Bill Text: NJ S2191 | 2010-2011 | Regular Session | Introduced
Bill Title: Reduces school district, county, and municipal property tax levy cap from 4 percent to 2.5 percent and permits unused county and municipal increases to be banked for three succeeding years.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-07-01 - Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee [S2191 Detail]
Download: New_Jersey-2010-S2191-Introduced.html
Sponsored by:
Senator FRED H. MADDEN, JR.
District 4 (Camden and Gloucester)
SYNOPSIS
Reduces school district, county, and municipal property tax levy cap from 4 percent to 2.5 percent and permits unused county and municipal increases to be banked for three succeeding years.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the calculation of the local tax levy cap and amending P.L.2007, 62.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.2007, c.62 (C.18A:7F-38) is amended to read as follows:
3. a. (1) Notwithstanding the provisions of any other law to the contrary, a school district shall not adopt a budget pursuant to sections 5 and 6 of P.L.1996, c.138 (C.18A:7F-5 and 18A:7F-6) with an increase in its adjusted tax levy that exceeds the tax levy growth limitation calculated as follows: the sum of the prebudget year adjusted tax levy and the adjustment for increases in enrollment multiplied by [four] 2.5 percent, and adjustments for a reduction in total unrestricted State aid from the prebudget year, an increase in health care costs, beginning in the 2008-2009 school year, amounts approved by a waiver granted by the commissioner pursuant to section 4 of P.L.2007, c.62 (C.18A:7F-39), and, for the 2010-2011 school year, increases in amounts for certain normal and accrued liability pension contributions set forth in sections 1 and 2 of P.L.2009, c.19 amending section 24 of P.L.1954, c.84 (C.43:15A-24) and section 15 of P.L.1944, c.255 (C.43:16A-15) for the year set forth in those sections.
(2) Notwithstanding any provision of paragraph (1) of this subsection to the contrary, beginning in the 2008-2009 school year the tax levy growth limitation for a district which is spending above adequacy as determined pursuant to subsection d. of section 5 of P.L.2007, c.260 (C.18A:7F-47) and has a prebudget year general fund tax levy greater than its local share as calculated pursuant to section 10 of that act and which receives an increase in State aid between the prebudget and budget years that is greater than 2% or the CPI, whichever is greater, shall be reduced by the amount of the State aid increase that exceeds 2% or the CPI, whichever is greater. For the purposes of this paragraph, the CPI shall not exceed 4%. The reduction shall be made following the calculation of any adjustments for increases in enrollment, a reduction in total unrestricted State aid, an increase in health care costs, and an increase in the amount of the normal and accrued liability pension contributions calculated pursuant to subsections b., c., and d. of this section and prior to the request or approval of waivers pursuant to section 4 of P.L.2007, c.62 (C.18A:7F-39). In the event that the reduction would bring the district's spending below adequacy, notwithstanding the requirements of this paragraph to the contrary the amount of the reduction made to the district's tax levy growth limitation shall not be greater than the amount that brings the district's spending to adequacy.
b. (1) The allowable adjustment for increases in enrollment authorized pursuant to subsection a. of this section shall equal the per pupil prebudget year adjusted tax levy multiplied by EP, where EP equals the sum of:
(a) 0.50 for each unit of weighted resident enrollment that constitutes an increase from the prebudget year over 1%, but not more than 2.5%;
(b) 0.75 for each unit of weighted resident enrollment that constitutes an increase from the prebudget year over 2.5%, but not more than 4%; and
(c) 1.00 for each unit of weighted resident enrollment that constitutes an increase from the prebudget year over 4%.
