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Amendments to the Intermunicipal Tax Sharing Formula

Amendments to the Inter-municipal Tax Sharing Formula

1989

The New Jersey Legislature enacted a series of changes in 1989 to the Intermunicipal Tax Sharing Formula based on Commission and the Hackensack Meadowlands Municipal Committee recommendations. These changes addressed the following areas:

Form of certification provided by the District school board showing the number, address and grade enrollment of pupils who reside within the district and those who reside outside the district. The amendment deleted the requirement that the certification show address and grade level of pupils.

A constituent municipality with a municipal equalization per capita exceeding $1 million was now excluded from either paying or receiving a Meadowlands adjustment payment.

The retention rate would increase by 2% each year beginning in 1989, until it reached 60% from the previous 50% retention rate. Development of a method to take into account tax appeals that are finalized after the comparison year period. If a tax appeal was decided after the calculations were completed for an adjustment year, the following year's calculations must now show a retroactive correction for the applicable preceding two years.

Revision of the definition of Apportionment Rate to now exclude the Meadowlands adjustment payment made in the comparison year. This provision eliminates the "compounding effect" which was a mathematical anomaly in the formula.

1999

The amendment to Section 72 of the Commission Enabling Legislation has authorized the use of moving averages in the calculation of the final adjustment payment beginning in calendar year 2000. Specifically, it requires the use of a two-year average in calendar year 2000 using calendar years 1999 and 2000 pre-adjustment payment. For calendar year 2001, the adjustment payment is the average of pre-adjustment payments for calendar years 1999, 2000 and 2001. For calendar year 2002 and subsequent years the adjustment payment is the average of the pre-adjustment payments for the prior three calendar years.