News Flash

Budgeting

Posted on: June 15, 2023

Court Decision Will Impact Municipal Collection of BPPT

This week, an Appellate Panel released their opinion in Verizon New Jersey v. Borough of Hopewell, a case which the League participated in as amicus because of its broad implications on New Jersey’s municipalities.

The Appellate Panel maintained the lower court rulings, holding that an ILEC is no longer obligated to pay the BPPT to a municipality if they provide less than 51% of the dial tone access, finding that the dial tone calculation must be done on a yearly basis. The Appellate Panel also upheld the lower court’s ruling related to how this calculation should be done, supporting the method advanced by the Borough’s expert.

The matter involved Verizon’s unilateral decision to no longer pay the Business Personal Property Tax (BPPT) to the Borough of Hopewell. Verizon took this action after it determined they no longer provided 51% of the dial tone access to the Borough. New Jersey law requires that certain telephone companies like Verizon, known as Incumbent Local Exchange Carriers (ILEC), must pay the BPPT to the local municipality. Under the law the requirement to pay the BPPT was limited to those ILECs “that were subject to tax as of April 1, 1997” under another provision of the law. 

Verizon and the Borough disagreed on the interpretation of the law, with Verizon taking the position that only ILECs that currently provide 51% of dial tone access to a municipality would be subject to the tax. In other words, once the ILEC stopped providing access to more than half the Borough, they were under no obligation to pay the BPPT. The Borough, and the League as amicus, took the position that the obligation to pay the tax continued as the law obligated the ILEC that provided 51% of dial tone access as of April 1, 1997, to continue to pay the BPPT in perpetuity. 

The two sides also disagreed on how to calculate whether an ILEC provides 51% of the dial tone access to a municipality. Any calculation requires both technical knowledge of telephone systems, and knowledge of the individual ILEC’s business operations. Further, the percentage of dial tone access provided by an ILEC changes each year as customers are added and leave. 

The ruling will play an important part as other municipalities that have been receiving BPPT payments could begin to no longer receive this revenue as ILECs continue to take the position that they no longer provide the necessary dial tone access. This ruling will also serve as guidance to those municipalities that challenge the ILEC’s calculation.

It is unclear at this time if either party will appeal this matter to the Supreme Court but should that happen the League is ready to continue to participate as amicus and as a strong voice for all municipalities.       

Contact: Frank Marshall, Esq., Associate General Counsel, fmarshall@njlm.org, 609-695-3481, x137. 

Facebook Twitter Email

Other News in Budgeting

Bills of Interest Signed by Governor

Posted on: January 19, 2024

Division Issues Guidance on CY 2024 Budget

Posted on: December 21, 2023

DCA Budget Breakdown

Posted on: May 5, 2023

SHBC Plan Design Committee Meeting Summary

Posted on: February 24, 2023