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