to
municipalities from the �Municipal Property Tax Relief Aid Fund� in excess of
the amount distributed to the municipality from the "Energy Tax Receipts
Property Tax Relief Fund" during the State fiscal year 2002 is to be used for
the purpose of reducing the amount the municipality is required to raise by
local property tax levy for municipal purposes.�

���� Under the bill, in any year
that certain net payments from specified sources to the State exceed $1.425
billion, 75 percent of the amount in excess of $1.425 billion would be required
to be credited to the "Municipal Property Tax Relief Aid Fund" and
distributed to municipalities as additional aid.