Bill Text: NJ A1127 | 2024-2025 | Regular Session | Introduced
Bill Title: Establishes "Subaccount for School Funding Protection" reserve account in Property Tax Relief Fund to prevent state aid losses for schools during economic emergency.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced) 2024-01-09 - Introduced, Referred to Assembly Education Committee [A1127 Detail]
Download: New_Jersey-2024-A1127-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Assemblyman JOHN DIMAIO
District 23 (Hunterdon, Somerset and Warren)
Co-Sponsored by:
Assemblyman McGuckin
SYNOPSIS
Establishes "Subaccount for School Funding Protection" reserve account in Property Tax Relief Fund to prevent state aid losses for schools during economic emergency.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act establishing a reserve account in the Property Tax Relief Fund to hold unanticipated dedicated revenue increases to fund schools during economic emergencies, and supplementing chapter 9 of Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. There is established within the Property Tax Relief Fund a restricted reserve account to be known as the Subaccount for School Funding Protection. The State Treasurer shall credit to the Subaccount for School Funding Protection on or before December 31 annually, and in addition to any amount appropriated to the Subaccount for School Funding Protection, the amounts determined pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill). Monies credited to the Subaccount for School Funding Protection may be invested in the same manner as assets of the Property Tax Relief Fund and any investment earnings on the Subaccount for the School Funding Protection shall accrue to the account and shall be available subject to the terms and conditions as other balances pursuit to P.L. , c. (C. ) (pending before the Legislature as this bill). The State Treasurer may determine the amount of earnings to be credited to the Subaccount for School Funding Protection to reflect the average rate of return on the State of New Jersey Cash Management Fund. The State Treasurer shall provide a report of the status of the Subaccount for School Funding Protection to the Governor and to the Legislature through the Joint Budget Oversight Committee, or its successor, periodically, but not less often than annually on or about January 15.
2. a. As used in this section "anticipated revenue" means the amount of revenue estimated to be realized in a fiscal year as Property Tax Relief Fund resources to support appropriations made, but not including revenue transfers to the Property Tax Relief Fund from other funds in the State Treasury.
b. The amount annually to be credited to the Subaccount for School Funding Protection shall be determined by the State Treasurer in the following manner:
(1) The State Treasurer shall identify the amount of anticipated revenue certified by the Governor upon approval of the annual appropriation act for the fiscal year immediately preceding the fiscal year in which a credit to the Subaccount for School Funding Protection is required.
(2) The State Treasurer shall determine, from the annual financial report of the Property Tax Relief Fund for the fiscal year immediately preceding the fiscal year in which a credit to the Subaccount for School Funding Protection is required, the amount of resources actually deposited in the Property Tax Relief Fund in that fiscal year. If in any preceding fiscal year for which a determination under this subsection is to be made, there is a State law enacted which will increase the gross income tax revenue or sales tax revenue to the Property Tax Relief Fund, the yield from that increase for that preceding fiscal year in which the increase is in effect shall be disregarded in determining the amount to be credited to the Subaccount for School Funding Protection.
(3) The amount of the credit to the Subaccount for School Funding Protection shall be an amount not less than 50 percent of the excess, if there be any, of the amount determined in paragraph (2) of this subsection over the amount determined in paragraph (1) of this subsection. If actual resources deposited into the Property Tax Relief Fund for the fiscal year preceding the fiscal year in which a credit to the Subaccount for School Funding Protection is required are less than the amount of resources deposited to the Property Tax Relief Fund as certified by the Governor upon approval of the annual appropriation act for that fiscal year, the amount of the credit to the Subaccount for School Funding Protection otherwise calculated pursuant to this section shall be reduced by the difference between the amount so certified and the actual collections.
c. The Governor shall include in the annual budget message to the Legislature an estimate of the credit to be made to the Subaccount for School Funding Protection as a reduction of the estimated undesignated fund balance in the Property Tax Relief Fund as of July 1 of the fiscal year for which the Governor is making the budget recommendations. The amount estimated by the Governor for this purpose shall not be less than 50 percent of the difference between the amount certified by the Governor upon approval of the annual appropriation act for the fiscal year immediately preceding the fiscal year for which the Governor's budget recommendations are being made and the amount of revenue anticipated for that preceding fiscal year as reflected in the annual budget message for that preceding fiscal year.
