Action Needed on Energy Tax Proposal

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town-crier_facebookIn testimony before the Legislature on Monday, and again on Tuesday, State Treasurer Elizabeth Maher Muoio again cited the State’s ‘need’ to lay claim to Energy Tax (ETR) revenues that, for twenty years, have been dedicated to municipal property tax relief. We do not doubt the Administration’s commitment ‘to providing the municipalities with an equal level of support in FY ’19.’

We sincerely appreciate the fact that this ‘accounting adjustment’ will result in no reduction in property tax relief funding, this year. We have, however, asked State budget-makers to look beyond their own immediate needs. We have asked them to consider the longer-term implications of the ETR shift.

Our arguments seem to have made little headway. But there is still time to change that.

Please contact your State Legislators regarding the proposal. Remind them that:

  • Since 1997, municipalities have been able to count on annual baseline distributions from the off-budget, dedicated Energy Tax Receipts Property Tax Relief Fund.
  • Before the Fund existed, utility tax revenues, meant for municipal property tax relief, were commonly diverted in State budgets to address annual State-level concerns.
  • In order to create a dependable and predictable source of property tax relief, which would enable municipalities to engage in responsible budgetary planning, local officials, State leaders and representatives of the taxpaying utilities joined together to advocate for the creation of the ETR.
  • The proposed accounting shift, to be effected by budget language, mirrors the genesis of the Consolidated Municipal Property Tax Relief Aid (CMPTRA) program, which replaced funding from Sales and Corporate Tax sources, for a number of revenue replacement programs, with Income Tax dollars.
  • That shift led – not immediately, but inevitably – to the deterioration of CMPTRA property tax relief. (In its first year, CMPTRA was funded at $755 million. In 2001, CMPTRA’s best year, the fund provided $818.5 million. By 2010, due to cuts and the steady shift of property tax relief dollars from CMPTRA to the ETR, funding was down to $264.7 million. And this year’s budget proposal calls for the distribution of $263.3 million through CMPTRA.)

You might also want to mention the fact that unless the Legislature adjusts the proposal, this will be the eighth straight year of level ETR/CMPTRA funding. And in the three preceding years, as the State struggled to balance its budget during the great recession, the level was lowered by about $320 million. In a recent NJSpotlight story, Colleen O’Dea noted that, since 2007, the CPI has risen by 22%; while property tax relief funding from these sources has decreased by 17%.

Contact: Jon Moran, Senior Legislative Analyst, jmoran@njslom.org, 609-695-3481 x121.

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NJ Supreme Court OPRA Decision Diminishes Privacy Rights

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town-crier_facebookOn Wednesday, the NJ Supreme Court issued its decision in William J. Brennan v. Bergen County Prosecutor’s Office, a case that examined the Open Public Records Act’s competing interests of government transparency and individual privacy. In this case, the Court was asked to determine whether OPRA compels disclosure of documents containing the names and addresses of persons who successfully bid at an auction of public property?

Unfortunately, as is often the case, transparency interests prevailed to the detriment of privacy concerns.  The Court found that those who participate in a public auction for public property are aware that their names, addresses and other information which they have provided will be available to the public.  Therefore, there is no reasonable expectation of privacy which must be protected and the unredacted records should be disclosed.

Also, in this case, the Court created what appears to be a new rule for whenever courts are tasked with examining the release of records and balancing transparency with privacy.  Typically, when privacy considerations are presented as reason for withholding disclosure under an OPRA request, courts would use what is known as Doe factors to analyze whether privacy would trump the need for disclosure.  The Doe factors examine, among other things; the type of record requested, the information contained in those records, the potential harm of disclosure, and the degree of need for access to the records.

In the case at hand, the Court determined that “courts are not required to analyze Doe factors each time a party asserts that a privacy interest exists.  A party must first present a colorable claim that public access to records would invade a person’s reasonable expectation of privacy.”  Based on this, it would appear that courts must now first examine the threshold questions of whether or not a reasonable expectation of privacy exists prior to examining the Doe factors.  Where a colorable claim of a reasonable expectation of privacy has not been made, the courts will not need to examine the Doe factors.  While on many occasions lower courts have seemingly made this threshold determination, the Court’s ruling in Brennan sets out a more bright-line requirement for courts to do so.

You should review this decision with your municipal attorney and your records custodian for more information on this ruling and the impact on your municipality.

Contact: Frank Marshall, Esq., League Staff Attorney, FMarshall@njslom.org or 609-695-3481 x137.

 

 

 

IRS to Issue Guidance on SALT Deduction and Charitable Trust Issue

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correct size blogOn May 4 in East Rutherford, Governor Murphy signed S-1893, which permits municipalities, counties, or school districts to establish one or more charitable funds, each for a specific public purpose; and permits property tax credits in association with certain donations. This legislation is a response to the new cap on the Federal SALT property tax deduction. New Jersey’s new law will take effect on July 3, 2018. The state is in the process of drafting rules to implement the law. We will continue to share updates as they become available. For more on the new law please read our earlier Town Crier blog post.

