Bill

Bill > S3719


NJ S3719

NJ S3719
Limits and clarifies use of cap banking by school districts.


summary

Introduced
05/06/2021
In Committee
05/06/2021
Crossed Over
Passed
Dead
01/11/2022

Introduced Session

2020-2021 Regular Session

Bill Summary

This bill clarifies current law to provide that a school district may consider in its calculations a decrease in the school district's adjusted tax levy for a school budget year for the purposes of determining the difference between the maximum allowable amount to be raised by taxation for the current school budget year and the actual amount to be raised by taxation for the current school budget year. Under current law, the amount of that difference may be added to the school district's adjusted tax levy above the maximum allowable amount permitted by law in any one of the next three succeeding budget years, which is a practice commonly referred to as "cap banking." The bill also amends current law, with respect to "cap banking," to provide that that under no circumstances will a school district be permitted to add an amount to its adjusted tax levy that represents an increase of more than six percent as compared to the school district's adjusted tax levy in the immediately preceding school budget year. In other words, this bill will prohibit a school district from using the "cap banking" provision of law to increase its adjusted tax levy more than six percent in any school budget year. Finally, the bill amends current law to provide that a school district that adds an amount to its adjusted tax levy that is more than the allowable amount permitted by law in a school budget year will not be permitted to do so in any of the next two succeeding school budget years. In other words, the bill will eliminate any amount that remains in the school district's "cap bank" in any year that the school district uses the "cap banking" provision of law, thereby requiring the school district to build up its "cap bank" in order to utilize the "cap banking" provision of law in future school budget years. The intent of this legislation is to provide school districts with an appropriate amount of flexibility when utilizing the "cap banking" provision of law, but also to prevent school districts from using their "cap bank" to increase the adjusted tax levy by an exorbitant amount in any given school budget year. By placing sensible limitations on the use of "cap banking," this bill provides assurances to New Jersey residents that they will not be subject to burdensome property tax increases due to a school district's use of its "cap bank."

AI Summary

This bill clarifies and limits the use of "cap banking" by school districts. Cap banking refers to the practice of a school district adding the difference between the maximum allowable tax levy and the actual tax levy in one year to its adjusted tax levy in a future year. This bill allows school districts to consider a decrease in their adjusted tax levy when calculating the difference that can be added to the cap bank, but limits the amount that can be added in any one year to no more than a 6% increase over the previous year's adjusted tax levy. Additionally, the bill eliminates any remaining amount in a school district's cap bank if it uses the cap banking provision, requiring the district to rebuild its cap bank before using it again. The intent is to provide school districts with flexibility in using cap banking, while preventing exorbitant tax increases due to excessive use of the cap bank.

Committee Categories

Education

Sponsors (1)

Last Action

Introduced in the Senate, Referred to Senate Education Committee (on 05/06/2021)

bill text


bill summary

Loading...

bill summary

Loading...
Loading...