William G. Dressel, Jr., EXECUTIVE DIRECTOR ■ Michael J. Darcy, CAE, ASSISTANT EXECUTIVE DIRECTOR
222 West State Street, Trenton, NJ 08608 PHONE: 9609) 695-3481 FAX: (609) 695-0151 WEBSITE: www.njslom.com
August 18, 2010
NJLM REACTS TO COMPTROLLER’S TAX ABATEMENT REPORT
No elected official ever wants to raise taxes. But the state sets tax policy for all New Jersey governments. And only state action can provide true local property-tax reform. Until real reforms reduce New Jersey’s over-reliance on regressive and excessive property taxes, our municipalities will need economic development tools, like tax abatements, to compete with local economies in neighboring States.
We hope, therefore, that the Comptroller’s Report will not divert attention from the immediate need for Legislative action on local government management reforms and mandates relief initiatives.
Faced with the new 2% tax levy cap, local officials need real solutions to real cost drivers, whether they are inside or outside a cap. They need to know that the state will honor its promise of property-tax relief revenue replacement funding. Absent cost containment initiatives and an end to the diversion of municipal revenue replacement funding, these new caps will only shift the burden of deciding whether to slash vital municipal services or increase property taxes from local elected officials to the citizens who elected them. Only real reform can provide immediate and sustainable property-tax relief. Only the state can deliver real reform.
We appreciate the Comptroller’s interest in tax abatements. The suggestion, however, that counties and school districts somehow suffer because of abatements fails to account for the fact that municipalities alone bear the burden for uncollected property taxes and for successful tax appeals. Counties and school districts are guaranteed 100% of their tax levy, regardless of the collection rate or the outcome of tax appeals.
Further, municipal officials are responsible for the collection of property taxes used to support school districts and county governments. Accordingly, the local officials who implement tax abatements have NO interest in increasing the reliance of other jurisdictions on this regressive revenue source.
And we fear that increased involvement by these entities and greater State oversight will only further delay and discourage local development initiatives, which are vital for producing immediate jobs for our fellow citizens and long-term ratable growth. Abatements, particularly long term PILOTs (payments in lieu of taxes) are a very positive economic engine for governments to cooperate with and encourage development and investment of private capital into their community.
Beyond that, the Report makes some valuable recommendations, based on practices implemented by a number of municipalities all around the State. We look forward to working with the Comptroller in order to promote best practices
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For further information contact: Michael Cerra, senior Legislative Analyst at (609)695-3481, extension 120 or (609) 532-2494.