Yesterday, the Federal Treasury Department and Internal Revenue Service (IRS) announced their intentions to propose guidance on payments made in exchange for State and Local Tax Credits.

While it is premature to fully assess what the impact of this IRS guidance will be, it appears that the agency is seeking to prohibit the legislative intent of S-1893.   We call your attention to this language:

Despite these state efforts to circumvent the new statutory limitation on state and local tax deductions, taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes.

Click here for a copy of the IRS notice.

Governor Murphy immediately offered a comment indicating that the State may challenge any regulations that will invalidate the new State law.

We will continue to advise you of all developments related to this issue.

Contacts:

Governor Signs “Workplace Democracy Enhancement Act”

On May 18 Governor Murphy signed A-3686, the “Workplace Democracy Act”. This law, which became effective today, imposes mandatory requirements on public employers to ensure that public unions are able to carry out their statutory duties by having access to, and the ability to communicate with, their public employee members. The new law was enacted in response to public employee union concerns regarding the possible outcome of a case, Janus v. American Federation of State, County, and Municipal Employees, Council 31, which was argued before the U.S. Supreme Court earlier this year.

In signing this bill, Governor Murphy acknowledged that the new law may be in conflict with the U.S. Supreme Court’s ultimate decision, but he is willing to work closely with the sponsors to enact any required changes. In addition, the Governor noted his “sensitive to the privacy concerns of our public employees and recognize the need to prevent the improper use of personal identifying information collected under the terms of this act.” Therefore, the Governor has directed State agencies to develop “sufficient procedures to protect sensitive personal employee information and to restrict its use solely to achieve the act’s purposes” when implementing the law.

The law immediately imposes new mandates and requirements on public employers that have been traditionally negotiated during the collective bargaining process. In addition, it expands who is covered under a collective bargaining agreement to include regular full-time and part-time employees who perform “negotiations unit work”. “Negotiations unit work” is defined as work that is performed by any employees who are included in a union, without regard to job title, job classification or number of hours worked, except that employees who are confidential employees or managerial executives as defined by N.J.S.A. 34:13A-3, or elected officials, members of boards and commissions, or casual employees. Casual employees are employees who work an average of fewer than four (4) hours per week over a 90 calendar day period. Within 90 days (August 16) employees who were not included in the union because they did not meet the time threshold must be included in the union.

The law requires public employers to provide unions with access to their members. The law defines access to include, but not be limited, to:

  • The right to meet with individual employees on premise during the work day to investigate and discuss grievances, workplace related complaints, and other workplace issues;
  • The right to conduct on premise worksite meetings during lunch and other non-work breaks, before and after the workday, to discuss workplace issues, collective negotiations, the administration of collective negotiations agreements, other matters related to the duties of an union, and internal union matters involving the governance or business of the exclusive representative employee organization;
  • The right to meet with newly hired employees for a minimum of 30 to a maximum of 120 minutes within 30 calendar days from the date of hire. The meeting can take place during new employee orientations or at individual or group meetings, if the employer does not have new employee orientations;
  • The employer must provide the union in an excel format, or other agreed upon format, the name, job title, worksite location, home address, work phone number, home and personal cell number on file, date of hire, work email address and any personal email on file within ten (10) calendar days of hiring a new employee; and
  • After January 1, 2019, every 120 calendar days the employer must provide the unions, in an excel format, or other agreed upon format, the name, job title, worksite location, home address, work, home and personal cell numbers, date of hire, work email address and any personal email on file of all union employees.

Please note that the law does exempt the home addresses, phone numbers, email addresses, dates of birth, and negotiation units and groupings of employees, and the emails or other communications between the union and their members, prospective members, and non-members, from the definition of government records; thereby creating an exemption to the Open Public Records Act (OPRA).

The law also gives the unions the right to use the public employer’s email system to communicate with union members regarding collective negotiations, the administration of collective negotiations agreements, the investigation of grievances, other workplace related complaints and issues and internal union matters involving the governance or business of the union.

Further, the law gives the unions the right to use government buildings and other facilities owned or leased by the public employer to conduct union meetings. However, the meetings cannot be for the purpose of supporting or opposing any candidate for partisan political office, or for the purpose of distributing literature or information regarding partisan elections. A public employer may charge the union using a public building for maintenance, security and other costs related to the use of the government building or facility that would not otherwise be incurred by the government entity.

