WASHINGTON, D.C. – July 28, 2015 – (RealEstateRama) — Assembly Republican Jack Ciattarelli, R-Somerset, Hunterdon, Mercer and Middlesex, said Jersey City losing $80 million in property taxes due to tax abatements is a prime example of how the school funding system is manipulated. A recent news report revealed the lost property taxes.
Jersey City’s abatements or payments-in-lieu-of-taxes (PILOT) are long-term tax breaks given to developers, allowing them to pay a fixed amount instead of the normal property tax rate. The city shares five percent of the PILOT revenue with the county. Most times, the school district receives very little or nothing.
“This report reveals the tip of an iceberg that is vast and mostly underwater,” said Ciattarelli. “Short-term property tax abatements, under very special circumstances, may have their place. What’s happening in Jersey City and elsewhere is crony capitalism at its worst and an injustice to all New Jersey taxpayers.
“Jersey City can afford to siphon property tax revenues from their schools because the state provides such large subsidies,” stated Ciattarelli. “In Jersey City, the state contributes 60 percent of its school funding. This subsidy is so overly generous that local taxpayers pay only 15 cents on the dollar for their schools.
“At a time when the state is experiencing a painful squeeze on its budget and can’t afford to make the full teachers’ pension payment, the abatements exploit the state school funding formula,” explained Ciattarelli. “If communities want to provide tax abatements to encourage development, they should fund them from municipal and county taxes, not school property taxes.”
Ciattarelli noted two parts of his comprehensive proposal for pension reform that address the area of school funding and abatements:
• No community is allowed to fund less than 25 percent of their school budget through the local tax levy (some communities fund less than 15 percent of their school budget, while others fund more than 90 percent); and
• No community whose local school budget is funded more than 50 percent by federal and state aid can abate school property taxes on new development