Bill Summary – FastDemocracy

LEGISLATIVE FISCAL ESTIMATE
                              [First Reprint]
                                SENATE, No. 1619
                             STATE OF NEW JERSEY
                              220th LEGISLATURE
                                         DATED: JULY 26, 2023
                                              SUMMARY
    Synopsis:                   Provides corporation business tax and gross income tax credits for
                                value of certain fruit and vegetable donations made by commercial
                                farm operators.
    Type of Impact:             Annual State revenue decrease to the General Fund and Property Tax
                                Relief Fund.
    Agencies Affected:          Department of the Treasury.
                                  Office of Legislative Services Estimate
    Fiscal Impact                                 Five-Year Duration of Tax Credit Program
    Annual State Revenue Decrease                             $206,000 to $367,000
    The Office of Legislative Services (OLS) concludes that this bill will result in an annual
     decrease in State revenue that could range from approximately $206,000 to $367,000 to
     provide tax credits to commercial farm operators who donate certain fruits and vegetables over
     a five-year period beginning January 1, 2024.
                                        BILL DESCRIPTION
    This bill provides a credit against the corporation business tax and the gross income tax for the
value of certain donations of fruits and vegetables that are made to charitable organizations by
commercial farm operators over a five-year period beginning January 1, 2024.
    Under the bill, commercial farm operators who make donations of fruits or vegetables fit for
human consumption to a charitable organization located in this State would be allowed to claim a
credit that can be used to reduce the commercial farm operator’s tax liability. The credit would be
equal to 10 percent of the wholesale value for the fruits or vegetables donated to the charitable
organization during the tax period of the donation, as determined using a quantity-weighted
average of comparable wholesale sales of similar fruits or vegetables made by the commercial
farm operator during the month of the donation or, if no comparable sales are made, the overall
average price paid for similar fruits or vegetables at the nearest regional market during the month
      Office of Legislative Services                                 Legislative Budget and Finance Office
           State House Annex                                                 Phone (609) 847-3105
              P.O. Box 068                                                    Fax (609) 777-2442
      Trenton, New Jersey 08625                                               www.njleg.state.nj.us
                                             FE to S1619 [1R]
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of the donation. The bill would require commercial farm operators claiming the credit to obtain a
written statement from the charitable organization to verify each donation of fruits or vegetables.
    The Division of Taxation in the Department of the Treasury would be required to prepare an
annual report on the utilization of the credits provided by the bill for each year of the five-year
period for which credits are allowed.
                                           FISCAL ANALYSIS
EXECUTIVE BRANCH
   None received.
OFFICE OF LEGISLATIVE SERVICES
    The OLS concludes that this bill will result in a decrease in State revenue that could range from
approximately $206,000 to $367,000. The OLS assumes a range of producer costs, noting that
producer behavior can vary widely and that there does not appear to be publicly available
information regarding the exact value of fruits and vegetables produced and donated in New
Jersey.
    For purposes of estimating potential revenue losses to the State resulting from the provisions
of the bill, the OLS makes certain assumptions concerning the behavior of market participants.
With respect to the percentage of fruits and vegetables produced in New Jersey that will be donated
and utilize the tax credit program, the OLS assumes that the behavior of market participants will
be similar to when California enacted a similar law. The OLS notes that tax credits under the bill
may be carried forward up to five years following the final year during which the tax credits are
awarded (FY 2029). The OLS’ calculations are summarized in the table below.
 Estimated Estimated Total Value Estimated Percentage of New Jersey                  Estimated
  Range    of Fruits and Vegetables   Fruits and Vegetables that will be            Annual Tax
   Level   Produced in New Jersey Donated and Utilize the Tax Credit               Credit Amount
 Low       $995,713,956             0.02%                                         $205,516
 High      $995,713,956             0.04%                                         $367,120
  Section:      Revenue, Finance, and Appropriations
  Analyst:      Patrick Walsh
                Assistant Fiscal Analyst
  Approved:     Thomas Koenig
                Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).