New Jersey Assembly Bill A703

New Jersey 2022-2023 Regular Session

• Introduced: 1/11/22
• Refer: 1/11/22

Caption

Ends the transitional energy facilities assessment, caps the State use portion of State energy tax revenues and ensures the balance of such State revenues are paid annually as municipal aid.

Impact

If enacted, A703 would significantly alter the current revenue-distribution model of energy taxes in New Jersey. By capping the state's use of energy tax revenues at the 1998 level, municipalities are expected to receive an increase in funding and support for local property tax relief programs. The intended outcome is to ensure a fairer distribution of financial resources, which would help alleviate some of the financial burdens placed on local governments and their residents.

Summary

Assembly Bill A703 aims to eliminate the Transitional Energy Facilities Assessment (TEFA) that has been a longstanding charge on New Jersey’s energy consumers. This bill proposes to bring an end to the repeated extensions of this 'temporary' tax, limiting state retention of energy tax revenues to the amount previously skimmed in fiscal year 1998. The purpose of this bill is to restore financial equity to municipalities by ensuring that energy-related tax revenues are distributed as aid to local governments instead of being retained excessively by the state government.

Contention

While the bill is designed to provide considerable benefits to municipalities, it draws some criticism from various stakeholders, particularly supporters of the existing TEFA system who argue that the historical need for this tax was to support the state budget during fiscal crises. There are concerns that this bill could limit the state's flexibility in managing its budget and that the loss of these funds could have ripple effects on state services and operations. Critiques highlight a potential clash between state financial interests and municipal needs.