Republican Jack Ciattarelli called for increased scrutiny of tax abatement programs and Payments in Lieu of Taxes (PILOTs) in towns being investigated by the State for not properly assessing their tax properties.
In a letter (attached) to acting director Dennis Shilling of the Division of Taxation, Ciattarelli urged expanding an ongoing investigation of three municipalities for failing to “uniformly and fairly assess properties” to include analysis of lost revenue attributable to abatements and PILOTs, and why state school aid is increasing in these towns if their taxable properties are growing in number and value.
“The notion of any community not collecting school property taxes on properties when its schools are 50%, 60% or 70% funded by state school aid is dubious if not unacceptable, especially considering that the New Jerseyans providing that aid do, in fact, pay school property taxes. Inadvertent or purposeful, communities sustaining their dependency on state school aid, at a time when we are experiencing extraordinary unfunded liabilities (i.e., teachers’ pensions) requires urgent and robust analysis,” Ciattarelli’s letter stated.
“While PILOTs and tax abatements have their place in certain circumstances (e.g., affordable, senior citizen and veteran housing), it is my contention that widespread use of these programs is an injustice to all New Jerseyans who pay income taxes to subsidize our state’s public school systems. Not only do PILOTs and tax abatements cause property tax inequities from homeowner-to-homeowner within the same community, these programs, in combination with the state’s current school funding formula, create a system whereby municipalities actually sustaintheir dependency on state school aid (by not collecting school property taxes on certain properties),” Ciattarelli continued.
In November, the Department of Taxation notified the municipal governments of Jersey City, Dunellen and Elizabeth informing them that it will conduct an investigation to determine whether to order a revaluation of properties within their boundaries.
“Given the fact that the Division will be conducting an investigation to determine whether to order a revaluation of properties in Dunellen, Elizabeth and Jersey City, I respectfully request that your investigation in these municipalities be expanded to include an analysis of the properties for which little to no school property taxes are collected as a result of PILOTs and/or tax abatements,” Ciattarelli wrote. In the letter, he asked that the State Department of Education, the non-partisan Office of Legislative Services, and the Department of Community Affairs provide assistance “to determine why 2008 School Funding Reform Act Adjustment Aid is not decreasing in these municipalities if their properties are, in fact, increasing in number and value.”