COUGHLIN & WISNIEWSKI BILL ELIMINATING MINIMUM THRESHOLD FOR MUNICIPAL CALCULATION OF RESERVE FOR UNCOLLECTED TAXES ADVANCING TOWARD LAW

(TRENTON) – Legislation Assemblymen Craig J. Coughlin and John S. Wisniewski sponsored eliminating minimum threshold for municipal calculation of reserve for uncollected taxes by alternate method when tax appeal judgments reduce the tax levy is advancing toward law.

“Presently, municipalities are facing an unusually high number of tax appeals during the recession. With shrinking local and state revenue, our municipalities are in need of help to alleviate the loss of anticipated tax revenue.” said Coughlin (D-Middlesex). “Eliminating the minimum threshold for the municipal calculation of reserve for collected taxes will not only lessen a municipality’s appropriation to the reserve, but it will reduce the amount of taxes levied.”

“In these days of unprecedented pressure on municipal budgets, we, in the legislature, must look for creative ways to ease that pressure.” said Wisniewski (D-Middlesex). “This bill would lessen the tax burden now imposed on municipalities by lowering the mandated reserve funds now set aside for uncollected taxes.”

Under the bill (A-2950), the threshold for county tax board and State tax court judgments against a municipality, expressed as a percentage of the tax levy for the previous local fiscal year, that is used to calculate the reserve for uncollected taxes would be eliminated. Presently, the threshold is set at 0.75. The elimination of the threshold will allow more municipalities to utilize both of the accepted methods of calculating the reserve thereby lessening the tax burden caused by an unnecessarily high reserve for uncollected taxes.

Additionally, this bill would permit a municipality operating under the State fiscal year that has introduced, but not adopted, its budget for fiscal year 2011 prior to the effective date of the bill to adopt the resolution authorizing the alternative calculation prior to the adoption of the budget by the governing body. Current law requires that this resolution must be approved by the governing body prior to the introduction of the budget.

The bill was recently passed by both the General Assembly and Senate and now goes to the Governor for his signature.