Bill Text: NJ A235 | 2022-2023 | Regular Session | Introduced
Bill Title: Allocates nondedicated portion of State realty transfer fee collections to municipal property tax relief.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2022-01-11 - Introduced, Referred to Assembly Community Development and Affairs Committee [A235 Detail]
Download: New_Jersey-2022-A235-Introduced.html
STATE OF NEW JERSEY
220th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2022 SESSION
Sponsored by:
Assemblywoman NANCY F. MUNOZ
District 21 (Morris, Somerset and Union)
SYNOPSIS
Allocates nondedicated portion of State realty transfer fee collections to municipal property tax relief.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act requiring that municipalities receive the nondedicated General Fund portion of the State's realty transfer fee collections for property tax relief and amending P.L.1968, c.49, P.L.2004, c.66, and P.L.1992, c.148.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.1968, c.49 (C.46:15-7) is amended to read as follows:
3. a. In addition to the recording fees imposed by section 2 of P.L.1965, c.123 (C.22A:4-4.1), a grantor shall pay to the county recording officer at the time the deed is offered for recording the following fees:
(1) A basic fee, which basic fee shall consist of (a) a State portion at the rate of $1.25 for each $500.00 of consideration or fractional part thereof recited in the deed, and (b) a county portion at the rate of $0.50 for each $500.00 of consideration or fractional part thereof so recited; provided however, that on and after the tenth day following a certification by the Director of the Division of Budget and Accounting in the Department of the Treasury pursuant to subsection b. of section 2 of P.L.1992, c.148 (C.46:15-10.2) [or subsubparagraph (ii) of subparagraph (b) of paragraph (2) of subsection b. of section 1 of P.L.1992, c.148 (C.13:19-16.1) as amended], the State portion of the basic fee shall not be imposed;
(2) An additional fee at the rate of $0.75 for each $500.00 of consideration or fractional part thereof recited in the deed in excess of $150,000.00; provided however, that on and after the tenth day following a certification by the Director of the Division of Budget and Accounting in the Department of the Treasury pursuant to subsection b. of section 2 of P.L.1992, c.148 (C.46:15-10.2) [or subsubparagraph (ii) of subparagraph (b) of paragraph (2) of subsection b. of section 1 of P.L.1992, c.148 (C.13:19-16.1) as amended], the additional fee shall not be imposed; and
(3) A general purpose fee at the [rate of] following rates; provided however, that on and after the tenth day following a certification by the Director of the Division of Budget and Accounting in the Department of the Treasury pursuant to subsection b. of section 2 of P.L.1992, c.148 (C.46:15‑10.2), the general purpose fee shall not be imposed:
(a) $0.90 for each $500.00 of consideration or fractional part thereof recited in the deed that is not in excess of $550,000.00, except that in the case of a conveyance or transfer of property for which the total consideration recited in the deed does not exceed $350,000.00, no general purpose fee shall be imposed;
(b) $1.40 for each $500.00 of consideration or fractional part thereof in excess of $550,000.00 but not in excess of $850,000.00 recited in the deed;
(c) $1.90 for each $500.00 of consideration or fractional part thereof in excess of $850,000.00 but not in excess of $1,000,000.00 recited in the deed; and
(d) $2.15 for each $500.00 of consideration or fractional part thereof in excess of $1,000,000.00 recited in the deed.
b. A deed subject to any of the fees established by this section, which is in fact recorded, shall be deemed to have been entitled to recording, notwithstanding that the amount of the consideration shall have been incorrectly stated or that the correct amount of such fee shall not have been paid. No such defect shall in any way affect or impair the validity of the title conveyed or render the same unmarketable; but the person or persons required to pay said additional fee at the time of recording shall be and remain liable to the county recording officer for the payment of the proper amount thereof.
(cf: P.L.2008, c.31, s.2)
2. Section 8 of P.L.2004, c.66 (C.46:15-7.2) is amended to read as follows:
8. a. In addition to all other fees imposed under P.L.1968, c.49 (C.46:15-5 et seq.), there is imposed a fee upon the grantee of a deed for the transfer of real property:
(1) that is classified pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 2 "residential";
(2) (a) that includes property classified pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 3A: "farm property (regular)" but only if the property includes a building or structure intended or suited for residential use, and
(b) any other real property, regardless of class, that is effectively transferred to the same grantee in conjunction with the property described in subparagraph (a) of this paragraph;
(3) that is a cooperative unit as defined in section 3 of P.L.1987, c.381 (C.46:8D-3); or
(4) that is classified pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 4A "commercial properties"
that is transferred for consideration in excess of $1,000,000 recited in the deed, which fee shall be an amount equal to 1 percent of the entire amount of such consideration, which fee shall be collected by the county recording officer at the time the deed is offered for recording and remitted to the State Treasurer not later than the 10th day of the month following the month of collection for deposit into the General Fund; provided however, that on and after the tenth day following a certification by the Director of the Division of Budget and Accounting in the Department of the Treasury pursuant to subsection b. of section 2 of P.L.1992, c.148 (C.46:15‑10.2), the fee established by this section shall not be imposed.
b. (1) The fee imposed by subsection a. of this section shall not apply to a deed if the grantee of the deed for the transfer of real property is an organization determined by the federal Internal Revenue Service to be exempt from federal income taxation pursuant to paragraph (3) of subsection (c) of section 501 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.501.
