The NJ Tax Blog

"When Barack Obama makes his New Year's resolutions, at the top of his list ought to be the following: 'I will not allow America to become New Jersey.' Think of it as our [New Jersey's] gift to the nation." These are the words spoken in an editorial in today's Wall Street Journal in an article titled "New Jersey is the Perfect Bad Example, Obama should look here to see what high taxes do." As stated by the author, New Jersey, according to the Tax Foundation, has the most hostile business environment in the country. Moreover, as realized by the author, "Over the long run, the only way to have a healthy and growing economy is to do exactly what New Jersey has not: Trust the people with their own money, and create an environment where initiative and enterprise are rewarded rather than penalized. Absent a thorough-going revolution in Trenton, New Jersey may be lost for some time to come. But if Mr. Obama can learn from our bad example and do the opposite, New Jersey's loss might yet be America's gain." I fully agree with the author and can only pray that the New Jersey Legislature will one day realize the wisdom that resonates from the author’s words.

To read the full article by the Wall Street Journal click the words Property Tax.

As a reminder to everyone in New Jersey who recently received a 2007 omitted-added assessment bill and/or a 2008 added assessment bill, the deadline to appeal such assessment is THIS MONDAY, December 1, 2008.

This means that the County Board of Taxation must actually RECEIVE your filed petition contesting the 2007 omitted-added assessment or 2008 added assessment by Monday. Merely mailing your petition by Monday is insufficient. If the County Board does not receive your petition by December 1, 2008, the County Board will almost for certain not hear your appeal and you will be jurisdictionally barred from appealing your assessment to the Tax Court of New Jersey.

If you are unsure whether or not you have a claim, I strongly suggest that you file your appeal now in order to preserve your rights. After you file your petition, you could always investigate your rights further by contacting a Property Tax Attorney who specializes in this area of law.

Timothy A. Boulos, Esq., a fellow real estate tax appeal attorney, died this morning. He was twenty-six years old. Tim graduated from the Widener University School of Law in 2007 and from Rutgers University in 2004. Tim was a close colleague to many in the New Jersey Bar and will be greatly missed.

The Record (www.northjersey.com) reported today that Verizon Wireless plans to stop paying millions of dollars in property taxes to local New Jersey municipalities by 2011. Currently, Verizon is paying these taxes pusuant to a 1940 statute that requires the predominant “telecomunications carrier” in a municipality to pay taxes on personal property. However, due to the fact that several cable companies are now offering telephone services in addition to traditional cable services, Verizon is no longer the dominant “telecomunications carrier” in several New Jersey municipalities. As a result, Verizon is now arguing that it is no longer required to pay property taxes on its personal property. To read the full article that addresses this issue in more detail, please click the words Property Tax.

Due to the faltering economy, Governor Corzine indicated that he may cut New Jersey’s Property Tax Rebate program even further next year. Yesterday, at a news conference after dedicating New Jersey’s World War II Memorial, Governor Corzine stated: "We're hopeful that we will be able to sustain it [the Property Tax Rebate Program], but I can't promise anything in this environment…" To read more, please click the words Property Tax.

The New Jersey Division of Taxation just released the New Jersey State Tax News for Fall 2008. This eleven page publication covers issues ranging from recent Tax Court opinions, to current legislative laws being considered, to small business workshops. To read the full publication, please click the words Property Tax.

White Township’s wallet was recently hit by the Appellate Division’s decision in DSM Nutritional Products v. White Township. In that case, the Appellate Division affirmed reducing the assessment on DSM Nutritional’s property by $77 million dollars for the 2004 tax year and by $74 million dollars for the 2005 tax year. Consequently, White Township must now refund more than $2.5 million dollars in property taxes to DSM Nutritional.

At trial in the Tax Court, Judge Kuskin held that the DSM Nutritional expert’s sole reliance on the cost approach was appropriate due to the fact that “other market data,” such as “comparable sales or leases, [were] scarce or nonexistent.” In addition, at trial, the question of depreciation became a major issue. Addressing this issue, Judge Kuskin noted that “the analysis by plaintiff's appraiser was not error free” but that “defendant presented no depreciation analysis,” or other proofs to challenge the conclusions or adjustments of plaintiff's appraiser. As such, Judge Kuskin evaluated in detail DSM Nutritional expert’s testimony and after noting the need to make corrections and adjustments, Judge Kuskin concluded that the “original assessment [was] unreliable,” and therefore not entitled to “its presumptive correctness.” In so doing, Judge Kuskin ruled that DSM Nutritional overcame the presumption of correctness that normally attaches to a municipality’s assessment. Since the presumption of correctness of the assessment no longer attached to DSM Nutritional’s assessment, Judge Kuskin was under a duty to find the true value of the property. In so doing, Judge Kuskin lowered the assessment of the property by $77 million for the 2004 tax year and by $74 million for the 2005 tax year.

The Appellate Division affirmed Judge Kuskin’s decision. Some sources say that this case will be appealed to the New Jersey Supreme Court.