3. Balances less than $2,000,000,000 in the Subaccount for School Funding Protection shall not be available for appropriation except as provided in P.L. , c. (C. ) (pending before the Legislature as this bill). Balances in the Subaccount for School Funding Protection may be appropriated by the Legislature only:
a. upon separate certification by the Governor that anticipated resources in the Property Tax Relief Fund are estimated to be less than those certified by the Governor upon approval of the annual appropriation act; or
b. upon a finding by the Legislature, based on its research, that to offset resource declines anticipated in the Property Tax Relief Fund an appropriation from the Subaccount for School Funding Protection is a more prudent fiscal policy than imposing new taxes or increasing any rate of tax or otherwise modifying the tax structure, including elimination or modification of deductions, exclusions, or exemptions.
The provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not be construed to render balances in the Subaccount for School Funding Protection unavailable for meeting the costs of any emergency identified by the Governor as it pertains to funding schools pursuant to P.L.2007, c.260 (C.18A:7F-43 et al.). Balances in the Subaccount for School Funding Protection are appropriated for that purpose, provided however, that the Governor shall notify the Joint Budget Oversight Committee, or its successor, of his determination that balances in the fund are required to meet an emergency, describing the nature of the emergency and the intended use of the funds in meeting the emergency. Upon notice to the Governor that such expenditures have been approved by the committee, or its successor, the expenditure of such funds shall be lawful. As used in this section, "emergency" means any condition or occurrence which requires an immediate response in the protection of the life, safety, or well-being of the citizens of this State, or any of them, or in the protection or restoration of property, public or private, endangered, damaged, or destroyed as a result, actual or potential, of such condition or occurrence.
c. Excluding an emergency, balances in the Subaccount for School Funding Protection in excess of $2,000,000,000 may be appropriated for the purposes of the Property Tax Relief Fund.
4. a. If in any fiscal year there is enacted an appropriation from the Subaccount for School Funding Protection pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), there shall not be enacted any imposition of increases in existing gross income tax rates, sales and use tax rates, gross income tax modifications, or sales and use tax modification having the effect of increasing gross income tax revenues or sales and use tax revenues except as provided in subsection b. of this section.
b. If the amount of the
decline in resources in the Property Tax Relief Fund is greater than the
equivalent of two percent of the total available resources in the Property Tax
Relief Fund as certified by the Governor upon approval of the annual
appropriation act for the fiscal year in which that resource decline is
anticipated, the restrictions of subsection a. of this section shall not apply
and the balances in the Subaccount for School Funding Protection may be
appropriated in any other manner as found to be in the best interests of the
fiscal condition of the Property Tax Relief Fund after first meeting the
requirements pursuant to P.L.2007, c.260 (C.18A:7F-43 et al.).
5. This act shall take effect immediately.
STATEMENT
This bill establishes a Subaccount for School Funding Protection in the property tax relief fund to serve as a "rainy day fund" for schools if property tax relief fund revenue were to decline. The State Treasurer is required to credit, on or before December 31 annually, not less than 50 percent of resources deposited into the property tax relief fund in excess of the amount certified by the Governor.
Balances less than $2,000,000,000 in the Subaccount for School Funding Protection may only be appropriated by the Legislature: 1) if anticipated Property Tax Relief Fund resources are estimated to be less than the Governor's certification; 2) to offset Property Tax Relief Fund resource declines instead of increasing, or modifying to increase, the gross income tax and sales and use tax, which is prohibited unless property tax relief fund resources decline by more than two percent; or 3) for meeting the costs of any emergency identified by the Governor that is within the purposes of the Property Tax Relief Fund. Excluding an emergency, balances in the Subaccount for School Funding Protection in excess of $2,000,000,000 may be appropriated for the purposes of the Property Tax Relief Fund.
It is the sponsor's intent to prevent a decrease in State aid to schools if a recession or other economic emergency led to a decrease in revenue dedicated to the Property Tax Relief Fund. The Property Tax Relief Fund is the primary source for school funding and is the constitutionally required repository of revenue from the New Jersey gross income tax.