(2) The fee imposed by subsection a. of this section shall not apply to a deed if the transfer of real property is incidental to a corporate merger or acquisition and the equalized assessed value of the real property transferred is less than 20% of the total value of all assets exchanged in the merger or acquisition. A grantee shall claim this exemption from imposition of the fee at the time the deed is offered for recording by filing with the county recording officer such information, in addition to the affidavit of consideration filed by one or more of the grantee parties named in the deed or by the grantee's legal representative pursuant to subsection d. of this section, as the Director of the Division of Taxation in the Department of the Treasury may prescribe as to constitute a filing of a protest of the assessment of the fee and by paying any other recording fees not exempted pursuant to this paragraph. This additional information shall be forwarded by the county recording officer to the director along with the grantee's affidavit of consideration, and shall be deemed to be and have the effect of a protest of a finding by the director of a deficiency of payment of the fee filed on the date on which the deed is recorded.
c. The fee imposed by subsection a. of this section shall be subject to the provisions of the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.; provided however, that notwithstanding the provisions of subsection a. of R.S.54:49-14, a taxpayer may file a claim under oath for refund at any time within 90 days after the payment of any original fee and that subsection b. of R.S.54:49-14 shall not apply to any additional fee assessed.
d. (1) If a transfer includes property classified pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 4 property of any type, an affidavit of consideration shall be filed by one or more of the grantor parties named in the deed or by the grantor's legal representative declaring the consideration and shall be annexed to and recorded with the deed as a prerequisite for the recording of the deed. The filing of an affidavit of consideration pursuant to this paragraph shall be in addition to the filing, if any, pursuant to paragraph (2) of this subsection.
(2) Whether or not the transfer is exempt, pursuant to subsection b. of this section or any other provision of law, from payment of the fee pursuant to subsection a. of this section, if a transfer includes property otherwise subject to subsection a. of this section, then an affidavit of consideration shall be filed by one or more of the grantee parties named in the deed or by the grantee's legal representative declaring the consideration and shall be annexed to and recorded with the deed as a prerequisite for the recording of the deed. The filing of an affidavit of consideration pursuant to this paragraph shall be in addition to the filing, if any, pursuant to paragraph (1) of this subsection.
(3) An affidavit of consideration filed pursuant to paragraph (1) or paragraph (2) of this subsection shall clearly and entirely state the consideration, the county and municipality in which the property is situate, and the block and lot description of the real property conveyed.
(4) One copy of each affidavit of consideration filed and recorded with deeds pursuant to this subsection shall be forwarded by the county recording officer to the Director of the Division of Taxation in the Department of the Treasury on the tenth day of the month following the month of the filing of the deed.
(cf: P.L.2006, c.33, s.1)
3. Section 4 of P.L.1968, c.49 (C.46:15-8) is amended to read as follows:
4. a. The proceeds of the fees collected by the county recording officer, as authorized by P.L.1968, c.49 (C.46:15‑5 et seq.) and by section 8 of P.L.2004, c.66 (C.46:15-7.2), shall be accounted for and remitted to the county treasurer.
b. (1) The county portion of the basic fee collected pursuant to paragraph (1) of subsection a. of section 3 of P.L.1968, c.49 (C.46:15‑7) shall be retained by the county treasurer for the use of the county.
(2) The State portion of the basic fee, the additional fee, [and] the general purpose fee, and the fee imposed pursuant to section 8 of P.L.2004, c.66 (C.46:15-7.2) shall be paid to the State Treasurer for the [use of the State] uses enumerated in subsections c. and d. of this section. Payments shall be made to the State Treasurer on the tenth day of each month following the month of collection. The payment shall be accompanied by a tabulation, compiled by the county recording officer, listing the county's municipalities in which a property transfer has occurred and the revenue the State receives from all the property transfers in each of the county's municipalities, with the fee revenue separately categorized into basic fee, additional fee, general purpose fee, and the fee imposed pursuant to section 8 of P.L.2004, c.66 (C.46:15-7.2).
(3) The county recording officer may charge the grantor of each deed offered for recording a surcharge of up to $0.50 to offset the additional expenditures incurred by the county recording officer for the implementation of the tabulation requirement established pursuant to paragraph (2) of this subsection.
c. (1) Amounts, not in excess of $25,000,000, paid during the State fiscal year to the State Treasurer from the payment of the State portion of the basic fee shall be credited to the "Shore Protection Fund" created pursuant to section 1 of P.L.1992, c.148 (C.13:19‑16.1), in the manner established under that section.
