| BRIEF HISTORYGenerally, prior to 1900 New | | | | one State Budget line item.In 1985 the New |
| Jersey local tax assessors seldom entered a | | | | Jersey Tax Assessment Study Commission looked |
| complete list of tax exempt property located | | | | into the Tax Exempt Property problem and |
| within their municipality on their tax rolls. | | | | determined that while exempt property owners |
| Why should they, nobody would ever think | | | | paid a "ready and available fee" to their |
| about levying a property tax on governmental, | | | | local water utility to use water up "on |
| educational, church or other property used | | | | demand" and be billed for its usage those |
| for charitable purposes. It made little | | | | same exempt property owners did not pay their |
| sense to those early property tax assessors | | | | municipal governments for their public work |
| to spend the resources to find, list and | | | | departments or police departments to have |
| value such tax exempt property. Why, taxing | | | | those public servants and their equipment |
| government and other tax exempt property | | | | "ready and available" to meet the needs of |
| owners that served fundamentally public | | | | the exempt property owners when required.The |
| rather than private interests would be just | | | | Commission made estimates as to the amount of |
| taking publics money from one pocket and | | | | revenue that could be raised Statewide if |
| putting it in the other pocket, right?Tax | | | | such taxing authority was given to municipal |
| exemption cases brought before the New Jersey | | | | governments by the Sate and recommended that |
| Courts after 1900 show many questionable | | | | the Legislature adopt such a law. Of course |
| property tax exemption claims were filed by | | | | the Legislature acted swiftly to draft a |
| not for profit entities. Assessors found | | | | legislative resolution stating that the |
| that tax exempt property owners organized for | | | | Legislature had no knowledge of and in no way |
| charitable and religious purposes leased | | | | supported such a user fee on churches and |
| their tax exempt property rights to other for | | | | other not for profit charitable and |
| profit businesses. At the same time other | | | | educational institutions.LESSONS LEARNED AND |
| educational institutions went way beyond the | | | | THE FUTUREEncourage local tax assessors to |
| charges set forth in their charter's | | | | remain vigilant in granting tax exemptions to |
| provisions by including under their tax | | | | only those property owners who meet the |
| exemption umbrella such questionable property | | | | letter of the law. Do not attempt to impose |
| uses as polo fields for the use of their | | | | user fees on tax exempt property during |
| students and other private polo teams. With | | | | sunlight hours in Trenton. Partisan |
| increasing complaints about the abuses of tax | | | | Legislative staff should remind their |
| exempt claims some local tax assessors began | | | | legislators that the clergy can speak from |
| to assess certain questionable educational, | | | | the pulpit on Sunday about the foolish and |
| charitable and church property owners for | | | | wrong headed user fee proposals of |
| property that was not being used strictly for | | | | legislators who suggest imposing user fees on |
| their chartered tax exempt purposes.Of | | | | churches and the November elections falls on |
| course, these tax exempt property owners | | | | a Tuesday only two short days from the Sunday |
| complained to their legislators in Trenton | | | | sermon.If history is any prediction of the |
| about the wrongs caused them by the local | | | | future then New Jersey may see more State |
| property tax assessor. Their government | | | | owned properties like the Garden State Art |
| representatives in Trenton then started to | | | | Center have its name leased out for a profit. |
| provide some standards in the property tax | | | | Perhaps one day instead of the Atlantic City |
| law for the tax assessors to follow. So, for | | | | Expressway New Jersey will have the Trump |
| different uses of exempt property, presumably | | | | Expressway or the Mack Truck Turnpike. It is |
| based on the worthiness to society of a | | | | even possible that one day New Jersey will |
| particular property's use, the law specified | | | | sell its Sate House to a large corporation to |
| different standards. School buildings for | | | | raise needed revenues and then rent it back. |
| example had to be actually used for their | | | | Would that require more friendly Sate |
| intended purpose, while buildings for the | | | | treatment of the corporate community, else |
| work of churches had to be actually and | | | | eviction could ensue? Perhaps it really |
| exclusively used for religious purposes, etc. | | | | comes down to the public being vigilant watch |
| Then County Boards of Taxation and the State | | | | dogs. Why not require the Division of |
| Courts had to begin settling disputes over | | | | Taxation to post on its web page a listing of |
| what those terms meant in actual | | | | Tax Exempt Property, by municipality, by |
| application.Today, the property tax exemption | | | | ownership and by purpose? Property taxation |
| battle continues. Should your church be able | | | | is a battle, and the tax assessors in New |
| to build a large building to lease to a For | | | | Jersey need the support of the public to |
| Profit Day Care Center and with the rent | | | | enforce the letter of the law.A New Jersey |
| money pay off the building's mortgage? Does | | | | Governor one day may sign a law permitting |