As it stands now, in order to refund the $2.5 million dollars to DSM Nutritional, the property taxes in White Township are going to be raised by 5 cents per 100 dollars in assessed valuation.

To read about this decision from LehighValleyLive.com, click Property Tax.

To read about this decision from the NJ.com, click Property Tax.

According to today’s DailyRecord, “Assembly Republicans denounced new affordable housing regulations that took effect this summer as ‘devastating’ to New Jersey and vowed Tuesday to focus most of their legislative efforts this fall on revising them.” This effort is based on the realization that the new rules will lead, as some believe, to higher property taxes, overdevelopment and less open space. In part, the Republicans are looking to reduce the number of affordable houses required to be built each year from 115,000 to some more reasonable level. One idea to accomplish this is by using New Jersey’s plethora of foreclosed homes to solve the state’s needs for affordable housing. Please click the words Property Tax to read the DailyRecord’s full article.

The Appellate Division recently affirmed ABD Independence, Inc. v. Township of Independence, --- A.2d ----, 2008 WL 3982681 (App. Div. 2008) (Real Estate Property Tax).

In this case, Plaintiff, ABD Independence, Inc. (ABD), owned property in Warren County that was governed by the Highlands Water Protection and Planning Act (Highlands Act), N.J.S.A. 13:20-1 to -35. After trial, the Plaintiff appealed the value assigned to the property by Judge Kuskin, judge of the Tax Court, and argued that the value assigned by Judge Kuskin was excessive and alleged that Judge Kuskin misinterpreted statutory exemptions and thereby allowed development and regulations permitting an extension of public water to the site. The Township of Independence (the Township), cross-appealed and alleged that Judge Kuskin committed error when he found that the improvements had no value. The Appellate Division dismissed both appeals and affirmed Judge Kuskin’s findings.

The subject property in question was a 122.86 acre parcel located along Petersburg Road (Warren County Route 614) about 1200 feet north of the intersection of Petersburg Road and State Highway 46 in the Township. A substantial portion of the subject property is wooded with moderate to steep slopes. A large pond is located near Petersburg Road. A 1910 square foot farmhouse is located on the property close to Petersburg Road. The farmhouse is occupied but in disrepair. There are also miscellaneous accessory structures, such as a barn, sheds and a springhouse, on the property, all in disrepair.

On June 16, 2003, the Township planning board granted preliminary major subdivision approval to plaintiff for a thirty-nine lot clustered residential development. The project also included a single 10.056-acre parcel with the existing house and out-buildings. Each home would be served by public water and individual septic systems. The approval contained several conditions, including issuance of several permits by the New Jersey Department of Environmental Protection (DEP).

The Highlands Act was adopted in August 2004, but major Highlands developments that received certain approvals and/or permits prior to March 29, 2004, were exempt from its provisions. N.J.S.A. 13:20-28a(3); N.J.A.C. 7:38-2.3(a)3. On October 18, 2004, in response to the Highlands Applicability Determination and Water Quality Management Plan Consistency Determination request filed by ABD, DEP advised ABD that the subject property is located in the Highlands Preservation Area. DEP noted that ABD had not received qualifying approvals before March 29, 2004; therefore, ABD's proposed subdivision fell within the Major Highlands Development category, that it did not meet any of the statutory exemptions, and it would be required to obtain a Highland Preservation Area Approval before it could proceed. The Highlands Act prohibits major Highlands development within 300 feet of any Highlands open waters, i.e., 300-foot buffer, N.J.S.A. 13:20-30b(1), -32a; N.J.A.C. 7:38-3.6(a). The subject property's existing structures fell within that buffer.

At trial, Judge Kuskin found that an addition to the residence on the property could be constructed even though the residence was within the 300 foot buffer area. Judge Kuskin interpreted N.J.S.A. 13:20-28b, which provides that the enumerated exemptions do not alter or obviate the requirements of other statutes or regulations, as not including Highlands Act requirements. Judge Kuskin reasoned that any other interpretation would render the seventeen enumerated exceptions, N.J.S.A. 13:20-28a(1) to (17), meaningless. Consequently, Judge Kuskin held that the taxpayer could renovate or construct a single family dwelling within the 300 foot buffer mandated by the Highlands Act. In so doing, Judge Kuskin rejected Plaintiff's contention that an extension of the water line would be prohibited under N.J.A.C. 7:38-2.5(a), which prohibits “the construction of any new public water system and the extension of any existing public water system to serve development in the preservation area,” because N.J.A.C. 7:38-2.5(a) is inapplicable to a development that is “exempt from the Highlands Act pursuant to N.J.A.C. 7:38-2.3.”

The Appellate Division agreed with Judge Kuskin’s logic and affirmed the assessment that Judge Kuskin placed on the property.

