New Jersey-2010-A4032-Introduced

An Act concerning an exception for library purposes to the municipal tax levy cap and amending P.L.2007, c.62.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. 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] amounts approved by voter referendum in the previous 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)], and all amounts appropriated in the previous fiscal year for library purposes, with that result multiplied by 1.02, 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.2010, c.44, s.8)

2. 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] amounts approved by voter referendum 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] to exceed the levy cap by voter referendum pursuant to section 11 of P.L.2007, c.62 (C.40A:4-45.46), may add to its adjusted tax levy in any one 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 paragraph (1) of this subsection 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:

increases in amounts required to be raised by taxation for capital expenditures, including debt service as defined by law; increases in pension contributions and accrued liability for pension contributions in excess of 2.0%; 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 2.0% 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; any amount appropriated for library purposes; and extraordinary costs incurred by a local unit directly related to a declared emergency, as defined by regulation promulgated by the Commissioner of the Department of Community Affairs, in consultation with the Commissioner of Education, as appropriate.

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] voter referendum 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 this subsection or directly reduce the adjusted tax levy if there are no exclusions.

(cf: P.L.2010, c.44, s.9)

3. This act shall take effect immediately.

STATEMENT

This bill would remove amounts required to be appropriated for library purposes from the municipal cap on increases to the property tax levy, which was enacted by P.L.2007, c.62.

The 2007 enactment, the "tax levy cap law," established a formula that limits increases in the amount a local unit can raise by taxation each budget year. The core of the formula, as amended by P.L.2010, c.44, is a two percent limitation on the amount a local unit can increase its tax levy over the prior year's tax levy. While an older law that imposes a cap on municipal appropriations (N.J.S.A.40A:4-45.3) continues to afford municipalities an exception from that cap for amounts expended to fund free public libraries, the Legislature did not authorize a library cap exception when it adopted the "tax levy cap law."

General law governing free public libraries (N.J.S.A.40:54-8) provides that increases in equalized assessed valuation of property in a municipality automatically trigger increases in appropriations for free public libraries in that municipality. When the market causes the equalized assessed valuation of property in a municipality to increase, funding for the municipal free library also increases automatically under the statutory formula in N.J.S.A.40:54-8, with that funding increase being charged against the municipality's permissible annual property tax levy increase. P.L.2011, c.38 exempted all statutorily required payment to a municipal library from the calculation of the two percent levy cap, but did not include other payment to a municipal library. This bill would ensure that all funding for library purposes, not just statutorily required funding, be excluded from the calculation of a municipality's adjusted tax levy.