(2) A school district may request approval from the commissioner to calculate EP equal to 1.00 for any increase in weighted resident enrollment if it can demonstrate that the calculation pursuant to paragraph (1) of this subsection would result in an average class size that exceeds 10% above the facilities efficiency standards established pursuant to P.L.2000, c.72 (C.18A:7G-1 et al.).
c. The allowable adjustment for a reduction in total unrestricted State aid authorized pursuant to subsection a. of this section shall equal any reduction in total unrestricted State aid from the prebudget to the budget year.
d. (1) The allowable adjustment for increases in health care costs authorized pursuant to subsection a. of this section shall equal that portion of the actual increase in total health care costs for the budget year, less any withdrawals from the current expense emergency reserve account for increases in total health care costs, that exceeds [four] 2.5 percent of the total health care costs in the prebudget year, but that is not in excess of the product of the total health care costs in the prebudget year multiplied by the average percentage increase of the State Health Benefits Program, P.L.1961, c.49 (C.52:14-17.25 et seq.), as annually determined by the Division of Pensions and Benefits in the Department of the Treasury.
(2) The allowable adjustment for increases in the amount of normal and accrued liability pension contributions authorized pursuant to subsection a. of this section shall equal that portion of the actual increase in total normal and accrued liability pension contributions for the budget year that exceeds [four] 2.5 percent of the total normal and accrued liability pension contributions in the prebudget year.
e. In addition to the adjustments authorized pursuant to subsection a. of this section, for the purpose of determining a school district's allowable tax levy growth limitation for the 2007-2008 school year, a school district may apply to the commissioner for an adjustment for increases in special education costs over $40,000 per pupil, increases in tuition, capital outlay increases, and incremental increases in costs for opening a new school facility in the budget year.
(1) The allowable adjustment for increases in special education costs over $40,000 per pupil shall equal any increase in the sum of per pupil amounts in excess of $40,000 for the budget year less the sum of per pupil amounts in excess of $40,000 for the prebudget year indexed by four percent.
(2) The allowable adjustment for increases in tuition shall equal any increase in the tuition for the budget year charged to a sending district by the receiving district pursuant to the provisions of N.J.S.18A:38-19 or charged by a county vocational school district pursuant to the provisions of section 71 of P.L.1990, c.52 (C.18A:54-20.1) less 104 percent of the tuition for the prebudget year charged to a sending district by the receiving district pursuant to the provisions of N.J.S.18A:38-19 or charged by a county vocational school district pursuant to the provisions of section 71 of P.L.1990, c.52 (C.18A:54-20.1).
(3) The allowable adjustment for increases in capital outlay shall equal any increase in capital outlay, less any withdrawals from the capital reserve account, over the prebudget year in excess of four percent.
f. The adjusted tax levy shall be increased or decreased accordingly whenever the responsibility and associated cost of a school district activity is transferred to another school district or governmental entity.
(cf: P.L.2009, c.19, s.3)
2. Section 4 of P.L.2007, c.62 (C.18A:7F-39) is amended to read as follows:
4. a. (1) Beginning in the 2008-2009 school year, a school district may request approval from the commissioner for a waiver to increase its adjusted tax levy by more than the allowable amount authorized in section 3 of P.L.2007, c.62 (C.18A:7F-38) to address extraordinary costs which may include, but not be limited to:
(a) a district's failure to meet the core curriculum content standards as determined through the New Jersey Quality Single Accountability Continuum. Prior to full implementation of NJQSAC, such determination shall be based on a school district's status under the "No Child Left Behind Act of 2001," Pub.L. 107-110. The commissioner shall approve the increase only if the district satisfactorily demonstrates that the increase will be used to implement or expand programs or services to address the causes of the district's failure to meet the core curriculum content standards or other performance indicators as determined through NJQSAC;
(b) energy cost increases over the prebudget year in excess of [four] 2.5 percent;
(c) capital outlay increases, less any withdrawals from the capital reserve account, over the prebudget year in excess of [four] 2.5 percent;
(d) the appropriation of non-recurring general fund revenues in the prebudget year original budget, including the appropriation of surplus;
(e) increases in insurance costs over the prebudget year in excess of [four] 2.5 percent;
(f) increases in transportation costs required to service hazardous routes over the prebudget year in excess of [four] 2.5 percent;
(g) increases in special education costs that exceed $40,000 per each special education pupil over the prebudget year in excess of [four] 2.5 percent;
(h) increases in tuition costs charged to a sending district by the receiving district pursuant to the provisions of N.J.S.18A:38-19 over the prebudget year in excess of [four] 2.5 percent or charged by a county vocational school district pursuant to the provisions of section 71 of P.L.1990, c.52 (C.18A:54-20.1) over the prebudget year in excess of [four] 2.5 percent; and
(i) incremental increases in costs associated with opening a new school facility in the budget year.
