Bill > A1498

Introduced Session

This bill revises the Energy Tax Receipts Property Tax Relief ("ETR") Aid Program by requiring all energy taxes to be paid directly to municipalities. Historically, energy providers and public utility companies were required to pay gross receipts and franchise taxes based on their use of public lands. For many decades, these taxes were paid directly to municipalities as a means of compensation for hosting such facilities. In the 1980s, the State began to collect these taxes on behalf of municipalities, distribute a portion of the proceeds to municipalities as State aid, and retain the remaining revenues for other State purposes. In the late 1990s, this practice was continued when the State established the ETR Aid program after reforming the taxation of energy providers and public utility companies. Under current law, the State is required to annually deposit a statutorily determined amount of monies into the "Energy Tax Receipts Property Tax Relief Fund" and distribute those monies to municipalities as ETR Aid. Every year, the total distribution of ETR Aid is required to increase based on inflation. During any year in which the State fails to provide this aid, the State is required to forego the collections of certain taxes on energy providers and public utilities (e.g., sales tax collections for energy services, corporation business tax collections from certain public utility companies, etc.), hereinafter referred to as "energy taxes." Under this bill, the ETR Aid program would be restructured to reflect the original design of the gross receipts and franchise taxes, wherein all energy taxes were paid directly to municipalities. Beginning in Fiscal Year 2022, and during each year thereafter, the bill requires the State Treasurer to: (1) determine the aggregate amount of ETR Aid provided Statewide; (2) determine the amounts provided to each municipality; (3) direct each energy taxpayer to make direct payment of energy taxes to one or more municipalities; and (4) advise each municipality of the name of each energy taxpayer that would make direct payment of energy taxes to the municipality, the amounts owed therefrom, and the dates on which each payment would be provided. The State Treasurer would also be required to establish additional requirements concerning the payment of ETR Aid, including but not limited to dates on which each payment would be provided. The bill provides that whenever an energy tax payment is made directly to a municipality, the amount of the payment may be taken as a credit against the tax liability of the energy taxpayer, as prescribed by the State Treasurer. Additionally, the bill provides that beginning in Fiscal Year 2022, the aggregate amount of ETR Aid provided during any fiscal year is required to equal the greater of: (1) the total amount that would have been otherwise provided under current law; or (2) the total amount of energy taxes due and payable during that fiscal year. Consequently, the bill would prevent the State from retaining any portion of these energy tax collections for other State purposes. Under the bill, if the total energy taxes due and payable during any fiscal year exceed the amount of ETR Aid that would have been otherwise provided under current law, then the difference would be distributed amongst all municipalities in proportion to the equalized assessed valuation of real and personal property owned by all energy taxpayers located within each municipality, as determined by the State Treasurer. Alternatively, the bill also provides that if the total energy taxes due and payable during any fiscal year is less than the amount of ETR Aid that would have been otherwise provided under current law, then the State Treasurer is required to make such additional payments as are necessary, from the Property Tax Relief Fund, to ensure that each municipality receives the amount owed. During any fiscal year in which the State fails to comply with the requirements of this bill, the State would be required to forego the collection of all energy taxes.

Committee Categories

Chris DePhillips (R)*,  Vicky Flynn (R)*,  Gerry Scharfenberger (R)*,  John Azzariti (R),  John DiMaio (R),  Aura Dunn (R),  Michael Inganamort (R),  Erik Peterson (R), 

Introduced, Referred to Assembly State and Local Government Committee (on 01/09/2024)

Official Document