Caps State use portion of energy tax revenues and ensures balance of such revenues are paid annually as municipal aid.

S3310

SENATE, No. 3310

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 5, 2026

Sponsored by:

Senator� CARMEN F. AMATO, JR.

District 9 (Ocean)

Co-Sponsored by:

Senator Corrado

SYNOPSIS

���� Caps State use portion of energy tax revenues and
ensures balance of such revenues are paid annually as municipal aid.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act

concerning certain energy tax revenues and
capping the State's skimming of energy tax revenues, amending P.L.1997, c.167 and
repealing section 3 of P.L.1997, c.167.

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

���� 1.��� Section 2 of P.L.1997,
c.167 (C.52:27D-439) is amended to read as follows:

���� 2.��� a.�
[
Commencing July
1, 1997 there
]

There
is established the "Energy Tax Receipts Property Tax Relief
Fund" as a special dedicated fund in the State Treasury into which there
shall be credited annually
[
,
commencing in State fiscal year 1998,
]

the sum of
[
$740,000,000
or the amount determined pursuant to subsection e. of this section
]

the total
annual revenue
from the following: 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,
and
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), and such sums from
]

but net of
$403,000,000 from those sources, which amount, but no greater amount thereof,
may be credited to
the General Fund as
[
may
be necessary to provide that the annual amount credited to the fund shall equal
$740,000,000 or the amount determined pursuant to subsection e. of this section
]

general
State revenue
.

���� 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.) and any other provision of law concerning the
apportionment and distribution by the State of taxes paid by public utilities,

���� (1)
]
� There shall be paid
[
during the State
fiscal year 1998 and
]

during each fiscal year
[
thereafter
]
from the
"Energy Tax Receipts Property Tax Relief Fund" to the municipalities
of the State
[
the
sum of $740,000,000 or
]

the amount determined pursuant to subsection e. of this section.

����
[
(2)� A portion of the
$740,000,000 or the amount determined pursuant to subsection e. of this section
shall be allocated in a manner that provides that each municipality shall
receive an amount not less than the largest annual amount received or to be received
by the municipality from:

���� (a)�� the distribution of
$685,000,000 from the proceeds of the public utilities franchise and gross
receipts taxes under P.L.1940, c.4 (C.54:30A-16 et seq.) and P.L.1940, c.5
(C.54:30A-49 et seq.) in calendar year 1994, 1995 or 1996; or

���� (b)� the distribution of
$685,000,000 from the proceeds of the public utilities franchise and gross
receipts taxes under P.L.1940, c.4 (C.54:30A-16 et seq.) and P.L.1940, c.5
(C.54:30A-49 et seq.) or from taxes and assessments collected in replacement of
such taxes as released by the Division of Local Government Services in the
Department of Community Affairs as fiscal year 1998 estimated franchise and
gross receipts taxes State aid distributions by municipality prior to the
certification of apportionment of such funds by the Director of the Division of
Taxation and the amounts required pursuant to subsection d. of this section.

���� (3)� A portion of the
$740,000,000 or the amount determined pursuant to subsection e. of this section
shall be allocated in a manner that provides that each municipality shall
receive an amount equal to the difference, if any, between the amount it
received pursuant to paragraph (2) of this subsection and the sum of the
amounts that the municipality received pursuant to the certification made in
the 1997 calendar year released by the Division of Local Government Services in
the Department of Community Affairs as the fiscal year 1998 estimated franchise
and gross receipts taxes State aid distribution of $685,000,000 and the
certification of the 1997 fiscal year distribution of $45,000,000.

���� (4)� The portion of the
$740,000,000 or the amount, not more than $755,000,000, determined pursuant to
subsection e. of this section remaining after the allocations pursuant to
paragraphs (2) and (3) of this subsection shall be distributed in proportion to
the amounts distributed pursuant to paragraph (2) of this subsection.
]

���� c.���
[
(1)
]
The funds
distributed pursuant to
[
paragraphs
(2) and (4) of subsection b. of
]

this section shall be distributed annually to municipalities on the following
schedule:
[
July
15, 35% of the total amount due;
]

August 1,
[
10%
]

45%
of
the total amount due; September 1, 30% of the total amount due; October 1, 15%
of the total amount due; November 1, 5% of the total amount due; and December
1, 5% of the total amount due.

