Bill Text: NJ S1662 | 2024-2025 | Regular Session | Introduced
Bill Title: Revises Energy Tax Receipts Property Tax Relief Aid program; requires all energy taxes to be paid directly to municipalities.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced) 2024-01-09 - Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee [S1662 Detail]
Download: New_Jersey-2024-S1662-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Senator DECLAN J. O'SCANLON, JR.
District 13 (Monmouth)
Co-Sponsored by:
Senator Steinhardt
SYNOPSIS
Revises Energy Tax Receipts Property Tax Relief Aid program; requires all energy taxes to be paid directly to municipalities.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning the distribution of Energy Tax Receipts Property Tax Relief Aid and amending 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. (1) Commencing July 1, 1997 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 and concluding in State fiscal year 2021, the sum of $740,000,000 or the amount determined pursuant to subsection e. of this section 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, 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 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.
(2) Commencing in State fiscal year 2022, and for each fiscal year thereafter, the State Treasurer shall:
(a) determine the aggregate amount of Energy Tax Receipts Property Tax Relief Aid that shall be provided to municipalities throughout the State, as calculated pursuant to paragraph (2) of subsection e. of this section;
(b) determine the amount of Energy Tax Receipts Property Tax Relief Aid that shall be provided each municipality in the State, as calculated pursuant to subsection b. of this section;
(c) direct each energy taxpayer liable for payment of energy taxes during that fiscal year to make direct payment of such tax liabilities to one or more municipalities, as designated by the State
Treasurer, such that each municipality receives the amount determined under subparagraph (b) of this paragraph;
(d) when the aggregate amount of Energy Tax Receipts Property Tax Relief Aid is determined by the amount set forth in subparagraph (a) of paragraph (2) of subsection e. of this section, the State Treasurer shall make such additional payments as are necessary, from the Property Tax Relief Fund, to ensure that each municipality receives the amount determined under subparagraph (b) of this paragraph;
(e) establish any requirements, as the State Treasurer may deem appropriate, concerning the payments made pursuant to subparagraphs (c) or (d) of this paragraph, including but not limited to dates on which each payment shall be provided; and
(f) advise each municipality of the name of each energy taxpayer that shall make direct payment of energy taxes to the municipality, the amounts owed therefrom, and the dates on which each payment shall be provided.
(3) The amount of any payment made pursuant to subparagraph (c) of paragraph (2) of this subsection may be taken as a credit by the energy taxpayer making the payment against the energy tax liability of the energy taxpayer, as prescribed by the State Treasurer. The payments made pursuant to this paragraph shall be deemed to be payments of State taxes for purposes of the "State Uniform Tax Procedure Law," R.S.54:48-1 et seq.
(4) Notwithstanding any provision of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the State Treasurer may adopt immediately upon filing with the Office of Administrative Law such regulations as the State Treasurer deems necessary for the efficient administration of this section which shall be effective for a period not to exceed 360 days following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) and may thereafter be amended, adopted or readopted by the commission in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et seq.).
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.
(5) Commencing in State fiscal year 2022, and during each State fiscal year thereafter, if the total energy taxes due and payable during that fiscal year exceed the amount that would have been otherwise deposited into the "Energy Tax Receipts Property Tax Relief Fund" during that fiscal year, then the difference shall be distributed amongst all municipalities in proportion to the equalized assessed valuation of real and personal property owned by all energy taxpayers located within each municipality, as determined by the State Treasurer.
c. (1) [The] Except as otherwise determined by the State Treasurer pursuant to subparagraph (e) of paragraph (2) of subsection a. of this section, 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% 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, except as otherwise determined by the State Treasurer pursuant to subparagraph (e) of paragraph (2) of subsection a. of this section.
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.
e. [The] (1) Concluding in State fiscal year 2021, 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 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.
(2) Commencing in State fiscal year 2022, and for each fiscal year thereafter, the aggregate amount of Energy Tax Receipts Property Tax Relief Aid provided to all municipalities, as determined by the State Treasurer pursuant to subparagraph (a) of paragraph (2) of subsection a. of this section, shall be the greater of:
(a) the amount that would have been otherwise deposited into the "Energy Tax Receipts Property Tax Relief Fund" for that fiscal year, as determined by paragraph (1) of this subsection; or
(b) the amount equal to the total energy taxes due and payable during that fiscal year.