The New Jersey Appellate Division decided Rosen v. Plainsboro Township yesterday. In that case, the Plaintiffs argued that Plainsboro Township’s 2006 reassessment of their condominium units should be nullified because no compliance plan was submitted or approved. The Plaintiffs challenged the application of the remediation exception under the applicable regulation, N.J.A.C. 18:12A-1.14, which provides in pertinent part:

(i) Assessment maintenance: An assessor proposing to revise and update assessments because he or she has reason to believe that property comprising a part of a taxing district has been assessed at a value lower or higher than is consistent with the purpose of securing uniform taxable valuation of property according to law for the purpose of taxation, or is not in substantial compliance with the law, and that the interests of the public will be promoted by reassessment of such property, shall make a reassessment of the property in the taxing district not in substantial compliance....

*2 ....

3. The following are the criteria to be considered by the county board and Division of Taxation in determining whether to approve a compliance plan.

....

(viii) Assessed value changes due to clerical, typographical, transpositional, physical descriptive or mathematical errors, added assessments, omitted assessments, omitted added assessments, exemptions, demolitions, governmentally imposed restrictions, planning board, and/or zoning board of adjustment approvals, approved revaluations, site contamination, removal of contaminated soil and property remediation; and storm, cyclone, tornado, earthquake, fire, flood, hurricane, vandalism, or other casualty, qualified farmland, subdivisions, mergers and changes resulting from appeals or settlement agreements, do not require the filing of a compliance plan.

The Plaintiffs argued that “property remediation” in section (i)(3)(viii) should be read in conjunction with the preceding language “soil contamination” to except from the compliance plan requirement only property remediation undertaken in connection with contaminated soil, and should not include remediation that they contend amounts to “a concentrated catching-up on deferred maintenance.”

The Appellate Division agreed with the Judge Menyuk, judge of the Tax Court of New Jersey, who found that the remedial work was not simply deferred maintenance but effected physical changes at the conclusion of the remedial work that increased the value of the condominium units from the prior assessment, which reflected only partial improvements to the properties while they were in a state of ongoing remediation. Consequently, the Appellate Division affirmed that the substantial remediation of the subject properties constituted an exception to the requirement of a compliance plan stated in N.J.S.A. 54:4-23.

According to the Tax Foundation: “New Jersey taxpayers bear the heaviest state-local tax burden in 2008” and paid on average 11.8% of their income in state and local taxes. New York was a close second behind New Jersey with a 11.7% burden. Alaska had the lightest burden, with a mere 6.6% burden. The Tax Foundation’s full article may be found HERE.

Governor Jon S. Corzine and State Treasurer David Rousseau announced that the deadline for both homeowners and tenants to file their 2007 homestead rebate applications has been extended to October 31, 2008. The deadline for filing 2007 Senior Freeze (Property Tax Reimbursement) applications has also been extended to October 31, 2008.

On Monday, the New Jersey Supreme Court decided Hunterdon Medical Center v. Township of Readington. In a thirty-five page published opinion, the New Jersey Supreme Court affirmed a new test first put in place by Judge Kuskin of the Tax Court. The Supreme Court used this new test in order to discern whether the hospital at issue was in fact a “hospital” eligible for property tax exemption. In so doing, the New Jersey Supreme Court redefined the term “hospital” itself.

The New Jersey Supreme Court stated in part:

“In our view, the analysis for ‘hospital purposes’ must take into consideration the many medical pursuits permitted to the ‘modern’ hospital in New Jersey. A hospital can no longer be restrictively equated with a nineteenth, or even twentieth, century vision of a monolithic building, in which is offered continuous inpatient care or emergency treatment, twenty-four hours per day, to the sick, disabled, and infirm. Licensing authorities have allowed hospital activities to evolve as inpatient stays have diminished. Today, treatment often is delivered on an outpatient basis at a hospital’s main facility, as well as at off-site facilities, backed up by the promise of ready inpatient care from the general, acute-care hospital when necessary. Thus, a fair definition of core “hospital purposes” must acknowledge the variety of activities that a modern hospital can be expected to perform for patients, be they inpatients or outpatients. That said, a hospital’s expansive view of its mission does not necessarily equate with ‘hospital purposes’ in the tax exemption analysis.”

Ultimately, the Supreme Court affirmed the majority of the Tax Court’s and Appellate Division’s holdings, which affirmed the denial of the Hospital’s tax exemption application, and remanded the case back to the Tax Court for further fact-finding on one narrow issue. (The New Jersey Supreme Court remanded the case to the Tax Court for further fact-finding on the sole and precise issue as to whether the PT Service on the second floor of the hospital should be tax exempt.)

The full text of the New Jersey Supreme Court’s opinion may be found HERE.

On July 7, the Appellate Division affirmed the Tax Court of New Jersey's decision in Wee Love, Inc. v. Township of Maple Shade. In so doing, the Appellate Division agreed with the Tax Court that the day-care facility at issue in that case is a school for purposes of the local property tax exemption under N.J.S.A. 54:4-3.6. The Tax Court found, and the Appellate Division agreed, that due to the fact that virtually all of the plaintiff's building was used by preschool children, the predominant use of the building was as a school, even though at times some portion of the building was occupied by participants in before- and after-school programs. The Appellate Division also noted that there was substantial credible evidence to support the Tax Court's conclusion that the entire premise was exempt because the predominant use was as a school.

