New Jersey Assembly Bill A2900

New Jersey 2022-2023 Regular Session

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

Caption

Allows residents of certain Highlands municipalities to designate on gross income tax returns that a portion of gross income tax paid be returned to municipality of residence.

Impact

The municipalities benefiting from this bill are those that have been historically burdened by the Highlands Act, which imposes development restrictions, thereby limiting their capacity to generate revenue through property taxes. The bill aims to ensure that funds deposited into the NJ Highlands Tax Fairness Fund are allocated as municipal aid directly to these municipalities, thus enabling them to reduce the amount they need to raise through local property tax levies. This could improve the financial stability of these communities and potentially enhance public services funded by local taxes.

Summary

Assembly Bill A2900 seeks to provide a financial mechanism for residents of certain municipalities within the Highlands region of New Jersey to return a portion of their income tax payments back to their local governments. Specifically, the bill allows qualifying taxpayers—residents of municipalities where at least 95% of the land is designated within the Highlands preservation area—to designate 10% of their income tax payment for deposit into the newly created NJ Highlands Tax Fairness Fund. This fund is intended to alleviate the financial constraints these municipalities face due to strict land use regulations under the Highlands Water Protection and Planning Act.

Contention

There may be points of contention surrounding this bill, primarily regarding the fairness of shifting tax burdens and whether the fund adequately compensates municipalities affected by land use restrictions. Critics could argue that while the return of funds to these areas is beneficial, it may not sufficiently address the broader economic challenges they face, including declining property values due to development restrictions. Additionally, there may be ongoing discussions about the effectiveness of state-level intervention versus local governance in addressing the specific needs of these communities.