New Jersey Assembly Bill A2784

New Jersey 2022-2023 Regular Session

• Introduced: 2/28/22
• Refer: 2/28/22

Caption

Modifies interest rates and accrual of interest on certain unpaid water and sewer utility bills and delinquent municipal taxes, assessments, and other municipal liens and charges.

Impact

The implications of A2784 are significant for local municipalities and their residents. By altering the calculation method for unpaid charges, this legislation hopes to provide a more equitable system for those struggling with acute financial hardship. Specifically, it requires a 30-day grace period before any interest on unpaid balances can begin to accrue, suggesting a compassionate approach during economic downturns. Furthermore, the cap for interest rates on municipal taxes has been adjusted to not exceed three percentage points above the prime rate, thereby providing potential relief for taxpayers compared to previous high limits of 18% on larger delinquencies.

Summary

Assembly Bill A2784 seeks to reform the rates and terms for interest accrual on unpaid water and sewer services as well as municipal taxes and assessments within New Jersey. The bill amends existing laws regarding the 'sewerage authorities law' and 'municipal and county utilities authorities law' to ensure that interest rates on unpaid service charges and municipal dues are aligned with the prevailing municipal bond yield, fostering a more dynamic and adaptive approach to managing unpaid debts. Under the proposed framework, interest will now accrue monthly based on a formula that shifts with the marketplace rather than being a fixed rate, which has not changed since the early 1980s for some categories of debts.

Contention

Despite its supportive framework, A2784 has faced its share of criticism. Stakeholders claim that the changes could disproportionately impact smaller municipalities that may rely heavily on the fixed interest revenues they were accustomed to generating. The discussion surrounding A2784 often hinges on whether the adjustments adequately consider the financial realities of local governments versus the needs of residents facing financial strain. Critics argue that while lowering rates may benefit citizens, it might pose a risk to overall municipal fiscal health and incentivize prolonged non-compliance with payment obligations.