CNN reported today that a glitch in a Wells Fargo's computer system resulted in 900 taxpayers receiving a property tax bill for one penny. A video on CNN.com that discusses this mistake may be found HERE.

As released yesterday by the New Jersey Division of Taxation:

"The Division of Taxation is now in the process of mailing 2007 homestead rebate applications to homeowners who are under age 65 and who are not disabled. This is the second of two mailings for the program this year; applications were mailed in May to homeowners who were senior citizens (age 65 or older) or disabled.

The current mailing of application packets will be staggered over a two-week period starting July 3, 2008. The deadline for filing these applications is August 15, 2008.

Some senior and disabled homeowners may receive an application packet in this mailing, even though they have already filed for the 2007 homestead rebate. Homeowners who have already filed their applications online or by phone and received a confirmation number, or who have completed and mailed in a paper application, should not file again.

The homestead rebate application delivery dates by county are:

Morris, Ocean - July 3

Atlantic, Essex, Monmouth, Sussex - July 7

Camden, Hudson, Hunterdon, Salem, Somerset - July 10

Gloucester, Mercer, Middlesex, Passaic - July 12

Bergen, Burlington, Cumberland, Warren - July 16

Cape May, Union - July 18"

Click HERE for additional information on the 2007 homestead rebate.

“In a state where the major burden of paying for government services falls to the property tax, New Jersey bears the unenviable distinction of having the highest property taxes in the country. Over the last five years, the average state property tax has increased 30 percent.

Since housing values have started to drop, some homeowners are balking that they are now paying too much — based on inflated property assessments made at the height of the real estate boom — and are now asking the assessor to come back for another look.”

This quote was written in yesterday’s New York Times in an article by Joseph Elliott titled “Homeowners Fight Back as Market Cools Off.”

According to the article, “property reassessments took place every 10 years on average. But with the rapid rise in real estate values in the first half of this decade, the process spun into warp speed in some hot markets. Since 2000, 272 of New Jersey’s 566 municipalities have undergone revaluations.”

However, as recognized by this article, many of these municipalities that have put in place reassessment or revaluation programs (at a cost of up to $2 million per municipality), are now facing a serious dilemma: A municipality may choose to ignore the current drop in real estate values and implement the reassessment or revaluation that was used with sales data from a year ago, or a municipality may scratch any revaluation or reassessment work that has been done thus far in order to start over in order to take into account the recent drop in real estate prices.

For the full article by Joseph Elliott with the New York Times, please click HERE.

On Thursday, in a single, unanimous vote, the Senate granted tenure to the Honorable Vito L. Bianco, judge of the Tax Court of New Jersey. Although the day a judge receives tenure is a special day for every judge, last Thursday was especially noteworthy to Judge Bianco as it was also Judge Bianco's 50th birthday.

State Treasurer David Rousseau announced yesterday that the deadlines for filing 2007 Homestead Rebate and Senior Freeze (Property Tax Reimbursement) applications have been extended to August 15, 2008.

To view the details and the Treasurer's press release, please visit:

http://www.state.nj.us/treasury/news/2008/p080522a.pdf

“Faced with revenue short-falls, local governments across the U.S. are raising property-tax rates, angering homeowners already hit by the housing slump and economic slowdown.” - Conor Dougherty, The Wall Street Journal, “Rising Property Taxes Fill Gaps, Pinch Homeowners,” (April 25, 2008).

This article by The Wall Street Journal sites several cities that are raising their property taxes drastically in order to cover municipal revenue short-falls. For instance, Spring Valley, NY is increasing the property tax rate by 9.7% and Memphis, TN has proposed raising their property taxes by a whopping 17%!

According to the article: “Local-governing costs have been growing more quickly than in other parts of the economy because municipalities spend disproportionately on fast-rising items such as building materials, fuel and health insurance. From the fourth quarter of 2006 to the fourth quarter of last year, prices for state and local expenditures rose 6.1% compared with an increase of 2.6% for the broader economy, according to the Bureau of Economic Analysis . . . . Both raising taxes and slashing costs can accelerate the economic cycle’s downward turn. Municipal spending accounts for one-eight of the nation’s gross domestic product and the U.S.’s eight million municipal worker account for 6% of the nation’s employment ranks.”

If you have a subscription to the WSJ’s online service, you may read the full article by clicking HERE.

On April 9, 2008 the Appellate Division, by way of a published opinion, expanded the rights of all owners of non-income producing property in New Jersey. See H.J. Bailey Co. v. Neptune (to read the full opinion click here).

