June 25, 2010
Re: Re-cap of Assembly and Senate Budget Committee Actions
As we approach the deadline for the adoption of the State’s FY 2011 budget, the Senate Budget and Appropriations Committee and the Assembly Budget Committee have taken action on various bills of bills of interest.
A-3055, Commercial Fee Moratorium
Yesterday, the Assembly Budget approved A-3055, which would extend the suspension of the 2.5% fee on non-residential development to October 30. The fee suspension will otherwise expire on July.
The League submitted a statement in opposition to the bill since it is a band-aid solution and the Assembly should instead immediately prioritize comprehensive reform to the Fair Housing Act.
Though the bill was moved from Committee and is likely to be voted on by the full Assembly on Monday, Senate President Steve Sweeney stated yesterday that he does not support A-3055, and instead called on the Assembly to act on S-1: http://www.nj.com/news/index.ssf/2010/06/nj_senate_president_considers.html
Thus, though the fate of A-3055 is uncertain in the Senate, we would urge you to contact your Assembly representatives and ask them to oppose A-3055 and, most importantly, instead act immediately on S-1. Reform does not have to wait until September. For more on this issue, please see our June 22 Dear Mayor letter.
S-1828 & A-2579, Hotel Occupancy Taxes
Both the Assembly and Senate Budget approved S-1828 & A-2579, which would require the Division of Taxation to regularly provide certain information to municipalities concerning hotel occupancy taxes and would permit unpaid occupancy taxes to become a municipal lien on the real property.
The bills would require the State Treasurer to provide municipalities with annual notification, with authorization to act at the collection agency, of non-payment of hotel occupancy taxes. In addition, the municipality could impose a 5% per annum interest rate on unpaid occupancy taxes.
S-1828 is scheduled for a Senate vote on Monday. We suggest asking your State Senator to support S-1828.
A-2911 & S-2070, Free Public Library Surplus
Last week A-2911& S-2070 were introduced and referred to their respective budget committees. The bill requires the transfer of municipal free library surplus amounts above 20% of its operating expenditures to municipality for its general purposes. In addition the bill provides a tax levy exception for surplus amounts transferred to the municipality. These bills could be voted on in their respective Houses on Monday. We suggest contacting your State representatives and ask their support for A-2911 and S-2070.
A-2950 & S-2077, Impact of Tax Appeal judgments on Reserve for uncollected taxes calculation
Last week A-2950 & S-2077 were introduced and referred to their respective budget committees. The bills would eliminate the threshold for county tax board and State tax court judgments against a municipality, expressed as a percentage of the tax levy for the previous local fiscal year that is used to calculate the reserve for uncollected taxes under N.J.S.40A:4-41c. N.J.S.40A:4-41c permits the reserve for uncollected taxes to be calculated using either a three-year averaging of receipts received on the last day of each of the three preceding fiscal years, or, when the amount of the county tax board- and tax court-ordered tax reductions for the previous fiscal year exceed 0.75% of that previous fiscal year's tax levy, through the reduction of the previous year's certified tax levy by the amount of the tax levy adjustments required by the county tax board and tax court orders. A-2950 & S-2077 will eliminate the 0.75% threshold in order to permit this alternative calculation to be used by more municipalities.
Current law requires that this resolution must be approved by the governing body prior to the introduction of the budget. A-2950 & S-2077 would permit a FY municipality that has introduced, but not adopted, its budget for FY 2011 prior to the effective date of the bills to adopt a resolution authorizing the alternative calculation prior to the adoption of the budget by the governing body. These bills could be voted on in their respective Houses on Monday. We suggest contacting your State representatives and ask their support for A-2950 and S-2077.
S-1804/A-3073, Special Emergency Appropriations for Severance Liabilities
S-1804 & A-3073 would permit municipalities to adopt an ordinance authorizing special emergency appropriations for the payment of contractually required severance liabilities, resulting from the layoff or retirement of employees. The statute currently permits municipalities to adopt a special emergency appropriation for severance liabilities if the cost would equal at least 10% of the amount raised by municipal taxes. This standard is essentially impossible to ever achieve for a small, medium or large municipality and thus the statute is meaningless in its present form.
In light of the pension reforms recently enacted and those discussed in the press, municipalities are experiencing an increase in unanticipated retirements. S-1804 & A-3073 is simply one other tool for municipalities to use when preparing their municipal budget. Given the unique circumstances facing municipalities, this permissive tool will allow municipalities to meet the needs of their community.
S-1804 is scheduled for a Senate vote on Monday. We suggest asking your State Senator to support S-1804.
Very truly yours,
William G. Dressel, Jr.