(2) A waiver request shall be submitted at least five working days prior to the required budget submission dates established pursuant to sections 5 and 6 of P.L.1996, c.138 (C.18A:7F-5 and 18A:7F-6) in a form required by the commissioner, as appropriate, and shall include such information and documentation as the commissioner deems necessary.
(3) In considering a waiver request, in addition to the authority granted to the commissioner pursuant to section 6 of P.L.1996, c.138 (C.18A:7F-6), the commissioner shall have the power to make budgetary reallocations up to the total amount of the waiver request. The commissioner shall not reduce or reallocate any line item accounts that will impact the district's ability to meet the core curriculum content standards and provide a thorough and efficient education.
(4) A waiver approval shall specify whether the adjusted tax levy increase shall be limited to the budget year or added to the adjusted tax levy as a permanent increase.
(5) Any decision of the commissioner as to the entitlement of any school district to an increase of its adjusted tax levy pursuant to this section shall be final and conclusive, and no appeal or review shall be taken therefrom; except that the matter may be put before the voters pursuant to subsection c. of this section.
b. (1) The commissioner may direct a school district to increase specific line item expenditure accounts, for specific purposes, to address low achievement or the causes of the district's failure to meet the core curriculum content standards as determined through NJQSAC, or prior to full implementation of NJQSAC, as determined based on a school district's status under the "No Child Left Behind Act of 2001," Pub.L.107-110.
(2) The commissioner is authorized to approve a school district budget with an increase in its adjusted tax levy by more than the allowable amount authorized pursuant to section 3 of P.L.2007, c.62 (C.18A:7F-38), up to the amount required to support the increase in expenditure accounts as directed in paragraph (1) of this subsection.
c. For the 2007-2008 school year, or for the 2008-2009 through [2011-2012] 2013-2014 school years if a waiver requested pursuant to subsection a. of this section fails to be approved by the commissioner or if the school district elects not to request a waiver, the school district may submit to the voters at the April school election, or on such other date as is set by regulation of the commissioner, a proposal or proposals to increase the tax levy by more than the allowable amount authorized pursuant to section 3 of P.L.2007, c.62 (C.18A:7F-38). The proposal or proposals to increase the tax levy shall be approved if a majority of people voting at the April 2007 school election vote in the affirmative, or if 60 percent of the people voting at the April 2008 through April [2011] 2013 school elections vote in the affirmative. In the case of a school district with a board of school estimate, the additional tax levy shall be authorized only if a quorum is present for the vote and a majority of those board members who are present vote in the affirmative to authorize the additional tax levy.
(1) A proposal or proposals submitted to the voters or the board of school estimate to increase the tax levy pursuant to this subsection shall not include any programs or services necessary for students to achieve the core curriculum content standards.
(2) All proposals to increase the tax levy submitted pursuant to this subsection shall include interpretive statements specifically identifying the program purposes for which the proposed funds shall be used and a clear statement on whether approval will affect only the current year or result in a permanent increase in the levy. The proposals shall be submitted and approved pursuant to sections 5 and 6 of P.L.1996, c.138 (C.18A:7F-5 and 18A:7F-6).
(3) For only the 2007-2008 school budget year, any proposal or proposals rejected by the voters shall be submitted to the municipal governing body or bodies for a determination as to the amount, if any, that should be expended notwithstanding voter rejection. The decision of the municipal governing body or bodies or board of school estimate, as appropriate, shall be final and no appeals shall be made to the commissioner.
d. The commissioner shall have the authority to grant additional waivers, applicable to all or some school districts, as determined by the commissioner, and only effective for the school budget year in which the waiver is granted, upon a finding of extraordinary circumstances that result in an unanticipated increase in expenditures for a service essential to the health, safety and welfare of the school children of the State.