The case, H.J. Bailey Co. v. Neptune, examined whether the failure of an owner of non-income-producing property to respond to a written request for information made by a municipal tax assessor pursuant to N.J.S.A. 54:4-34 (Chapter 91) prohibits ones right to appeal ones tax assessment. As stated by the Appellate Division: “The answer to this question directly implicates a fundamental aspect of the right to Due Process.”

In affirming the Tax Court’s decision, the Appellate Division held: “that an owner of non-income-producing property who fails to respond to a written request for information made by a municipal tax assessor, pursuant to N.J.S.A. 54:4-34, is not subject to the sanction of an Ocean Pines reasonableness hearing. Based on the clear language of the statute, we hold that Chapter 91's appeal-preclusion provision and the limited appeal process fashioned by our Supreme Court in Ocean Pines apply solely to income-producing properties.”

The relevant portion of N.J.S.A. 54:4-34 reads as follows:

“Every owner of real property of the taxing district shall, on written request of the assessor, made by certified mail, render a full and true account of his name and real property and the income therefrom, in the case of income-producing property, and produce his title papers, and he may be examined on oath by the assessor, and if he shall fail or refuse to respond to the written request of the assessor within 45 days of such request, or to testify on oath when required, or shall render a false or fraudulent account, the assessor shall value his property at such amount as he may, from any information in his possession or available to him, reasonably determine to be the full and fair value thereof. No appeal shall be heard from the assessor's valuation and assessment with respect to income-producing property where the owner has failed or refused to respond to such written request for information within 45 days of such request or to testify on oath when required, or shall have rendered a false or fraudulent account.”

While examining this statute, the Appellate Division held: “As presently written, N.J.S.A. 54:4-34 offers no resolution of the tension created by the language limiting the sanction of appeal preclusion to income-producing properties, and the legitimate needs of the tax assessor to receive from all taxpayers the information necessary to rationally assess the value of real property within the municipality. While we agree with defendant that the statute, in its current form, poses an inconvenient, practical dilemma for tax assessors, we are not at liberty to ignore Chapter 91's plain language.

Unfortunately, N.J.S.A. 54:4-34's clear language confers upon owners of non-income-producing properties the unilateral right to ignore Chapter 91 requests with impunity. While we may disagree with the public policy behind this conclusion, it is not the judiciary's role to formulate public policy; rather, our duty is to give effect to the intent of the Legislature when that intent is clear. State v. D.A., supra, 191 N.J. at 164. By holding that Chapter 91's appeal-preclusion provision does not apply to non-income-producing properties, we give effect to the statute's clear language. We recognize, however, that the Legislature may hereafter amend the statute to provide practical consequences to non-responding owners of non-income-producing properties.”

As posted in today’s Star Ledger by Craig:

“A new state program would provide tax credits to corporations that build office towers in New Jersey cities.

The Urban Transit Hub Tax Credit is supposed to convince companies to relocate to Camden, East Orange, Elizabeth, Jersey City, New Brunswick, Paterson, Trenton and... Hoboken.

Companies would have to make a capital investment of at least $75 million and create at least 250 jobs, according to an article yesterday on NJBiz.com. The tax credit would between 80 percent and 100 percent of the company's real estate investment, the article said.

And if the building is located within an Urban Enterprise Zone, the company would be exempt from paying sales tax on furniture, fixtures and equipment.

The program is backed by Gov. Jon Corzine of Hoboken.

To qualify, the business must be within a half-mile of mass transit. The idea, supporters say, is to encourage redevelopment of property within cities, reducing suburban sprawl.”

A quote from today’s The Daily Journal:

“Who's to blame?

With $33 billion being collected, and with the state still broke, who's to blame? Who allowed this to happen?

The lawmakers who run the state government, said Riccards of the Hall Institute, ‘spent more money than we took in. ... even in good times, we didn't save. Both political parties are responsible.’

All of us played a role. At the ballot box, taxpayers approved billions in borrowing for everything from farmland preservation to bridge repairs.

‘We've been afraid of alienating the important interest groups that run this state,’ Riccards said. The teachers, state workers, police and firemen ‘are a huge number of votes.’ Of the 4.3 million workers in New Jersey, 770,000 belong to unions.

Lawmakers have promised before to cure the state of its spending addiction.

But they never have.

And when they fail, what do we do?

‘We re-elect them,’ Riccards said. ‘We're the ones who are refusing to make changes. It's our own fault.’"

For the full article, click HERE.

As reported by the Star Ledger today, the second-highest-ranking member of New Jersey’s Senate and Budget and Appropriations Committee, Sen. Paul Sarlo (D-Bergen), stated yesterday that he will seek to prevent Governor Corzine from the planned $168 million reduction in state aid to municipalities. According to the Senator, Corzine’s plan will result in higher property taxes for those that live in small municipalities who already receive minimal state aid.

"I intend to work with my colleagues to identify more cuts to the state budget, including additional layoffs and steeper reductions in state operations, in order to restore the $168 million for property tax relief," Sarlo said. "We need to reduce the size of state government."