These new provision establish the minimum requirements for access to and communication with negotiations unit employees by union. At the request of the union, a public employer must negotiate in good faith contract provisions to memorialize the parties’ agreement to memorialize this new law. Negotiations must begin with ten (10) calendar days from the date of the request by the union to meet, even if a collective bargaining agreement is in effect at the time of the request. If you are unable to reach an agreement regarding access to and communication with the union members, the union or employer may file a petition with the Public Employment Relations Commission (PERC) to resolve the negotiations dispute. Upon receipt of a petition, PERC must appoint an arbitrator, who shall issue a binding award resolving the parties’ negotiations disputes.

The law also prohibits a public employer from encouraging union members to resign or relinquish their union membership or revoke their authorization of deduction of union dues. A public employer cannot encourage or discourage an employee from joining, forming or assisting a union. Any public employer that violates this provision will be found to have engaged in an unfair practice pursuant to N.J.S.A. 34:13A-5.4. Upon finding a violation has occurred, PERC shall order the public employer to make whole the union for any losses suffered by the union as a result of the public employer’s unlawful conduct and any other remedial relief deemed appropriate.

A public employee may revoke their union dues payroll deduction within ten (10) days following each anniversary of their date of employment by written notice to the employer. Within five (5) days of receipt of the written notice, the public employer must provide notice of the revocation of union dues to the union. The revocation of union dues becomes effective on the 30th day after the anniversary of the date of employment.

PERC has been given rulemaking authority under this new law.

Contact: Lori Buckelew, Senior Legislative Analyst, lbuckelew@njslom.org, 609-695-3481, Ext. x 112.

Confusion Surrounds Misinterpretation of New Animal Cruelty Enforcement Law

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correct size blogOn January 16 of this year, former Governor Christie signed into law a bill that enacted major reforms, designed to improve enforcement of the State’s animal welfare and animal cruelty statutes. In response to reports of improprieties, the law eliminates the enforcement authority of the New Jersey Society for the Prevention of Cruelty to Animals.  Instead, the law implements a joint municipal-county system.

Please review the statute to make sure that your municipality is not being asked to do more than the statute, Chapter 331 of the Public Laws of 2017 require.   Also, please consult your municipal attorney regarding your responsibilities.

For now, you should be aware of the following:

Section 25 of the law requires the governing body of any municipality that has a police department to ‘submit at least one applicant for designation as a municipal humane law enforcement officer.’ The governing body’s application should go to your municipality’s chief law enforcement officer, or, in the absence of same, to the Superintendent of the New Jersey State Police. That officer will conduct a background check and either approve or reject the applicant. That Section, further, states:

The governing body of a municipality may designate as a municipal humane law enforcement officer any qualified individual.  An animal control officer or a police officer may serve concurrently as a municipal humane law enforcement officer, so long as the officer is able to effectively carry out the duties and responsibilities required of each position held.

d.)  (1) The governing body of a municipality with a full-time municipal police department may authorize a municipal humane law enforcement officer to possess, carry and use a firearm while enforcing the laws and ordinances enacted for the protection of animals if the officer:

(a)  has satisfactorily completed a firearms training course as defined in subsection j. of N.J.S.2C:39-6 and approved by the Police Training Commission; and (b)  twice annually qualifies in the use of a revolver or similar weapon.

(2)  A municipal humane law enforcement officer authorized to possess, carry, and use a firearm pursuant to this subsection shall be subject to the supervision of the chief law enforcement officer of the municipality. 

Section 4 of the law also asserts the governing body’s right to authorize a certified animal control officer to ‘serve concurrently as a municipal humane law enforcement officer.’ Additionally, Section 26 of the act permits a municipal humane law enforcement officer to be designated concurrently by more than one municipality, provided that the officer is able to effectively carry out the duties required of each designation, but excepting a municipal police officer who also serves as the municipal humane law enforcement officer from concurrently serving in that capacity in more than one municipality.  And, we see nothing in the act that would otherwise prevent a municipality from entering into a shared services agreement with a neighboring municipality for such an officer.

Other sections of the new law require the Police Training Commission to develop a program of instruction for a newly appointed municipal humane enforcement officer, which would need to be completed within one year of appointment. The Police Chief of the municipality can request a waiver from all or parts of the training requirements for an appointee who has already completed ‘substantially equivalent’ training.

If a violation of the act is brought to Superior Court by a county prosecutor by a municipal animal control officer or a municipal humane enforcement officer, Section 22 provides ‘ … the fines, penalties, or moneys collected shall be paid as follows:  one half to the municipality in which the violation occurred; and one half to the county  to be used for the purpose of protecting animals in the county .’ If the violation is brought to municipal court, which has a municipal humane enforcement officer, all fines and penalties will be paid to the municipality. If the violation is brought to the municipal court, in a municipality that does not have such an officer, the proceeds will be evenly divided between the municipality and the county. Finally, the Section provides that:

Any fines, penalties, or moneys paid to a municipality pursuant to subsection b. of this section shall be allocated by the municipality to defray the cost of (1)  enforcement of animal control, animal welfare , and animal cruelty laws and ordinances within the municipality; and (2)  the training therefor required of certified animal control officers and municipal humane law enforcement officers pursuant to law or other animal enforcement related training authorized by law for municipal employees.