(2) In addition to the amounts credited to the "Shore Protection Fund" pursuant to paragraph (1) of this subsection, amounts equal to $12,000,000 in each of the first 10 years after the date of enactment of the "Highlands Water Protection and Planning Act," P.L.2004, c.120 (C.13:20‑1 et al.) and to $5,000,000 in each year thereafter, paid during the State fiscal year to the State Treasurer from the payment of fees collected by the county recording officer other than the additional fee of $0.75 for each $500.00 of consideration or fractional part thereof recited in the deed in excess of $150,000.00 shall be credited to the "Highlands Protection Fund" created pursuant to section 21 of P.L.2004, c.120 (C.13:20‑19), in the manner established under that section. No monies shall be credited to the "Highlands Protection Fund" pursuant to this paragraph until and unless the full amount of $25,000,000 has first been credited to the "Shore Protection Fund" pursuant to paragraph (1) of this subsection.
(3) (a) All amounts paid during the State fiscal year to the State Treasurer from the payment of the State portion of the basic fee that are not reserved by paragraph (1) and paragraph (2) of this subsection, the general purpose fee, and the fee imposed pursuant to section 8 of P.L.2004, c.66 (C.46:15-7.2), shall be determined and certified separately for each municipality by the Director of the Division of Taxation in the Department of the Treasury to the State Treasurer on December 31 of each year, as prescribed by the State Treasurer. A municipality may anticipate in its immediately succeeding budget the disbursement of the amount certified by the Director of the Division of Taxation. Subsequent to the certification of the Director of the Division of Taxation, the appropriation in the annual appropriations act for each State fiscal year of the sums thus certified, and the warrant of the Director of the Division of Budget and Accounting; the State Treasurer shall pay and distribute on July 1 of each year to each municipality the amount determined and certified by the Director of the Division of Taxation on the immediately preceding December 31.
(b) The Director of the Division of Taxation in the Department of the Treasury shall apportion to a municipality and deduct from that municipality's amount credited pursuant to this section the share of that municipality's revenue used to fulfill the requirements of paragraph (1) and paragraph (2) of this subsection in the following manner: commencing with the proceeds of the first month of the fiscal year, the State Treasurer shall retain all monthly remittances from the county treasurers pursuant to this section until the requirements of paragraph (1) and paragraph (2) of this subsection are met. If, in any given month, the remittances from the county treasurers exceed the amount the State Treasurer is required to collect for the purposes of paragraph (1) and paragraph (2) of this subsection, the State Treasurer shall deduct from each municipality's total amount for that month as reported by the county treasurer pursuant to paragraph (2) of subsection b. of this section, the amount that corresponds to the percentage that the amount the State Treasurer is required to collect for the purposes of paragraph (1) and paragraph (2) of this subsection constitutes of that month's total statewide remittances from all county treasurers.
(c) Notwithstanding the provisions of subparagraph (a) of this paragraph to the contrary, in the first fiscal year following enactment of this act, the State Treasurer shall retain 80 percent of the amounts credited to each municipality pursuant to this paragraph for deposit into the State General Fund. In the second fiscal year following enactment of this act, the State Treasurer shall retain 60 percent of the amounts credited to each municipality pursuant to this paragraph for deposit into the State General Fund. In the third fiscal year following enactment of this act, the State Treasurer shall retain 40 percent of the amounts credited to each municipality pursuant to this paragraph for deposit into the State General Fund. In the fourth fiscal year following enactment of this act, the State Treasurer shall retain 20 percent of the amounts credited to each municipality pursuant to this paragraph for deposit into the State General Fund. In the fifth and each subsequent fiscal year following enactment of this act, all of the amounts credited to a municipality pursuant to this paragraph shall be paid and distributed to the municipality pursuant to subparagraph (a) and subparagraph (b) of this paragraph.
(d) Amounts paid to municipalities pursuant to this paragraph shall be used solely and exclusively by each municipality for the purposes of reducing the amount the municipality is required to raise by local property tax levy for municipal purposes. In the event that the amount paid pursuant to this paragraph exceeds the amount required to be raised by local property tax levy for municipal purposes, the balance of the State aid shall be used to reduce the amount the municipality is required to raise by local property tax levy for county purposes, notwithstanding the provisions of any law to the contrary. The Director of the Division of Local Government Services in the Department of Community Affairs shall certify that each municipality has complied with this subparagraph. If the Director of the Division of Local Government Services in the Department of Community Affairs finds that amounts paid pursuant to this paragraph are not used by a municipality solely and exclusively to reduce the amount required to be raised by local property tax levy, the Director of the Division of Local Government Services in the Department of Community Affairs shall direct that the municipal governing body make corrections to its budget.
d. All amounts paid to the State Treasurer from the payment of the additional fee shall be credited to the [Neighborhood Preservation Nonlapsing Revolving] New Jersey Affordable Housing Trust Fund established pursuant to P.L.1985, c.222 (C.52:27D‑301 et al.), in the manner established under section 20 thereof (C.52:27D‑320).