"It's kind of hypocritical to be sending money to smaller towns to pump up schools and on the other hand take out municipal aid," Sarlo said. "That's not doing anything but netting out to zero. The loser is the taxpayers. It's smoke and mirrors."

The full Star Ledger article may be found HERE.

GOVERNING Magazine just released its annual “Grading the States.” What should come as not much of a surprise, New Jersey received a “C” by the magazine.

As stated by the magazine:

“The problems in New Jersey's fiscal stewardship have never been clearer than they were on the Fourth of July, 2006, when the state's casinos and parks had to be closed — the result of lawmakers' inability to pass a budget on time. The budget fracas revolved around Governor Jon Corzine's plan to deal with structural money shortfalls by raising the sales tax from 6 to 7 percent. The impasse was resolved only when legislators agreed to approve the increase but send half of it back out in the form of property tax relief.

Last year the governor and legislature seemed genuinely dedicated to avoiding similar embarrassment. And they took a step toward accountability by publishing a comprehensive Citizens' Guide to the budget that included every change to the governor's original submission along with the name of the official who proposed that change. Transparency seemed to help; the budget passed nine days early.

But an on-time budget isn't necessarily a good one, and New Jersey hasn't yet found a way to deal with the long-term imbalance between its revenues and its spending. The state's citizens have begun to understand the problem. In November 2007, staring down a $3 billion hole in a $33 billion budget, voters rejected a plan to dedicate the remaining half-penny of the sales tax increase to property tax relief — and they did this despite the fact that New Jersey has the highest property tax in the nation. With a debt of $32 billion, such hard decisions are going to be necessary for some time.

The consequences of the fiscal problem hit home everywhere in state government. Deferred maintenance in the transportation system has swelled to $13 billion. As one Department of Transportation official puts it, "we are holding ground on the pavement and we are losing on the bridges." Although New Jersey has the nation's third-lowest gas tax, a tax increase to bolster maintenance doesn't seem politically possible. Corzine talks about creating a nonprofit public benefit corporation to manage the day-to-day operation of several major roadways, including the New Jersey Turnpike and Garden State Parkway.

Non-transportation infrastructure is no better off. The state dedicated $7 million this year toward a prioritized list of roof improvements on public buildings; even so, life-cycle roof replacement is three or four years behind schedule.

Similarly, the state's dwindling investment in human capital training has begun to leave a mark. With a hiring freeze on for many positions in the state, maximizing the productivity of each employee becomes critical. But New Jersey spends less than 0.2 percent of its corrections payroll on training, for example, while neighboring Pennsylvania and Connecticut spend 1 percent and 1.8 percent, respectively. Likewise, the development of a new Department of Children and Families is destined for difficulty if it continues to spend only $44 per manager for training. Both expenditure figures rank among the lowest in the nation. Civil service rules dictate that employees with seniority have protected jobs during layoffs, potentially compounding the problems of the baby-boomer retirement wave by leaving a dearth of young, well-trained talent in its wake.

Worse still, New Jersey faces a newly revealed $58 billion long-term bill for post-employment retirement benefits owed to its workers. Many other states are up against big bills on this front, but New Jersey's is a whopper by anyone's standards. On the pension side, the state is similarly hobbled. Despite improved funding in the past two years, liabilities continue to grow.”

For the original version of this article, including detailed statistics, please click HERE.

Assemblyman John J. McKeon (D) Assemblyman Thomas P. Giblin (D) posted proposed legislation last evening that would clarify the procedural and notice requirements for the issuance of Tax Sale Certificates on an accelerated and standard basis. This proposed legislation will likely be heard in the Assembly Housing Committee this upcoming Monday.

The statement of bill A-1619 provides:

“Section 1 of the bill would clarify that a municipality may hold either a standard tax sale (the sale of liens after the close of the fiscal year) or an accelerated tax sale (the sale of liens during the fiscal year). The current language of the statute authorizing the sale of tax liens has been criticized as confusing for many new tax collectors, and this proposed amendment to the existing statute would specifically provide for either a standard or an accelerated tax sale.

Section 2 of the bill would clarify the dates for the preparation of the list of properties subject to the tax sale, to reflect a date for a standard tax sale and a date for an accelerated tax sale.

Section 3 of the bill would allow the list of properties subject to tax sale to be maintained in either book form, or as a bound hard copy of a computer-generated list, to reflect the current practice of maintaining municipal records on computer.

Section 4 of the bill would amend R.S.54:5-26 to replace the current phrase "set of notices" with the word "notice," because the current phrase has created some confusion for tax collectors with respect to the mailing of notices of tax sale, as permitted by the statute. This proposed change would clarify that the cost of a mailing of a notice of tax sale, by either regular or certified mail, to each interested party may not exceed $25 for each notice, or mailing, given to an interested party. The cost of mailing may be added to the cost of the tax sale as a municipal charge, allowing municipalities to recoup the cost of the mailings from the purchaser of the lien.