To be clear, a municipality still needs to appoint an animal control officer. The new law doesn’t change that. It requires the appointment of a humane enforcement officer, also. But one individual can hold both offices.

Again, please review the new law with your Municipal Attorney. And please let us know if it poses any problems in your municipality so that we can petition the Legislature if remedial action is required.

Contacts:

Jon Moran, Senior Legislative Analyst, jmoran@njslom.org, 609-695-3481, x121.

Frank Marshall, Esq., League Staff Attorney, FMarshall@njslom.org, 609-695-3481 x137.

Governor Issues Conditional Veto on S-5

correct size blogEarlier today Governor Murphy conditionally vetoed S-5, which would transfer the management of the Police and Fire Retirement System (PFRS) to a Board of Trustees comprised of Labor and Management representatives.  In his veto message Governor Murphy noted that “unlike the State, New Jersey counties and municipalities have only rarely failed to make their full annual employer contribution when required to do so.” The Governor further noted that he is confident that his recommended changes “strike an appropriate balance by both empowering the new board with management of PFRS while continuing to protect the stability of the State’s pension funds, the expectations of PFRS members and, ultimately, the financial interests of the taxpayers of this State.”

 The League and Association of Counties opposed S-5 based on the lack of adequate protections and safeguards for property taxpayers.

The Governor’s conditional veto improves the original legislation, adding taxpayer protections and safeguards.    The League advocated for additional safeguards and protections, including a balanced board between labor and management, which are not included.   But we do appreciate that the Governor understood our concerns and included safeguards, which did not currently exist in either S-5 or the current pension system.

The conditional veto:

·       Continues to have the rate of return determined by the State Treasurer, instead of the Board of Trustees;

·       Requires at least eight (8) votes of the 12-member board for any change in benefits;

·       Prohibits any enhancement or reduction of benefits, including cost of living adjustments and changes to employee contribution rates, unless an actuary certifies that it does not increase employer contribution in the current year, and that such a change will not impact the long term viability of the fund;

·       Requires a majority of the authorized membership for a quorum;

·       Removes the language permitting the actuary to be an employee of the Board of Trustees;

·       Requires the actuary to be a fellow with the Society of Actuaries & an active member of the American Academy of Actuaries;

·       Removes the Board of Trustees’ authority to investment and reinvest the fund’s monies, as the power remains with the State Investment Council and Division of Investments;

·       Gives the Board of Trustees the authority to formulate and establish, amend, modify or repeal polices that will govern the methods, practices, and procedures for investments, reinvestments, purchase, sale or exchange of transactions, which the State Investment Council would follow for the PFRS fund;

·       Gives the Board of Trustees the authority to review and approve agreements which may be necessary and convenient for investment management;

·       Gives the Board of Trustees the authority to inspect and audit the respective PFRS accounts and funds administered by the Division of Investments. (Trustees are also permitted to take appropriate action as necessary to effectuate the long term viability of the system.);

·       The State retains 100% control over the Common Pension Fund L, which is the fund that includes the revenue from the State Lottery transfer;

·       The Executive Director serves without a term and may be removed upon notice and public hearing by a majority vote of the Board of Trustees;

·       Requires the Executive Director to act as a fiduciary to the retirement system and on behalf on the interest of the beneficiaries of the system;

·       Prohibits the Executive Director and Chief Investment Officer from being engaged in any other profession or occupation;

·       Changes the duties of the Chief Investment Officer to develop investment methods, practices and approaches and to coordinate with the Investment Committee;

·       Expands the qualification requirements of the Chief Investment Officer to include experience in direct management, analysis, supervision or investment of assets;

·       Requires a majority of the Investment Committee members to be qualified by training, experience or long term interest in the direct management, analysis, supervision or investment of assets. (Can be supplemented by academic training or practical experience in the fields of economics, business, law, finance, or actuarial science.);

·       State Treasurer remains the custodian of the funds;

·       Removes the mandated employer quarterly pension fund payments;

·       Removes the withholding of any property tax relief payments for non-payment of pension payments; and

·       Removes the Police and Fire Retirement System representatives from the State Investment Council.

Taxpayers will still be responsible for any fund shortfall if the investments returns are poor. Safeguards have been put into places, which have not previously existed, to ensure that benefits are not enhanced at the expense of taxpayers. The conditional veto requires an independent actuary certify that any benefit enhancement does not result in increased employer contributions and that such a change will not impact the long term viability of the fund.

