On May 15, Gov. Phil Murphy signed A-3969/S-2932, which permits municipalities to delay or alter the transmission of property tax revenue to school districts during gubernatorial-declared emergencies, such as the state’s current situation. The bill passed both the Assembly and the state Senate the previous day.
The bill empowers the Division of Local Government Services (DLG) in the state Department of Community Affairs to permit municipalities an extended grace period on property tax collection during a “public health emergency.” The extension is limited to the first $10,000 due for a tax quarter and is not to extend beyond the first calendar day of the next calendar month.
If an extension is approved by the DLG, a municipality will be required to “pay a percentage of the total installment of taxes due” to, among others, the school district. The percentage is determined by the DLG, in consultation with NJDOE, and the DLG is to consider:
- The amount of property taxes collected by the municipality,
- The fiscal condition of the municipality,
- The fiscal condition of any taxing district subject to the extension (e.g., the school district), and
- Any other budgetary, fiscal, or economic factors DLG finds appropriate to make the determination.
NJSBA opposed the bill and expressed concern with the potential disruption to the educational process that a delay in payment of tax revenues to districts could cause to school district budgets, staffing and operations during our current public health crisis.
State Facing $10 Billion Shortfall On May 13, the state treasurer announced the state is facing a $10 billion shortfall; $2.7 billion for the remainder of this fiscal year and $7.3 billion for fiscal year 2021. Further, tax revenues for the month of April were 60% less than April of 2019 as the state delayed important tax-payment deadlines in response to the coronavirus. Total revenues were off by about 8% through the end of April, compared with the same 10-month period last year.
Some of this revenue will be recaptured over the summer, as the state had delayed income tax filing day to July 15. Moreover, tax revenue had been up 6% from last year before the coronavirus-related orders took effect. However, the treasurer’s office warns sales tax data has a one-month lag time; so the true tax revenue picture still has yet to come into focus.
Earlier in the year, the state enacted legislation delaying fiscal year 2021 for three months, so it begins on Oct. 1, rather than July 1. Also in that legislation was a requirement the treasurer provide a report to the legislature on the financial condition of the state for fiscal years 2020 and 2021 by Friday May 22. It is hoped that the report will provide a clearer picture on the state’s fiscal house.
Furlough Legislation Passes Both houses of the Legislature also approved legislation, S-2350/A-4132, that would facilitate the implementation of temporary job-sharing furlough programs by the state and local governments, including school districts. The goal of the proposal is to save employers money while also enabling employees to take home more pay than they otherwise would if they continued to work full-time by taking advantage of certain provisions in the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. The bill’s fate is now in Governor Murphy’s hands.
According to a statement released by the Senate Majority Office, the New Jersey Job-Sharing Furlough Program capitalizes on two provisions of the federal Coronavirus Aid, Relief and Economic Security (CARES) Act, the $2.2 trillion economic relief package signed into law on March 27.
The first provides a Federal Pandemic Employment Compensation payment of $600 a week to workers laid off or furloughed during the health crisis. The second provides for 100 percent federal reimbursement of the cost of state unemployment benefits for any state that enacts a job-sharing furlough program under an existing state law. As New Jersey already has a job-sharing furlough law, which was enacted in 2011, the state qualifies for full federal reimbursement of state unemployment benefits for furloughed workers. Under a job-sharing furlough program, employers would reduce hours for workers who would be eligible for short-term unemployment benefits for their lost hours of work in addition to increased weekly payments provided under the CARES Act through July.
The state and federal laws essentially serve as incentives for employers to place workers on furlough rather than lay them off entirely. The 2011 state job-sharing law applies to both public and private employers, as would this new proposal. If signed into law, the state Division of Unemployment and Temporary Disability Insurance would be required to provide a guidance document to employers that explains the procedures for obtaining approval to establish a job-sharing furlough program.
The NJSBA supports the legislation. As the bill moved through the Legislature, the NJSBA sought and obtained several amendments that explicitly authorize boards of education to implement a job-sharing furlough program, notwithstanding the new law (P.L.2020, c.27) that they continue paying their employees and contracted service providers during the current emergency as if schools were still open.