This bill amends the "Long Term Tax Exemption Law" by imposing a cap on the amount of real property that can be exempt from property taxation. Specifically, it establishes that municipalities with a long-term tax exemption threshold exceeding five percent of their net valuation taxable and the value of properties already exempted are prohibited from entering into new financial agreements for further exemptions until the threshold is reduced below five percent. The bill also allows municipalities to reconsider previously denied tax exemptions if the threshold subsequently falls below the limit, as long as this does not increase the threshold beyond five percent.

The legislation addresses concerns about the potential financial burden on the state due to excessive long-term property tax exemptions, which can lead to an understatement of a municipality's property wealth. This situation may result in increased state school aid allocations to municipalities benefiting from these exemptions, thereby shifting the tax burden unfairly to other school districts. By establishing these restrictions and allowing for reconsideration of exemptions, the bill aims to promote a fairer distribution of tax responsibilities and uphold the integrity of the property tax system.

Statutes affected:
Introduced: 40A:20-2, 40A:20-4, 40A:20-12