The conditional veto has been returned to the Senate, which is the house of origin.    From there, the Senate is likely to consider accepting the Governor’s recommendations.   If the Senate and Assembly both accept the recommendations in the conditional veto, the bill is returned to the Governor for his consideration and signature.   The earliest the conditional veto can be considered by the Senate is June 7.

The fiscal perfect storm local governments are facing has dissipated a little with the conditional veto of S-5 but on the horizon is the continued expiration of the 2% Interest Arbitration cap, the underfunding of property tax relief and the impact of federal tax changes regarding the state and local government tax deductions. We call upon the Legislature and Administration to act immediately to renew the interest arbitration cap while we await the recommendations of the legislative committee to address the local property tax structure.

Contacts:

Governor Signs Charitable Trust Legislation

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correct size blogEarlier today, in East Rutherford, Governor Murphy signed S-1893, which permits municipalities, counties and school districts to establish one or more charitable funds, each for a specific public purpose, and permits property tax credits in association with certain donations. This legislation is a response to new Federal Income Tax cap on the SALT property tax deduction.

The charitable fund must have a specific public purpose that is more limited than the general purpose of the municipality. The purpose must be described in publicly available documents and records. For a municipality to establish a charitable fund it first must adopt an ordinance creating the fund for a specific public purpose of that municipality. The ordinance:

  • Must designate the official serving as the municipality’s custodian of public funds to serve as the fund administrator;
  • Must establish an annual credit eligible donation cap;
  • Must limit the total amount of money a person or entity may donate that qualifies for local property tax credit, that is, a cap on the total credits that a taxpayer can earn;
  • Must establish an initial annual credit eligible donation cap, that is, a cap on the total that each charitable fund can collect; and
  • May establish a spillover fund.

The annual credit eligible donation cap is a cap on the total value of local charitable donations that are eligible for a local property tax credit. This is the maximum amount of credit eligible money the fund may collect. The annual credit eligible donation cap must be established prior to the beginning of each fiscal year based on the tax levy from the prior calendar year. The annual cap cannot exceed 85% of the prior year’s budget unless otherwise authorized by the Director of Division of Local Government Services (DLGS).  For 2018 the cap must be established on the date on which each charitable fund begins accepting donations. It is important to note that the donation cap is not construed to limit all donations just donations that are property tax credit-eligible.

The spillover fund, which may be established, temporarily holds donations that have reached their annual credit eligible donation cap to a given fund. The spillover must be administered by the fund administrator of the charitable trust. The ordinance establishing the spillover fund must designate approved uses for the spillover funds that must be remitted by the spillover fund upon appropriation of the governing body. Approved uses include, but are not limited to, payment of debt services, funding of capital reserves, reserve for uncollected taxes, emergency expenses, and operating expenses. Funds in the spillover fund must be used solely for the budget year corresponding to the year in which the taxpayer will receive the credit.

The charitable fund must be held in the name of the municipality in one or more bank accounts and are governed by the Governmental Unit Deposit Protection Act.  It cannot be administered jointly by more than one local unit.

The funds in the charitable fund are equivalent to tax revenues for the purposes of State aid formula, revenue calculations, bonding capacity, and similar State or municipal computations. The funds must be available immediately to the establishing local unit upon request of the fund administrator for the payment of budget and emergency mandatory expenses, including debt service.

The fund administrator, who is the local unit’s custodian of public funds, is responsible for the collection, administration, and distribution of donations dedicated to the fund. They must continually track the total of all qualified donations with respect to the fiscal year.  The DLGS Director may adopt rules requiring additional or supplemental bonding for the fund administrator.

Any person or entity, regardless of property ownership or location of residence, may donate to the charitable fund by directing payment to the fund administrator.  The person must indicate at the time of the donation the specific property to which the donation applies for credit. Please note that a donation may be credited to more than one property, however, the property owner must indicate the amount of the donation intended to be applied to each property.

Following the receipt of a local charitable donation, the fund administrator must:

  • Issue a receipt to the donor – confirming donation amount and the property associated with the donation;
  • Notify the donor that, in the event that the annual credit eligible donation cap has been reached, the donation will be held by the local unit in escrow. The donor has 60 days, unless a lesser timeframe is specified by the DLGS Director, to direct the fund administrator to allocate the donation to another charitable fund established by the local unit or rescind the donation. If the donor fails to notify the local unit within the established timeframe, then the funds are transferred to the spillover fund. If no spillover fund is established the funds are returned to the donor; and
  • Notify the municipal tax collector and chief financial officer or business administrator within 5 business days of the amount of the donation and credit made as a result of the donation. Thereafter, the tax collector must notify the donor of the amount of the available local property tax credit. Please note that only local charitable donations made to the charitable fund established by the local unit are eligible for credit on a property tax bill.

