Plaintiffs challenged Jersey City's adoption of a payroll tax ordinance that exempted from its calculation the "total remuneration" employers paid to Jersey City residents, and included in the calculation remuneration paid to employees who worked outside the city but were supervised by an employee in the city. Amendments to the Local Tax Authorization Act, N.J.S.A. 40:48C-1 to -42 (LTAA) in 2018 permitted the exemption of local residents and authorized the use of payroll tax revenue to augment Jersey City's loss of state educational aid resulting from 2018 amendments to the School Funding Reform Act of 2008 (SFRA), N.J.S.A. 18A:7F-43 to -63. Jersey City was the only municipality that satisfied the statutory requirements. The Law Division judge upheld the constitutionality of the ordinance and amendments to the LTAA and dismissed the complaint.
The court affirmed in most respects. However, the court concluded that plaintiffs' constitutional challenge to the supervisor provision pursuant to the Commerce Clause of the United States Constitution potentially had merit and vacated dismissal of that count of the complaint. The court remanded the matter for further proceedings.