����
[
(2) The funds distributed
pursuant to paragraph (3) of subsection b. of this section, prior to January 1,
2002 for all municipalities, and distributed after January 1, 2002 for
municipalities operating on a State fiscal year basis, shall be distributed annually
to those municipalities on or before June 30.� The funds distributed after January
1, 2002 pursuant to paragraph (3) of subsection b. of this section to calendar
year municipalities shall be distributed annually on or before July 15.
]

���� d.���
[
The allocation
set forth in paragraph (2) of subsection b. of this section shall be adjusted
to increase each appropriate municipal distribution by the amount necessary to:

���� (1)� 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;
and

���� (2)� correct equitable
distortions, as determined by the State Treasurer, resulting from the
application of section 2 of P.L.1980, c.10 (C.54:30A-24.1) and section 4 of
P.L.1980, c.11

(C.54:30A-61.1).

���� The director shall report to
the Legislature, on or before July 15, 1997, the amount and distribution of the
corrections pursuant to paragraphs (1) and (2) of this subsection.
]
(Deleted
by amendment, P.L.���� , c.���� ) (pending before the Legislature as this bill)

���� e.���
[
The
]

If the

amount credited to the "Energy Tax Receipts Property Tax Relief Fund"

[
shall
be $745,000,000 for State fiscal year 1999, $750,000,000 for each of State
fiscal years 2000 and 2001, $755,000,000 for State fiscal year 2002, and
]
for
[
each
]

a

fiscal year
[
thereafter
the
]

is
an
amount
[
equal
to
]

less
than or greater than
the amount credited in the prior fiscal year
[
multiplied by
the sum of 1.0 and the index rate or zero, whichever is greater.� As used in
this section, "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)
]

the amount of aid distributed to a municipality shall be reduced or
increased, as the case may be, in proportion to the amount of aid distributed
to the municipality in the prior State fiscal year
.� Any amount of aid
distributed to a municipality in excess of the amount distributed to the
municipality from the "Energy Tax Receipts Property Tax Relief Fund"
during the 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.

���� f.���� Notwithstanding any
other provision of this section or any other provision of law to the contrary,
if any municipality paid a county for 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 paragraph (2) of subsection b. of this section.

(cf: P.L.2002, c.3, s.1).

���� 2.��� Section 4 of P.L.1997,
c.167 (C.52:27D-441) is amended to read as follows:

���� 4.��� a.� The annual
appropriations act for each State fiscal year commencing with fiscal year
[
1998
]

2019

shall appropriate
the full amount credited to the "Energy Tax Receipts
Property Tax Relief Fund" pursuant to the provisions of section 2 of
P.L.1997, c.167 (C.52:27D-439),
and distribute
to each municipality
during
the fiscal year
[
an
amount not less than $740,000,000 or
]

exclusively from the sources credited to the fund pursuant to that section,

the amount determined pursuant to subsection e. of section 2 of P.L.1997, c.167
(C.52:27D-439) from the "Energy Tax Receipts Property Tax Relief
Fund" pursuant to the provisions of
that
section
[
2 of P.L.1997,
c.167 (C.52:27D-439), 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 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 pursuant to subsection b. of this section 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, notify all taxpayers
that have filed a return under the Corporation Business Tax (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) pursuant to the amendment to that section 4 made
in section 2 of 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.

(cf: P.L.1997, c.167, s.4)

���� 3.��� Section 3 of P.L.1997,
c.167 (C.52:27D-440)� is repealed.

���� 4.��� This act shall take
effect immediately.

STATEMENT

���� This bill limits the amount of
annual energy tax revenues that the State may retain as general State revenue
to the amount the State budget "skimmed" in fiscal year 1998, or $403
million.� The remaining balance must be paid out annually to municipalities so
as to provide for enhanced property tax relief.� In so doing, the bill ensures
that, unlike in some years past, New Jersey's municipalities are not
shortchanged when energy-sector tax collections grow.

���� The State and its
municipalities share energy tax revenues.� Recent State budgets have routinely
shifted the allocation formula in the State�s favor by holding the municipal
share flat and apportioning to the State all the revenue growth.� The bill
breaks this abusive pattern by mandating that the State cannot retain more than
the $403 million per year that it �skimmed� in fiscal year 1998 and that any
excess amounts are disbursed to municipalities in proportion to each
municipality's prior year State aid distribution from this source.

���� The table below illustrates
the allocation of annual energy tax revenues between the State and its
municipalities under current law.

Energy
Tax Revenue Allocation between State and Municipalities

Fiscal Year

State Use Portion

Municipal Aid

1998

$403,000,000
(Bill�s Cap)

$740,000,000

2008

$948,000,000

$789,000,000

2009

$926,000,000

$789,000,000

2010

$844,000,000

$789,000,000

2011

$841,000,000

$789,000,000

2012

$389,000,000

$789,000,000

2013

$436,000,000

$789,000,000

2014

$337,000,000

$789,000,000

2015

$470,300,000

$789,000,000

2016

$187,000,000

$789,000,000

2017
est.

$304,600,000

$789,000,000

2018
est.

$328,400,000

$789,000,000