Charitable donations must be used for the following purposes:

  • For the purpose designated by the local unit;
  • Payment of any administrative fees of the municipality that may be required by the municipality to meet the requirements of this law; and
  • The remaining funds used in a manner consistent with the specific charitable purpose.

For fiscal years beginning on or after January 1, 2018, the tax collector must allow local property owners credit to be applied to property taxes. The credit shall be equal to 90%, or a different percentage as determined by the DLGS Director, of the amount of local charitable donations contributed, on behalf of the owner’s specified local real property, to a local unit’s charitable fund. However, no credit can be issued to any owner of a local real property if the owner owes local property taxes or other delinquent municipal charges at the time of donation.

On or after the fifth (5) business day following receipt of fund administrator’s donation notification, the tax collector shall apply the credit against the first local property tax bill that is charged. However, each municipality must impose a deadline by which the fund administrator must supply the tax collector and chief financial officer with all donation amounts received and the amount of credits made available as a result of those donations, in order for the credits to be applied to the next annual property tax bill. Subject to the pending rules, the municipality has the sole discretion as to whether to establish a deadline by which donations made to a charitable fund may be credited against an annual property tax bill that has already been issued. In that case, the property taxpayer must be given access to a statement showing how the credit has been applied.

If the total amount of all local property tax credits available for a specific local property exceeds the property taxes due during the year in which the donation was made, and the tax collector is unable to apply all or portion against the bill, the tax collector must carry the remaining portion of the credit forward to one or more future bills. Tax credits can only be carried over for five (5) years from the date of the first local property tax bill after the donation was made. No cash refund of property taxes can be issued until the amount of the property tax refund due exceeds the amount of tax credit issued for the property.

The tax collector must indicate on the property tax bill the value of tax credits applied to the current bill and value of tax credits available for future bills. The tax credit is applied to the parcel of property and not an individual person or entity. The law also requires the property tax bill to include the value of the tax credits that apply to the bill and the value of tax credits that apply to future bills.

Please note that no mortgagee or servicing organization is entitled to hold a local property owner liable for electing to meet their obligation to a local unit by means of a charitable donation and resulting property tax credit.

The law gives rulemaking authority to the State Treasurer, the Director of the Division of Taxation, the Commissioner of Banking and Insurance, the Commissioner of Education and the DLGS Director. The rules adopted by the DLGS may include provisions to:

  • protect local units against the loss of property tax revenues that may apply to a local unit due operation of the property tax levy cap attributable to receipt of charitable donations;
  • establish procedures for management of the charitable funds;
  • establish appropriate timelines to coordinate various responsibilities of fund administrators and tax collectors;
  • provide guidance to tax collectors as to when a tax bill is deemed assessed;
  • provide guidance as to how servicing organizations shall implement the election of a local property owner to meet their obligations and obtain resulting local property tax credits, including, but not limited to, provisions for notice to the servicing organization of credits;
  • adjust the percentage of the annual credit eligible donation caps;
  • establish standards for implementing local property tax credits for qualified charitable contributions toward a school district-established charitable fund, where the municipality defers a portion of the school levy tax; and
  • harmonize, to the extent necessary, the provisions of this law with the Local Budget Law and Local Fiscal Affairs Law.

The rules adopted by the State Treasurer may include guidance on how qualified donations impact the “Homestead Property Tax Credit Act”, the “Property Tax Deduction Act”, and the homestead property tax reimbursement program.

Please note that nothing in this law will prohibit a municipality or county from accepting bequests, legacies, or gifts pursuant to N.J.S.A. 40A:5-29 or any other legal authority.

The new law will take effect on July 3, 2018. The state is in the process of drafting rules to implement the law. We will continue to keep you posted.

Contact: Lori Buckelew, Senior Legislative Analyst, lbuckelew@njslom.org, 609-695-3481 x112.

Governor Signs Earned Sick Leave Legislation

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correct size blogOn Wednesday Governor Murphy signed A-1827, which requires employers to provide earned sick leave to employees they employ in New Jersey. The bill does provide an exemption for Civil Service municipalities.

All employers, including local governments, will be required to provide employees with one hour of earned sick leave for every 30 hours worked at the same rate of pay, and with the same benefits as the employee normally earns. An employer is in compliance with this mandate if the offer paid time off, which is fully paid, that includes personal days, vacation days and sick days. Nothing in the law prohibits the employee and employer from mutually agreeing to permit the employee to choose to work additional hours during the same pay period in lieu of sick leave.

The employer has the discretion to choose the increments in which its employees may use the earned sick leave, provided that the largest increment of sick leave is the same that the employee would be required to work for that shift. An employer has the discretion to provide the full complement of earned sick leave for a benefit year on the first day of each benefit year. The employer also has the discretion to permit the accrual of sick leave.

