Opinion ID: 222315
Heading Depth: 2
Heading Rank: 1

Heading: The Enactment Power and the Hotel Occupancy

Text: Tax’s Substantive Reach The Enabling Act’s grant of power to enact local hotel occupancy taxes varies based on the “class” of the political subdivision at issue. For general classification purposes, cities of the “first class” have populations of greater than 150,000, while cities of the “second class” have populations between 12,000 and 150,000. See N.J. Stat. Ann. §§ 40A:6- 4(a), (b).5 It is undisputed that Lyndhurst is a city of the 4 Under New Jersey law, a “municipality” is defined as a “municipal corporation,” and “[t]he words ‘municipality’ and ‘municipal corporation’ include cities, towns, townships, villages[,] and boroughs.” N.J. Stat. Ann. § 1:1-2. 5 As noted below, the distinctions based on these classifications are more nuanced, as cities of the “second class” with international airports have the same powers as cities of the 5 “second class” and that its enactment power is governed by N.J. Stat. Ann. § 40:48F-1, which permits it to “adopt an ordinance imposing a tax . . . on charges of rent for every occupancy . . . of a room or rooms in a hotel.” (Emphasis added).6 Lyndhurst exercised this authority by adopting (that is, enacting) such a tax, as did each member of the putative “first class.” 6 In full, the provision reads as follows: The governing body of a municipality, other than a city of the first class or a city of the second class in which the tax is authorized under [N.J. Stat. Ann. § 40:48E-3] is imposed, a city of the fourth class in which the tax is authorized under [N.J. § 40:48-8.15 et seq.] is imposed, or a municipality in which the tax and assessment authorized under [N.J. Stat. Ann. § 40:54D-4] is imposed, may adopt an ordinance imposing a tax, at a uniform percentage rate not to exceed 1% on charges of rent for every occupancy on or after July 1, 2003, but before July 1, 2004, and not to exceed 3% on charges of rent for every occupancy on or after July 1, 2004, of a room or rooms in a hotel subject to taxation pursuant to [the Sales and Use Tax Act, N.J. Stat. Ann. § 54:32B-3]. N.J. Stat. Ann. § 40:48F-1 (emphases added). Cities of the “second class” with international airports are governed by a different provision. See id. § 40:48E-3. 6 plaintiff class.7 Even as the New Jersey legislature provided Lyndhurst with the power to enact such a tax ordinance, it (the legislature) also placed limits on the ordinance’s substantive reach. In short, the Enabling Act only permitted Lyndhurst to impose a local hotel occupancy tax on transactions that were already subject to the Sales and Use Tax Act, which levied a statewide tax on “[t]he rent for every occupancy of a room or rooms in a hotel in [New Jersey].” N.J. Stat. Ann. § 54:32B-3(d). The tax was to be collected by “the person collecting rent from the hotel customer,” id. § 40:48F-3(a), which included “every operator of a hotel,” id. § 54:32B-2(w). Given this scheme, although the substantive reach of Lyndhurst’s hotel occupancy tax remains a matter of dispute, its power to enact such a tax is not. 7 Lyndhurst’s hotel occupancy tax ordinance reads as follows: There is hereby established a hotel and motel room occupancy tax in the Township of Lyndhurst which shall be fixed at a uniform percentage rate of one percent on charges of rent for every occupancy of a hotel or motel room in the Township of Lyndhurst on or after July 1, 2003, but before July 1, 2004, and three percent on charges of rent for every occupancy of a hotel or motel room in the Township of Lyndhurst on or after July 1, 2004, of a room or rooms in a hotel subject to taxation pursuant to [the Sales and Use Tax Act]. 7