Section 5 of the bill would add the term "interest" and a statutory reference to R.S.54:5-38 to the language of R.S.54:5-29, which authorizes the tax collector, any time prior to the sale of the tax lien, to receive payment of the amount due on a property, together with interest and costs. This new language clarifies that the interest, together with all of the applicable costs set forth in R.S.54:5-38, must be satisfied in order to remove the lien from the tax sale.

Section 6 of the bill authorizes a tax collector to sell a tax lien at no interest, and instead collect a premium for the tax lien sale. Current law authorizes an interest rate of less than 1%, but does not specifically authorize the payment of no interest on a tax lien. This language effectively clarifies that an interest rate of less than 1% includes "no interest" on the lien.

Section 7 would extend the date of an action for foreclosure of a tax lien for each day that foreclosure of the lien is precluded by the bankruptcy of the property owner.

Section 8 of the bill would clarify the dates for the payment of fees by the purchaser of a tax lien of the costs incurred by a municipality in a standard or an accelerated tax sale. This language is intended to provide uniformity between municipalities of charging and collecting from the lien purchaser the costs incurred by the municipality of holding the sale.

Section 9 of the bill would require the holder of the tax sale certificate to record the tax sale certificate and to provide the tax collector with a copy of the recorded certificate showing the date of recording, the book and page in which the lien is recorded, and the cost of recording the tax sale certificate. It also requires the collector to maintain the information as a permanent record. The intent of this language is to provide this information to the tax collector so that a certificate of redemption of the tax lien may be issued upon the payment in fill of the lien amount. This information is needed by the collector in order to execute the certificate.

Sections 10 and 11 of the bill concern the calculation by the tax collector of the amount need to redeem the tax sale certificate, referred to as the redemption amount. Section 10 of the bill would amend R.S.54:5-54 to require the tax collector to provide to any party entitled to redeem a tax sale certificate, two redemption calculations within a calendar year at no cost. It would also authorize the governing body of a municipality, by ordinance, to require a fee not to exceed $50 for each subsequent calculation requested of the tax collector. The language also requires that a request for a redemption calculation shall be made in writing to the tax collector. Section 11 would amend section 7 of P.L.1965, c.187 (C.54:5-97.1) to allow a municipality to charge a $50 fee for a redemption calculation.

Section 12 of the bill would make discretionary to the tax collector the sale of a tax lien that, together with the interest, penalties, charges and costs of advertising, would amount to less than $100.

Section 13 of the bill would require that if the owner of a tax lien fails to surrender a tax sale certificate within five years of being notified of redemption, the unclaimed redemption monies will escheat to the municipality. The provisions of this section would apply to any redemption monies being held by a tax collector on or after the effective date of the bill.

Section 14 of the bill would require that all redemptions of tax liens must be made through the tax collector's office, unless authorized by court order or pursuant to federal bankruptcy law. It would also require that any lienholder who knowingly causes a redemption to be made outside a tax collector's office in violation of this section will forfeit the tax sale certificate to the redeeming party."

The full text of the bill may be found HERE.

In today’s speech, (below in full), Governor Corzine addressed many different aspects of New Jersey’s financial picture. In so doing, Governor Corzine lowered the annual income one may earn in order to be eligible for a Property Tax Rebate. As stated in his speech:

“We should also revisit some of the unfinished business from last year’s special session on property tax reform such as eliminating defined benefit pensions for part time workers. The next broad area for savings involves painful reductions in base-budget aid and grant programs. This includes some property tax rebates, municipal aid, higher education, hospital assistance and Medicaid. Cuts in these areas will total almost $1.4 billion. These cuts are unavoidable as nearly 75 percent of all State spending is grant based or pass through aid. In terms of property tax relief programs 90 percent, repeat, 90 percent of all homeowners who received a rebate last year… will again. Those earning $100,000 or less, 70 percent of all households, will receive exactly the same $1,000-plus rebate they received last year. Those earning between $100,000 and $150,000 will receive at least two-thirds of last year’s rebate. We will also expand the eligibility for the senior freeze to an income level of $75,000 … helping another 150,000-plus of senior households. Unfortunately, residents earning more than $150,000 will no longer be eligible for rebates. In addition, renter rebates will be narrowed while increases in special assistance rental vouchers partially offset this cut.”

Governor Jon Corzine Budget Address- Tuesday, February 26, 2008

Text of Speech

"Good morning everyone. It’s great to be with you today.

Reverend Clergy ...Reverend Isinta…Rabbi Cooper ...thank you for joining us today. Senate President Codey ...Speaker Roberts ...Majority Leader Sweeney ... Majority Leader Watson Coleman and Minority Leaders Kean and DeCroce ... former Chief Justice Zazzali….Chief Justice Rabner.. It’s good to see you..and Judge Karchman. Former Governors Byrne, Bennett, and, of course, Governor Codey …May be you would like to trade places with me just for a couple of hours today. Thank you all for joining us.