Under the law, an employee may use earned sick leave:

  1. For diagnosis, care, treatment, or recovery related to the employee’s mental or physical illness or preventive medical care;
  2. To care for a family member during diagnosis, care, treatment, or recovery related to a family member’s mental or physical illness or preventive care;
  3. For certain absences resulting from the employee or a family member being a victim of domestic or sexual violence;
  4. For time during which the employee is not able to work because of a closure of the employee’s workplace, or the school or place of care of a child of the employee, in connection with a public health emergency or a determination that the presence of the employee or child in the community would jeopardize the health of others; or
  5. To attend school-related conferences, meetings, or events, or to attend other meetings regarding care for the employee’s child.

Please note that the law defines a child and parent as the biological, adopted (ive), foster, step or legal ward/guardian of the employee, domestic partner or civil union partner of the employee.  Family member is defined as child, grandchild, sibling, spouse, domestic partner, civil union partner, parent or grandparent of an employee or a spouse, domestic partner, or civil union partner of a parent or grandparent of the employee, or a sibling of a spouse, domestic partner or civil union partner of the employee or any other individual related by blood to the employee or whose close association with the employee is the equivalent of a family relationship.

An employer is permitted to require reasonable documentation if the leave is for three or more consecutive days. If the sick leave is foreseeable, an employer may require advance notice, not to exceed seven (7) calendar days prior to the beginning of the leave, of the intention to use and the expected duration. If the leave is unforeseeable, the employer may require an employee to provide notice as soon as practicable. Employers may prohibit employees from using foreseeable earned sick leave on certain dates and require reasonable documentation if employees use sick leave that is not foreseeable during those dates.

An employer may offer payment to an employee for unused earned sick leave in the final month of the benefit year. The employee has ten (10) calendar days from the date of offer to either accept or decline the payment. If the employee accepts the full payment, the employer must make the entire accrual for the following year available to that employee at the beginning of that year. If the employee declines a payment for unused earned sick leave or agrees to a partial payment, the employee may have the unused leave carried forward to the following year.

The law prohibits retaliatory actions against an employee for the use or requested use of earned sick leave or for filing a complaint for an employer violation of the provisions of this bill. There is a rebuttable presumption of an unlawful retaliatory personnel action under this law whenever an employer takes adverse action against an employee within 90 days of the employee files a complaint or court action, cooperates with a Labor Department investigation, informs any person of their rights under the law, or opposes any policy, practice, or act that is unlawful under this law.

Employees or their representatives may waive rights or benefits provided by this law during the negotiation of a collective bargaining agreement. Employees who

Employers are required to retain records documenting hours worked by employees and earned sick leave taken by employees for a five-year period.

The Department of Labor and Workforce Development has been given rulemaking authority under this law. They are tasked to implement a multilingual outreach program to inform employees, parents, and persons under the care of health care providers about the availability of earned paid sick leave. Employers are required to provide notification, using the forms provided by the Labor Department, to advise employees of their rights. The employer must provide each employee with a written copy of the notification within 30 days of issuance, at the time of hiring, or anytime requested by the employee.

In addition, after October 29 counties and municipalities are prohibited from adopting new requirements regarding earned sick leave, and the provisions of the bill preempt existing local requirements.

This new law takes effect on October 29, 2018, except for employees covered under a collective bargaining agreement. The effective date for those employees will be at expiration of the collective bargaining agreement. We suggest you review your existing policies and the new law with your labor attorney and administrator.

Contact: Michael F. Cerra, Assistant Executive Director, mcerra@njslom.org, 609-695-3481 x120.

Governor’s ETR Budget Proposal and History’s Hard Lessons

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correct size blogIn his testimony before the respective Legislative Budget Committees and in a recent meeting with the State Treasurer, League President, Mayor Jim Cassella of East Rutherford, voiced our concerns with a key piece of Governor Murphy’s State budget proposal. Our concerns are well-founded.

The Governor’s proposal would shake the foundations of the Energy Tax Receipts Property Tax Relief Fund (ETR), which, for more than twenty years, has delivered reliable and significant property tax relief to municipal home- and business-owners, all around our Garden State.

Specifically, the Governor’s proposal would zero-out the ETR, which has always been funded through taxes (Sales and Corporate) levied on energy suppling utilities. In lieu of the ETR, funding would be derived through the Income Tax. This change, we have been told, will be effected not by the passage of a new statute, but instead by the insertion of new budgetary language.

A little background on New Jersey State finance will help to explain the State’s reason for the proposed shift.

The vast majority of the money that the State collects (and spends) every year goes into one of four main funds. (A fifth fund, the Gubernatorial Election Fund, exists only to provide State funding for those elections.) Three of the four funds can only be used for specific purposes.