(cf: P.L.2004, c.120, s.61)
4. Section 2 of P.L.1992, c.148 (C.46:15-10.2) is amended to read as follows:
2. a. The annual appropriations act for each State fiscal year shall, without other conditions, limitations or restrictions on the following:
(1) credit amounts paid to the State Treasurer, if any, in payment of fees collected pursuant to [paragraph (1) of paragraph (2) of] subsection a. of section 3 of P.L.1968, c.49 (C.46:15‑7) and section 8 of P.L.2004, c.66 (C.46:15-7.2) to the "Shore Protection Fund" created pursuant to section 1 of P.L.1992, c.148 (C.13:19‑16.1), the [Neighborhood Preservation Nonlapsing Revolving] New Jersey Affordable Housing Trust Fund established pursuant to section 20 of P.L.1985, c.222 (C.52:27D‑320), [and] the "Highlands Protection Fund" created pursuant to section 21 of P.L.2004, c.120 (C.13:20‑19), pursuant to the requirements of section 4 of P.L.1968, c.49 (C.46:15‑8), and the municipalities as determined and certified by the Director of the Division of Taxation in the Department of the Treasury on December 31 immediately preceding the annual appropriations act pursuant to paragraph (3) of subsection c. of section 4 of P.L.1968, c.49 (C.46:15-8);
(2) appropriate the balance of the "Shore Protection Fund" created pursuant to section 1 of P.L.1992, c.148 (C.13:19‑16.1), for the purposes of that fund;
(3) appropriate the balance of the [Neighborhood Preservation Nonlapsing Revolving] New Jersey Affordable Housing Trust Fund established pursuant to section 20 of P.L.1985, c.222 (C.52:27D‑320), for the purposes of that fund; [and]
(4) appropriate the balance of the "Highlands Protection Fund" created pursuant to section 21 of P.L.2004, c.120 (C.13:20‑19), for the purposes of that fund; and
(5) appropriate to each municipality the amount of revenue determined and certified in the municipality's name by the Director of the Division of Taxation on December 31 immediately preceding the annual appropriations act pursuant to paragraph (3) of subsection c. of section 4 of P.L.1968, c.49 (C.46:15-8).
b. If the requirements 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 any of the requirements 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 any of the requirements 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.
(cf: P.L.2004, c.120, s.62)
5. This act shall take effect on the first day of the State fiscal year commencing after the date of enactment and shall apply to all payments of the State portion of the basic fee, the additional fee, the general purpose fee, and the fee imposed pursuant to section 8 of P.L.2004, c.66 (C.46:15-7.2) on or after that day.
STATEMENT
This bill provides municipal property tax relief by requiring the State to allocate to municipalities that share of the State portion of realty transfer fee proceeds that is derived from the fee's "general purpose fee", its fee on buyers of residential and commercial property sold at a price of $1,000,000 or above, and the State share of the "basic fee" that is not statutorily earmarked to other purposes. The fee's county share and its dedications to the New Jersey Affordable Housing Trust Fund, the Extraordinary Aid Account, the Shore Protection Fund, and the Highlands Protection Fund thus remain intact.
If, in any fiscal year, the State's annual appropriation act fails to appropriate to municipalities the entire balance of the State portion of nondedicated realty transfer fee proceeds, the county recording officers will only collect the county portion of the fee, a provision intended to prohibit the State from appropriating the revenue for other purposes.
Municipalities must use the realty transfer fee revenue they receive from the State exclusively to reduce their property tax levies, with the Director of the Division of Local Government Services in the Department of Community Affairs being required to mandate budget changes to municipal governing bodies that are noncompliant with that condition. Each municipality receives a payment that corresponds to the amount of the State portion of realty transfer fee payments on real estate transactions that have occurred in that municipality less the share that those transactions contribute to the aforementioned dedications.
The bill provides for a five-year phase-in period over which the State keeps a progressively decreasing share of the nondedicated State portion of fee proceeds: 80 percent in the first year following the bill's enactment, 60 percent in the second year, 40 percent in the third year, 20 percent in the fourth year, and zero percent in the fifth year. This transitional period smooths out the legislation's impact on the State General Fund, which would have lost almost $190 million in fiscal year 2012, if the bill's provisions had been in effect absent the phase-in period.
To compensate counties for the cost associated with the additional workload this bill may cause, it enables them to levy a $0.50 surcharge on the recording of each deed.