(cf: P.L.2007, c.62, s.4)
3. Section 5 of P.L.2007, c.62 (C.18A:7F-40) is amended to read as follows:
5. a. Notwithstanding any provision of subsection d. of section 5 of P.L.1996, c.138 (C.18A:7F-5) or section 36 of P.L.2000, c.126 (C.18A:7F-5a) to the contrary, for the 2007-2008 through [2011-2012] 2013-2014 school years the increase in a school district's general fund tax levy shall be calculated in accordance with the provisions of sections 2 through 4 of P.L.2007, c.62 (C.18A:7F-37 through C.18A:7F-39).
b. Notwithstanding any provision of paragraph (9) of subsection d. of section 5 of P.L.1996, c.138 (C.18A:7F-5) to the contrary, for the 2007-2008 through [2011-2012] 2013-2014 school years the submission of a separate proposal or proposals for additional funds to the voters or the board of school estimate shall be submitted in accordance with the provisions of subsection c. of section 4 of P.L.2007, c.62 (C.18A:7F-39).
(cf: P.L.2007, c.62, s.5)
4. Section 9 of P.L.2007, c.62 (C.40A:4-45.44) is amended to read as follows:
9. For the purposes of sections 9 through 13 of P.L.2007, c.62 (C.40A:4-45.44 through C.40A:4-45.47 and C.40A:4-45.3e):
"Adjusted tax levy" means an amount not greater than the amount to be raised by taxation of the previous fiscal year, less any waivers from a prior fiscal year required to be deducted by the Local Finance Board pursuant to section 11 of P.L.2007, c.62 (C.40A:4-45.46), that result multiplied by [1.04] 1.025, to which the sum of exclusions defined in subsection b. of section 10 of P.L.2007, c.62 (C.40A:4-45.45) shall be added.
"Amount to be raised by taxation" means the property tax levy set in the annual budget of a local unit.
"Local unit" means a municipality, county, fire district, or solid waste collection district, but shall not include a municipality that had a municipal purposes tax rate of $0.10 or less per $100 for the previous tax year.
"New ratables" means the product of the taxable value of any new construction or improvements times the tax rate of a local unit for its previous tax year.
(cf: P.L.2007, c.62, s.9)
5. Section 10 of P.L.2007, c.62 (C.40A:4-45.45) is amended to read as follows:
10. a. (1) In the preparation of its budget the amount to be raised by taxation by a local unit shall not exceed, except as provided in paragraph (2) of this subsection, the sum of new ratables, the adjusted tax levy, and the total of waivers approved pursuant to section 11 of P.L.2007, c.62 (C.40A:4-45.46); provided, however, that in the case of a county, the amount to be raised by taxation shall not exceed the amount permitted by section 4 of P.L.1976, c.68 (C.40A:4-45.4).
(2) A local unit that has not been granted approval for a waiver pursuant to section 11 of P.L.2007, c.62 (C.40A:4-45.46), may add to its adjusted tax levy in either of the next three succeeding years, the amount of the difference between the maximum allowable amount to be raised by taxation or county purposes tax, as applicable, for the current local budget year pursuant to subsection a. of this section and the actual amount to be raised by taxation or county purposes tax, as applicable, for the current local budget year.