The Casino Control Fund (with revenues derived from casino-related licensing fees, which must be used to fund the Casino Control Commission and the Division of Gaming Enforcement) and the Casino Revenue Fund (with resources derived from a gross revenue tax on the casinos, and which must be used for the benefit of senior and disabled citizens) are not involved in the matter at hand.

Monies collected through the State Income Tax are deposited into the Property Tax Relief Fund (PTRF) and are constitutionally dedicated and must be spent on a purpose that can reduce or offset property taxes. The General Fund receives most other State taxes, fees, fines and Federal funding. The largest source of General Funds is the State Sales Tax. (Portions of Sales and Corporate Taxes are, like the ETR, dedicated for specified purposes. But the lion’s share of all sales and corporate taxes goes into the General Fund.) General Fund revenues can be used for any number of purposes, and the General Fund supports State government operations.

State Treasurers and other State budget-makers like to be able to spend money as they see fit. (And don’t we all.)  The General Fund allows for that. So, while a bookkeeping shift of $788.5 million, from the ETR funding source to PTRF funding, reduces the amount that must be spent on other property tax relief initiatives, it increases the amount that the State can use to address other priorities.

As we have reported, Governor Murphy has called for level funding of combined Energy Tax and CMPTRA funding. That’s better than a cut. And while we had hoped to see some indication that these dedicated municipal property tax relief funding sources will begin to be restored to their previous levels, we appreciate that the proposal doesn’t further add to the $320 million cut, endured by local budget-makers in each of the last eight years.

Our concern is the impact that the reshuffling of ETR funding could well have in future years. And we have two main reasons for that concern

First, at the League’s insistence, Chapter 167 of the Public Laws of 1997, which established the ETR ‘lockbox,’ also includes the so-called ‘poison pill’ provisions that assure annual distributions of sufficient funds. Those provisions would prevent the State from collecting most corporate taxes, should the State ever fail to distribute the statutory minimum in any year. At that time, we fought for those safeguards, because Governors and Legislators of both parties, over many years, had used their discretion to retain revenues meant for municipal purposes, in order to fund State level priorities.

Second, history has taught us hard lessons about shifts from General Fund sourced revenues to the PTRF. This isn’t the first time it happened.

In 1995, not by the passage of a new statute, but instead by inserting new language in the budget, the State created the Consolidated Municipal Property Tax Relief Aid (CMPTRA) program. It was a new program, but it didn’t provide any new money. CMPTRA was an amalgamation of twelve pre-existing municipal property tax relief funding programs. Like the ETR, some, but not all of those, were revenue replacement programs. They replaced revenues that had been (or, in the case of Payments in Lieu of Property Taxes on State Property, that could otherwise have been) collected locally. And like the ETR, some, but not all, had been funded through the General Fund.

In the League’s testimony on the proposed budget that year, with regards to the ‘Block Grant’ proposal, then-League Executive Board Member and Union City Mayor Bruce Walter stated the following.

First, nine of the twelve funding programs which would be folded into the block grant are currently financed through the state’s general fund. That means that those dollars, which total approximately $300 million, come from sources other than the income tax. That tax is constitutionally dedicated to the property tax relief fund.

It is extremely important that those $300 million, or roughly 46 percent of the block grant, continue to come from the general fund. If, instead, you take less than $300 million, or 46 percent, of the funding from the general fund, you decrease the amount that would otherwise be available for funding other important property tax relief programs.

The Mayor, on the League’s behalf, then warned State budget-makers that, because of the change, future continued municipal property tax relief funding could be placed in jeopardy.

Sadly, his warning proved prophetic. In that first year, CMPTRA was funded at $755 million. In 2001, CMPTRA’s best year, the fund provided $818.5 million. By 2010, due to cuts and the steady shift of property tax relief dollars from CMPTRA to the ETR, funding was down to $264.7 million. And this year’s budget proposal calls for the distribution of $263.3 million through CMPTRA.

No one doubts Governor Murphy’s commitment to property tax relief. And no one questions our current State Legislators’ share that sense of purpose. But no one knows what the future will bring. And, when next faced with unanticipated problems forcing tough choices, no one can predict what a future Governor and a forthcoming Legislature might decide to do.

In his testimony to State budget-makers weeks ago, our President, Mayor Cassella, made our position clear.

On behalf of our property taxpayers, we will strongly oppose any proposal that changes the Energy Tax Receipts Property Tax Relief Fund from a dedicated source of local revenues, which the state can only reduce at some risk to its own revenues, to another discretionary aid program, which the state can cut, in future years, to meet some other priority.

We believe the Treasurer appreciates our concern and our need for guarantees. We expect our conversations to continue. Please explain these worries to your State Legislators as they consider the SFY 19 budget.

Contact: Jon Moran, Senior Legislative Analyst, jmoran@njslom.org, 609-695-3481, x121.