SENATE BUDGET AND APPROPRIATIONS COMMITTEE
STATEMENT TO
ASSEMBLY, No. 4706
with committee amendments
STATE OF NEW JERSEY
DATED: OCTOBER 7, 2024
The Senate Budget and Appropriations Committee reports
favorably and with committee amendments Assembly Bill No. 4706.
As amended, this bill amends and supplements the statutes
concerning the homestead property tax benefit program, the homestead
property tax reimbursement program, and the Stay NJ property tax
credit program in order to implement the recommendations of the Stay
NJ Task Force. The statutes controlling the homestead property tax
benefit program also provide statutory authority for the Affordable
New Jersey Communities for Homeowners and Renters (ANCHOR)
Property Tax Relief Program established by the Fiscal Year 2023
Appropriations Act. The proposed changes to these statutes are
intended to align the various administrative and eligibility
requirements methods for these programs in order to provide for the
efficient implementation of property tax benefits.
Age and Residency Requirements. Current law establishes a
different statutory residency date for qualification under each property
tax relief program. In order to provide consistency in these dates, the
bill amends current law to require an eligible claimant to be a State
resident as of December 31 of the year for which a benefit is sought.
The bill also requires senior citizens participating in each program to
be age 65 as of December 31 of the benefit year.
Application Process and Timeline. Current law establishes
different application timelines for each property tax relief program.
The bill amends current law to provide that the period during which an
eligible claimant may submit the combined property tax relief
application would include February 1 through October 31 of each year.
The bill also requires the Director of the Division of Taxation in the
Department of the Treasury to promulgate a single combined
application to be used for all three programs by no later than February
1, 2025, provided that the bill is enacted at least 90 days before that
date. However, if this bill is enacted less than 90 days before February
1, 2025, the director would not be required to promulgate the single
combined application until no earlier than the 91st day following the
date of enactment of this bill. To the extent practicable, the bill 2
requires this single combined application to resemble the application
currently used for the homestead property tax reimbursement program.
Benefit Calculation. The bill alters the method for determining the
amount of an eligible claimant’s Stay NJ property tax credit. Current
law entitles an eligible claimant to the greater of the Stay NJ property
tax credit or the combined amount of the ANCHOR property tax
rebate and the homestead property tax reimbursement. The maximum
Stay NJ property tax credit is 50 percent of an eligible claimant’s
property tax bill, not to exceed a maximum amount of $6,500 in tax
year 2026, with annual adjustments based on the annual increase in the
average residential property tax bill.
Under the bill, the amount of the Stay NJ property tax credit would
continue to be based on 50 percent of an eligible claimant’s property
tax bill, up to the maximum allowable credit for the tax year.
However, the bill provides that an eligible claimant would be entitled
to receive a Stay NJ property tax credit, ANCHOR property tax rebate,
and homestead property tax reimbursement in the same year. In this
circumstance, the bill specifies that for each eligible claimant, the
amount of the Stay NJ property tax credit, together with the combined
amount of the ANCHOR property tax rebate and the homestead
property tax reimbursement received by the eligible claimant for the
tax year, may not exceed the maximum allowable credit amount for
that tax year. The bill would not, however, reduce the amount of the
homestead property reimbursement or ANCHOR property tax rebate
that is required to be paid to an eligible claimant for any tax year in
which the combined value of these benefits exceeds the amount of the
maximum allowable Stay NJ property tax credit.
Accordingly, if the sum total of an eligible claimant’s homestead
property tax reimbursement and ANCHOR property tax rebate exceeds
the lesser of 50 percent of their property tax bill or the maximum
benefit amount, then the eligible claimant would receive the full
amount of the homestead property tax reimbursement and ANCHOR
property tax rebate for that tax year, but would not receive an
additional Stay NJ property tax credit. Alternatively, if the combined
amount of an eligible claimant’s homestead property tax benefit and
ANCHOR property tax rebate is less than the Stay NJ benefit amount,
then the eligible claimant would receive a Stay NJ property tax credit
equal to 50 percent of their property tax bill, not to exceed the
maximum benefit amount, less the sum total of their homestead
property tax reimbursement and ANCHOR property tax rebate.
Benefit Distribution. Under current law, eligible claimants receive
benefit payments under each of the property tax relief programs at
different times. The bill requires the sequential distribution of
property tax benefits in accordance with a statutory schedule, with the
homestead property tax reimbursement provided beginning in July, 3
ANCHOR property tax rebates provided beginning in September, and
the Stay NJ property tax credit provided beginning in November.
Additionally, current law requires a Stay NJ benefit to be provided
as a credit against an eligible claimant’s property tax bill. The bill
allows benefits distributed through each property tax relief program to
be provided as a check, direct deposit, or property tax credit. The bill
allows municipalities and the Division of Taxation in the Department
of the Treasury to share unredacted property tax information for the
purpose of calculating and distributing property tax credits.
Calculation of Income. Under current law, there are different
definitions of “income” for the purpose of determining eligibility for
the homestead property tax reimbursement and the Stay NJ property
tax credit. For the homestead property tax reimbursement, income is
determined based on an eligible claimant’s total income, including
income that is excluded in gross income under the “New Jersey Gross
Income Tax Act,” N.J.S.54A:1-1 et seq. For the Stay NJ property tax
credit, income is determined based on an eligible claimant’s gross
income, which does not include income that is excluded from gross
income under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1
et seq.
The bill establishes a uniform definition of income for purposes of
determining eligibility for the homestead property tax reimbursement
and the Stay NJ property tax credit. Under the new definition, an
eligible claimant’s income would be determined using the person’s
gross income, before the application of any deductions or exclusions,
plus income from the following sources of excluded income: (1) all
payments received under the federal Social Security Act; (2) pension
and annuity income; (3) interest income; (4) other retirement income;
and (5) distributions from a Roth Individual Retirement Account.