b. The following exclusions shall be added to the calculation of the adjusted tax levy:
(1) increases in amounts required to be raised for (a) all debt service and (b) lease payments with county improvement authorities pursuant to leases in effect on the effective date of P.L.2007, c.62 (C.18A:7F-37 et al.);
(2) increases in amounts required to be raised to replace State formula aid due to a reduction in State formula aid from the previous local budget year;
(3) increases in amounts for certain pension contributions set forth in section 5 of P.L.2003, c.108 (C.40A:4-45.43) for the years set forth in that section;
(4) with respect to municipalities, any increase, greater than [four] 2.5 percent, in the reserve for uncollected taxes that is required by law;
(5) increases in health care costs equal to that portion of the actual increase in total health care costs for the budget year that is in excess of [four] 2.5 percent of the total health care costs in the prior year, but is not in excess of the product of the total health care costs in the prior year and the average percentage increase of the State Health Benefits Program, P.L.1961, c.49 (C.52:14-17.25 et seq.), as annually determined by the Division of Pensions and Benefits in the Department of the Treasury;
(6) increases in amounts for certain normal and accrued liability pension contributions set forth in sections 1 and 2 of P.L.2009, c.19 amending section 24 of P.L.1954, c.84 (C.43:15A-24) and section 15 of P.L.1944, c.255 (C.43:16A-15) equal to that portion of the actual increase in normal and accrued liability pension contributions for the budget year that is in excess of [four] 2.5 percent of the normal and accrued liability pension contributions in the prior year.
[Notwithstanding the other provisions of this subsection, when the appropriation for all debt service is less than the amount appropriated for all debt service in the prior fiscal year, the amount of the difference shall be deducted from the sum of the exclusions listed in paragraphs (1) through (6) of this subsection.] If there are no exclusions, then the amount of the difference shall reduce the adjusted tax levy by that amount. Any cancelled or unexpended appropriation for any exclusion pursuant to this subsection or waiver pursuant to section 11 of P.L.2007, c.62 (C.40A:4-45.46), also shall be deducted from the sum of the exclusions listed in paragraphs (1) through (6) or directly reduce the adjusted tax levy if there are no exclusions.
(cf: P.L.2009, c.19, s.4)
6. Section 11 of P.L.2007, c.62 (C.40A:4-45.46) is amended to read as follows:
11. a. The governing body of a local unit may request approval from the Local Finance Board in the Department of Community Affairs for a waiver to increase its amount to be raised by taxes to address extraordinary costs, which may include but not be limited to:
(1) increases in appropriations for capital lease payments;
(2) energy cost increases in excess of [four] 2.5 percent;
(3) increases in insurance costs over the prebudget year in excess of [four] 2.5 percent;
(4) offsetting the loss of a non-recurring general fund revenue or surplus;
(5) total net expenditures for new mandated services or net expenditure increases above [four] 2.5 percent for the cost of those services that are mandated by any order of court, by any federal or State statute, or by administrative rule, directive, order, or other legally binding device issued by a State agency which has identified such cost as mandated expenditures on certification to the Local Finance Board by the State agency; and
(6) any purpose related to the provision of government services that the board deems essential to protect or promote the public health, safety, or welfare.
Amounts raised pursuant to a waiver granted pursuant to this subsection shall be included in the calculation of the adjusted tax levy in a subsequent year, unless otherwise required by the waiver.
Any decision of the Local Finance Board as to the entitlement of any local unit to a tax levy cap increase under this section shall be final and conclusive, and no appeal or review shall be taken therefrom; provided, however, that the matter may be put before the voters pursuant to subsection b. of this section.
b. (1) Notwithstanding subsection a. of this section, the governing body of a local unit may request approval, through a public question submitted to the legal voters residing in its territory to increase the amount to be raised by taxation by more than the allowable adjusted tax levy. Approval shall be by an affirmative vote of 60 percent or more of the people voting on the question at the election. The local unit budget proposing the increase shall be introduced and approved in the manner otherwise provided for budgets of that local unit at least 20 days prior to the date on which the referendum is to be held, and shall be published in the manner otherwise provided for budgets of the local unit at least 12 days prior to the referendum date, unless otherwise directed by the Director of the Division of Local Government Services in the Department of Community Affairs.
(2) The public question to be submitted to the voters at the referendum shall state only the amount by which the adjusted tax levy shall be increased by more than the otherwise allowable adjusted tax levy, and the percentage rate of increase which that amount represents over the allowable adjusted tax levy. The public question shall include an accompanying explanatory statement that identifies the changes in appropriations or revenues that warranted the governing body's decision to ask the public question; or, in the alternative and subject to the approval of the Director of the Division of Local Government Services in the Department of Community Affairs, a clear and concise narrative explanation of the circumstances for the increased adjusted tax levy being proposed.
