Senators Declan O’Scanlon and Michael Testa introduced legislation this week to give local property tax relief by redirecting more than $4 billion the Murphy administration has earmarked to pay down state debt to municipal and county governments.
Bill S-3906 would appropriate $4.32 billion from the New Jersey Debt Defeasance and Prevention Fund to local governments to pay down county and municipal debt or finance new capital projects on a pay-as-you-go basis. Paying down debt and not incurring interest when financing new capital projects would provide hundreds of dollars in local property tax relief.
Under the bill, $3 billion would be allocated to each municipality on an equal per capita basis. The remaining $1.32 billion would be allocated to each county on an equal per capita basis.
“The Murphy administration is sitting on billions of dollars of unallocated debt relief funds while towns and counties with substantial needs are being ignored,” said Sen. O’Scanlon (R-13), the Senate Republican Budget Officer. “Instead of letting that money waste away and get devalued by inflation, we are proposing to give it back to towns and counties on a per capita basis to help them pay down debt and meet their important capital needs.”
NJBIA Chief Government Affairs Officer Christopher Emigholz said the plan was a “a good idea for local property tax relief, as well as a good way to use the debt defeasance fund that NJBIA has supported in the past.” Unlike the ANCHOR property tax rebate program that excludes businesses, a plan that lowers tax rates for all property taxpayers by helping local governments pay down debt is a fairer approach, Emigholz said.
The $4.32 billion includes $1.97 billion in currently unallocated balances in the state’s debt defeasance fund along with another $2.35 billion that would be credited from the state’s General Fund, the senators said.
There is no fiscal impact on the overall budget or expected surplus since the $2.35 billion that would be transferred to the Debt Defeasance and Prevention Fund under the legislation matches the amount recommended by Gov. Phil Murphy in his FY 2024 budget proposal.
“Every town and county will get a fair share of funding under our proposal, and they will be able to use their portion to reduce their debt or pave roads, build parks, or advance other important capital projects that otherwise would have been funded with debt,” said Sen. Testa, a member of the Senate Budget & Appropriations Committee.
“Ultimately, this is $4.3 billion of new property tax relief that local governments sorely need as their health benefit premiums and pension costs have soared and inflation is at a 40-year high,” Testa said.