Since Social Security payments are excluded from gross income and
not reported on annual gross income tax returns, the bill requires
eligible claimants to report those amounts when applying for property
tax benefits.
Budgetary Surplus Target. Current law establishes the
maintenance of a budgetary surplus of 12 percent of total expenditures
from the General Fund and Property Tax Relief Fund in a given State
fiscal year as one of the prerequisites for funding and implementing
the Stay NJ property tax credit program. Total expenditures from the
General Fund and Property Tax Relief Fund are usually not
quantifiable until the publication of the Annual Comprehensive
Financial Report for each fiscal year. In order to establish an
identifiable and measurable amount for determining whether the
budgetary surplus target is satisfied for each fiscal year, the bill
requires the maintenance of a budgetary surplus of 12 percent of total
appropriations from the General Fund and Property Tax Relief Fund. 4
Total appropriations from the General Fund and Property Tax Relief
Fund are calculated and published in the annual Appropriations Act.
Gross Income Tax Deduction for Property Taxes. Current law
allows taxpayers to deduct up to $15,000 from gross income for
property taxes paid in a tax year. According to guidance published by
the Division of Taxation, taxpayers are not required to deduct property
tax relief payments from the amount of property taxes deducted from
gross income. In order to prevent taxpayers from claiming a gross
income tax deduction for the value of property taxes that were not
required to be paid due to the receipt of a property tax credit, the bill
amends current law to clarify that amounts deducted from gross
income would be limited to the property taxes paid by the taxpayer, as
opposed to the amounts billed.
Program Administration. The bill requires the Director of the
Division of Taxation, in consultation with other State and local
officials, to develop a process for the payment of benefits provided
through the homestead property tax reimbursement program and the
Stay NJ program as property tax credits.
The bill also requires the Stay NJ Task Force to continue to meet
monthly to assist the Director of the Division of Taxation in
developing this process and collecting information from local officials
regarding how to effectively implement property tax credits in future
years for those programs. Under current law, the task force would
otherwise be required to disband 30 days after the enactment of this
bill.
As amended and reported by the committee, this bill is identical to
Senate Bill No. 3693, which was also amended and reported by the
committee on this date.
COMMITTEE AMENDMENTS :
The committee amendments provide technical changes to the bill
to clarify the calculation of the Stay NJ property tax credit.
Specifically, the committee amendments provide that for each eligible
claimant of the Stay NJ property tax credit program, the amount of the
Stay NJ credit, together with the combined amount of the ANCHOR
property tax rebate and the homestead property tax reimbursement
received by the eligible claimant for the tax year, may not exceed the
maximum allowable credit amount for that tax year. The committee
amendments also clarify that the bill would not reduce the amount of
the homestead property reimbursement or ANCHOR property tax
rebate that is required to be paid to an eligible claimant for any tax
year in which the combined value of these benefits exceeds the amount
of the maximum allowable Stay NJ property tax credit.
Additionally, the committee amendments revise the time period in
which the Director of the Division of Taxation in the Department of 5
the Treasury would be required to provide written notice of the
amounts awarded to each applicant for an ANCHOR property tax
rebate, homestead property tax reimbursement, and Stay NJ property
tax credit. As introduced, the bill would have required the director to
issue this notice no later than October 15 of each year. Instead, the
committee amendments provide that this notice may be issued at such
time as the director deems appropriate.
The committee amendments also revised the definition of “eligible
claimant” under the Stay NJ property tax credit program to clarify that
the person is required to be a State resident.
FISCAL IMPACT:
The Office of Legislative Services (OLS) estimates that the bill
will have an indeterminate net impact on State costs and result in an
increase in State revenues.
Although the bill changes the method for determining the amount
of property tax relief benefits that may be provided to eligible
claimants, it will not impact the State costs related to the homestead
property tax reimbursement, ANCHOR, and Stay NJ property tax
credit programs. Instead, the bill will result in a redistribution of the
cost of property tax relief benefits among those programs.
Under current law, most eligible claimants will receive property
tax benefits only through the Stay NJ property tax credit program. The
bill provides that eligible claimants will receive property tax benefits
through the homestead property tax reimbursement, ANCHOR, and
Stay NJ property tax credit programs. The OLS notes that the bill will
not affect the total amount of property tax relief benefits provided to
eligible claimants.
The bill’s establishment of a uniform definition of income for
purposes of determining eligibility for the homestead property tax
reimbursement and Stay NJ property tax credit programs will result in
an indeterminate reduction in State costs. Some property taxpayers
will no longer qualify for a Stay NJ property tax credit because their
income will exceed the $500,000 eligibility limit under the new
definition.
The State may incur additional costs associated with the Stay NJ
property tax credit program for the printing and mailing of checks to
eligible claimants. Current law requires Stay NJ benefits to be
provided as a credit against an eligible claimant’s property tax bill.
These costs may be offset by a reduction in costs associated with the
printing and mailing of checks to eligible claimants who receive a
homestead property tax reimbursement. Current law requires
reimbursements to be provided by check; the bill allows
reimbursements to be provided by direct deposit.
The bill will result in a State revenue increase of approximately
$60 million to $120 million per year, beginning in Fiscal Year 2025,
because taxpayers will be required to reduce the amount of property 6
taxes deducted from gross income by the value of ANCHOR and Stay
NJ property tax benefits. As a result, taxpayers will report a higher
amount of gross income and have higher gross income tax liabilities.