(3) Unless otherwise provided pursuant to section 1 of P.L.1989, c.31 (C.40A:4-5.1), a referendum conducted pursuant to this subsection shall be held:
(a) for calendar year budgets only on the fourth Tuesday in January and the second Tuesday in March other than in a year when a presidential primary election occurs, in which case no such election on that date may be called; and
(b) for fiscal year budgets, only the last Tuesday in September, or the second Tuesday in December;
provided, however, that no referendum shall be held on the same day as a referendum to exceed the school district levy cap.
(4) Any decision of the voters rejecting an increase to the tax levy cap under this subsection shall be final and conclusive, and no appeal or review shall be taken therefrom and no waiver application shall be made to the Local Finance Board.
(5) The director is authorized to act as necessary in order to consolidate ballot questions and procedures when a governing body elects to hold a referendum under both this section and section 9 of P.L.1983, c.49 (C.40A:4-45.16).
c. The Local Finance Board shall have the authority to grant additional waivers, applicable to all or some local units, as determined by the board, and only effective for the local budget year in which the waiver is granted, upon a finding of extraordinary circumstances that result in an unanticipated increase in expenditures for a service essential to the health, safety, and welfare of the residents of the State.
d. The adjusted tax levy shall be increased or decreased accordingly whenever the responsibility and associated cost of an activity performed by a local unit is transferred to or from a local unit, other government entity, or other service provider.
(cf: P.L.2007, c.62, s.11)
7. Section 47 of P.L.2007, c.62 is amended to read as follows:
47. This act shall take effect immediately; provided, however, sections 2 through 12 shall be applicable only to budget years beginning on or after July 1, 2007, and shall not be applicable to budget years beginning after June 30, [2012] 2014; section 13 shall be retroactive to July 1, 2006, and shall not be applicable to budget years beginning after June 30, [2012] 2014; and sections 19 through 40 shall first apply to claims for rebates and credits for property taxes paid for the tax year 2006.
8. This act shall take effect immediately and shall be applicable to the next local budget year following enactment.
STATEMENT
This bill would reduce the levy cap for school districts, counties, municipalities, fire districts, and solid waste collection districts from the currently permitted 4 percent annual increase to a 2.5 percent permitted annual increase. The bill would also permit levy cap "banking" of any portion of the permitted 2.5% increase under the property tax levy cap that is not used by a county or municipality in any budget year. The current levy cap, enacted in 2007, has been fairly effective in holding down the rate of property tax increases. According to the information posted on the Division of Local Government Services website, the average municipal property tax bill rose 3.7% from 2007 to 2008 and 3.3% from 2008 to 2009. The sponsor believes that a further tightening of the existing levy cap laws will produce the same results as proposed by the Governor, as part of his tool kit, through a constitutional amendment.
Under current law, if a county or municipality does not use the entire 4% increase, perhaps because it uses surplus that year to keep tax rates steady, the difference is lost. This can be a problem in a succeeding tax year if circumstances require an unexpected increase in expenditures to maintain services. Under the bill, the cap is being reduced, but any unused permissible increase amount under that 2.5 percent levy cap limit could be used in either of the next three succeeding local budget years. This concept is similar to cap banking under the municipal and county appropriations cap law (N.J.S.A.40A:4-45.1 et seq.).
The bill also deletes language in current law in order to eliminate a levy cap penalty that occurs when a county or municipality acts responsibly to reduce its debt servicing expenditures.
The reduction in the property tax levy cap would be applicable to the local budget year next following enactment of the bill, and the opportunity to bank any unused portion of the allowable increase would commence in that local budget year so that any unused portion of the current 4 percent levy cap would not be available to be banked.
Finally, the bill extends the sunset provision of the levy cap law from June 30, 2012 to June 30, 2014. If the sunset is not further extended by future legislation, then the levy caps would not be applicable to local budgets that are adopted beginning July 1, 201 4.