(3) 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).
(4) 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.
g. As used in this section:
"Energy taxes" includes the 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, the 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, the 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, the net payments under P.L.1940, c.5 (C.54:30A-49 et seq.) from sewerage and water corporations, and the net payments under the "Transitional Energy Facility Assessment Act," P.L.1997, c.162 (C.54:30A-100 through C.54:30A-113).
"Energy taxpayer" means any entity responsible for payment of energy taxes.
(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. (1) The annual appropriations act for each State fiscal year commencing with fiscal year 1998, and concluding in State fiscal year 2021, shall appropriate and distribute during the fiscal year an amount not less than $740,000,000 or 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 section 2 of P.L.1997, c.167 (C.52:27D-439), for the purposes of that fund.
(2) The annual appropriations act for each State fiscal year commencing with State fiscal year 2022 shall appropriate and distribute during the fiscal year such amounts as are necessary to comply with the requirements set forth in section 2 of P.L.1997, c.167 (C.52:27D-439).
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 (1946), 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 revises the Energy Tax Receipts Property Tax Relief ("ETR") Aid Program by requiring all energy taxes to be paid directly to municipalities.
Historically, energy providers and public utility companies were required to pay gross receipts and franchise taxes based on their use of public lands. For many decades, these taxes were paid directly to municipalities as a means of compensation for hosting such facilities. In the 1980s, the State began to collect these taxes on behalf of municipalities, distribute a portion of the proceeds to municipalities as State aid, and retain the remaining revenues for other State purposes. In the late 1990s, this practice was continued when the State established the ETR Aid program after reforming the taxation of energy providers and public utility companies.
Under current law, the State is required to annually deposit a statutorily determined amount of monies into the "Energy Tax Receipts Property Tax Relief Fund" and distribute those monies to municipalities as ETR Aid. Every year, the total distribution of ETR Aid is required to increase based on inflation. During any year in which the State fails to provide this aid, the State is required to forego the collections of certain taxes on energy providers and public utilities (e.g., sales tax collections for energy services, corporation business tax collections from certain public utility companies, etc.), hereinafter referred to as "energy taxes."
Under this bill, the ETR Aid program would be restructured to reflect the original design of the gross receipts and franchise taxes, wherein all energy taxes were paid directly to municipalities. Beginning in Fiscal Year 2022, and during each year thereafter, the bill requires the State Treasurer to: (1) determine the aggregate amount of ETR Aid provided Statewide; (2) determine the amounts provided to each municipality; (3) direct each energy taxpayer to make direct payment of energy taxes to one or more municipalities; and (4) advise each municipality of the name of each energy taxpayer that would make direct payment of energy taxes to the municipality, the amounts owed therefrom, and the dates on which each payment would be provided.
The State Treasurer would also be required to establish additional requirements concerning the payment of ETR Aid, including but not limited to dates on which each payment would be provided. The bill provides that whenever an energy tax payment is made directly to a municipality, the amount of the payment may be taken as a credit against the tax liability of the energy taxpayer, as prescribed by the State Treasurer.
Additionally, the bill provides that beginning in Fiscal Year 2022, the aggregate amount of ETR Aid provided during any fiscal year is required to equal the greater of: (1) the total amount that would have been otherwise provided under current law; or (2) the total amount of energy taxes due and payable during that fiscal year. Consequently, the bill would prevent the State from retaining any portion of these energy tax collections for other State purposes.
Under the bill, if the total energy taxes due and payable during any fiscal year exceed the amount of ETR Aid that would have been otherwise provided under current law, then the difference would be distributed amongst all municipalities in proportion to the equalized assessed valuation of real and personal property owned by all energy taxpayers located within each municipality, as determined by the State Treasurer. Alternatively, the bill also provides that if the total energy taxes due and payable during any fiscal year is less than the amount of ETR Aid that would have been otherwise provided under current law, then the State Treasurer is required to make such additional payments as are necessary, from the Property Tax Relief Fund, to ensure that each municipality receives the amount owed.
During any fiscal year in which the State fails to comply with the requirements of this bill, the State would be required to forego the collection of all energy taxes.
