This action was instituted by the filing of a complaint in lieu of prerogative writs by the individual plaintiffs who are taxpayers of the Borough of Roselle Park in Union County and the Township of Delaware in Hunterdon County. They have been joined by four municipalities, City of Trenton, Township of Lawrence, City of Salem and Borough of Woodbine as plaintiff-intervenors. The complaint challenges the constitutionality of the statutory apportionment of public utility gross receipts tax revenues to the municipalities of New Jersey. N.J.S.A. 54:30A-61.
Defendants are the Governor, the Treasurer, the Commissioner of the Department of Community Affairs and the Directors of the Divisions of Taxation and Local Government Services, all in their official capacities. These defendants have been joined as defendant-intervenors by 20 municipalities.*fn1
Plaintiffs have filed a motion for summary judgment and defendants have filed cross-motions for summary judgment. There being no dispute as to any material fact, the matter is suitable for summary judgment. The factual background is simple: the individual taxpayers pay public utility companies for electric, gas and water service, which payments constitute part of the gross receipts of the companies upon which the State of New Jersey imposes a tax. N.J.S.A. 54:30A-49 to 67. The public utility gross receipts taxes are apportioned to the municipalities pursuant to a statutory formula, N.J.S.A. 54:30A-61, which apportionment is not made on the basis of the sale of services by the public utility companies to their customers but is based upon a statutory
value attributed to certain property located in each municipality. N.J.S.A. 54:30A-58.
As a result of the location of certain large public utility installations, manufacturing plants and generating stations, the municipalities in which those installations are located receive apportionments which are substantially larger than the apportionment to municipalities in which there is no major public utility installation. Plaintiffs contend that the gross receipts subject to taxation pursuant to N.J.S.A. 54:30A-49 to 67 are derived from the sale of services by the public utility companies to their customers, but that the apportionment to municipalities of the taxes so collected are not made on the basis of such sale of services.
Plaintiffs challenge the constitutionality of N.J.S.A. 54:30A-61 on the theory that it violates three provisions of our State Constitution , namely Art. IV, § VII, par. 9 (6); Art. IV, § VII, par. 9 (13), and Art. I, par. 1; as well as the Equal Protection Clause of the United States Constitution , Amend. XIV.
The statute under attack reads as follows:
The balance of the excise taxes imposed by Section 6(b) of this act upon each taxpayer in the year 1940 and each year thereafter is hereby appointed to the various municipalities in the proportion that the apportionment value of the scheduled property of such taxpayer located in each municipality as of the preceding July 1 bears to the total apportionment value of the scheduled property of such taxpayer in this State as of that date. The State Tax Commissioner shall on or before June 1, 1941 and annually before June 1 in each year thereafter, compute the balance of such taxes and apportionment thereof in the manner herein provided.
This statute is the apportionment section of the Public Utility Gross Receipts Tax Law which sets forth the manner in which the monies collected under N.J.S.A. 54:30A-54(b) are to be apportioned. The constitutional attack is limited to § 61; the plaintiffs are not challenging the imposition of the tax, but solely the manner of apportionment.
The threshold issue in this case is whether the public utility gross receipts tax imposed by ...