| a private school need a golf course for | | | | the sale, lease, or granting of naming rights |
| golfers who are not students when school is | | | | on State Owned Property to raise money for |
| out so as to defray the expense of the golf | | | | some worthwhile State purpose. Such revenue |
| course? These are the questions that local | | | | could be used to pay off State Debt so as to |
| tax assessors, the courts and the government | | | | free up cash for property tax relief. The |
| in Trenton struggles with daily.GOLD MINE OR | | | | payment streams from such activities could |
| MINE FIELDPrior to the Cahill Tax Policy | | | | become a new source of annual State revenue. |
| Commission in 1973 other Tax Commissions | | | | Once the State government adopted this new |
| created by the Legislature had looked solely | | | | funding mechanism my guess is that the local |
| into the legal status of tax exempt property | | | | municipal and county governments would follow |
| in New Jersey and took extensive testimony | | | | suit soon thereafter. If State and Local |
| concerning perceived tax exempt property | | | | governments keep doing the same fiscal things |
| abuses. Nevertheless, little could be done | | | | over and over and hoping to find new sources |
| legislatively at that time because there was | | | | of revenue they will never be able to fully |
| no Statewide tabulation of Exempt Property | | | | serve their citizens.I also think it would be |
| values in New Jersey and therefore the fiscal | | | | all right for the State to sell certain State |
| tax impact locally of changes in the law | | | | owned property, so long as that sale did not |
| could not be weighed by the State Government | | | | jeopardize the future economic prosperity of |
| decision makers.To remedy that problem the | | | | the State or threaten the future safety of |
| Division of Taxation in 1971, at the request | | | | its people. For example, the sale of the New |
| of the Cahill Tax Policy Commission took on | | | | Jersey Turnpike or Garden State Parkway would |
| the job of collecting over 100,000 exempt | | | | leave the business and people in New Jersey |
| properties listed by Local Tax Assessors on | | | | who depend on those vital arteries at the |
| their local Tax Exempt Lists. The submission | | | | mercy of a profit driven corporation. |
| of Governor Cahill's Tax Policy Report to the | | | | However, the sale and lease back of a State |
| legislature was delayed so that the Exempt | | | | warehouse would free up cash to pay off State |
| Property Study could be completed because it | | | | debt that is eating into the State's ability |
| was thought that such a list could contain | | | | to provide vital services and provide |
| the pot of gold needed to avert major new tax | | | | property tax relief. The State might even |
| increases to pay for property tax relief. | | | | sell a State property and use part of the |
| The study was finished and its results were | | | | proceeds to invest in other property that |
| reported in the ensuing Tax Policy Commission | | | | holds the potential to increase substantially |
| Report with recommendations that in large did | | | | in value in the future. My point is that |
| not meet the political and social needs of | | | | State asset and debt management needs a |
| the day for a new source of revenue for | | | | higher viability than it now |
| property tax relief.However, while no new | | | | receives.Biography: Gerald ‘Jerry' |
| revenue source for property tax relief was | | | | Dowgin "The Property Tax Doctor" and the |
| found because of the Exempt Property Study, | | | | author of the Homeowner's Assessment Review |
| the large concentrations of exempt property | | | | Guide ( a former tax assessor worked in the |
| found in certain cities and towns lead to the | | | | field of public finance at the State and |
| adoption of a State Aid Program called the | | | | local levels in New Jersey for more than |
| PILOT Program which stood for "payments in | | | | three decades until his retirement in 2001. |
| lieu of taxes." In essence, the State made | | | | As a Supervising Tax Analyst in the Office |
| payments to municipalities at the effective | | | | of Research and Statistics in the Division of |
| municipal purpose tax rate for certain | | | | Taxation in the New Jersey Department of |
| properties owned by the State. Those Sate | | | | Treasury he worked principally on local |
| Aid payments over the years were seldom fully | | | | property tax issues. Then he joined the |
| funded according to the formula set forth in | | | | Office of Legislative Services (OLS) in 1983 |
| the law because the program had its pay out | | | | and served as the Secretary to the New Jersey |
| level reduced by a fixed percentage for many | | | | Property Tax Assessment Study Commission for |
| State Budget years. Then the PILOT program | | | | four years. While working in the OLS, Local |
| was incorporated into the COMPTRA State aid | | | | Government Section he researched, drafted, |
| program which in effect locked up both the | | | | and estimated the cost of the Senior Property |
| property values used to calculate its funding | | | | Tax Freeze Bill which was signed onto law and |
| along with the local effective municipal | | | | worked on legislation that became law that |
| purposes tax rates used in the formula at a | | | | virtually stopped the tax assessment practice |
| static level. That COMPTRA program | | | | of "Spot Assessments" in New Jersey that had |
| consolidated more than a dozen State aid | | | | treated many property taxpayers unfairly. |
| programs along with the PILOT program into | | | | |