Members of the legislature and fellow citizens. Today I present a sober and responsible budget. The time is long past for the State, its Governor, and its Legislature to end imprudent spending and borrowing that exceeds our means. This budget … does just that. As you know, over the past 6 weeks, I’ve held 13 town hall meetings in 13 counties regarding our State’s fiscal challenges. It’s been a great opportunity to listen as much as to talk. I have heard firsthand the public’s frustration and anger generated by too many years of overspending, borrowing, and false rhetoric.

And they’re right. Whether they agree with my financial restructuring plan or not, the public is 100% right to be angry about the state of New Jersey’s fiscal affairs. Further, the public’s concerns are elevated by their high cost of living and a gathering national economic. Yes, the public understands the State has a fiscal crisis … but they want us to understand they have one of their own. It is with this perspective that I present a sobering budget for fiscal 2009 ...a budget, I believe, that represents a “turning point” in the fiscal management of our State.… a turning point away from the patterns of overspending and tortured borrowing. A turning point toward spending restraint and spending cuts that genuinely address our financial emergency. That said, this budget still labors under the weight of years of unfunded commitments, court mandates, bad decisions, and declining federal dollars. Regrettably, taxpayers live in a world where commitments and failures of the past, crowd out the resources for services our people deserve today. Frankly, New Jersey has a government its people cannot afford.

This budget declares the time of living beyond our means … is over. To limit and re-set our spending within our means requires many unpleasant choices -- choices about which activities and services are most critical. It will inevitably mean reducing spending in areas that we all support. I can tell you, I’m pained by the stress and anguish brought to our people’s lives by the cuts proposed. We are positioned between a rock and a hard place. Some may try to wish away the hard choices, suggesting old habits should prevail. Others may deny that tough choices are being made, seeking to exploit the well-earned cynicism the public holds towards Trenton. Still others will seek scapegoats from the past, as if that will solve anything in the present, let alone in the future. On reflection, I hope the representatives in this room know the difference between rhetoric and wishful thinking, as opposed to real choices and real answers.

I call on each of you, Republicans and Democrats alike, to recognize that today a turning point is at hand. We must turn away from the era of spending and borrowing beyond our means …once and for all. In practical terms, failing to take on the tough choices will only force New Jersey into a deeper fiscal swamp … and weigh down our taxpayers with more unbearable financial burdens. For me, that outcome is unacceptable. For our public, it is unacceptable. To that purpose, today’s budget is honestly balanced, sensitive to core responsibilities, and smaller by $500 million in year-over-year spending. Let me repeat: this budget cuts spending $500 million below the $33.5 billion budget I signed last year. In fact, this proposal asks for the second-largest spending cut of any budget in New Jersey history …and only for the fourth time since 1951, the budget will be reduced compared to the budget signed in the previous year. It also reduces the use of one time revenues by 90% and puts us on track to zero … an outcome we will achieve next year.

This budget goes well beyond the commitment I made to freeze spending as the first element of my financial restructuring and debt reduction plan. This is “cold turkey” therapy for our troubled spending addiction. Keep in mind ...this budget contains no debt service relief resulting from any monetization proposal. Keep in mind this, my budget takes the necessary and painful steps to reconcile years of mismatch between recurring expenditures and recurring revenues ... by cutting spending. That’s the headline … now let me put this budget and its spending cuts in context. Consider … cuts must be achieved in the face of $8 billion in current health care costs that are compounding at a nearly double digit rate. Consider … we carry the weight of twenty years of growing, unfunded pension contributions and post retirement medical benefits for teachers and public employees. Consider … we pay more for a growing debt service burden than we invest in either higher education or we provide in direct property tax relief. Consider … all of our spending is aggravated by State and federal court mandates… and we must compensate for declining federal dollars for housing, environmental clean-ups, health care and public safety. And consider … this budget accommodates $550 million in additional school aid that was approved on a bi-partisan basis for the historic new funding formula.

To achieve the cuts in this budget, we’ve changed the process. We started earlier … We set clear spending objectives for the departments ... We sought the ideas and recommendations of independent groups. Most particularly …I want to thank the bi-partisan private sector members of the GEAR Commission. These individuals have worked since the Fall scrubbing operational and financial practices with our departments. Many of their recommendations are included in the proposal. I am grateful for the hundreds of suggestions, I really am,from the public and organizations like the State Chamber of Commerce that have engaged in the broader financial restructuring dialogue. And I want to thank the bipartisan participants from the Legislature -- Senators Buono and O’Toole along with Assemblymen Greenwald and Malone for their counsel and review. Although we may not always agree … their partnership is truly appreciated. And lastly … let me emphasize two points … they’re important points.

For the second year running, my budget contains no new taxes of any kind … while it increases property tax relief. Now … given these observations, let me review the overall numbers: When we began our planning process, we were facing mandatory and inflationary spending increases of nearly $2.2 billion beyond expenditures in the current fiscal year. Our restructuring plan mandated flat funding … that is, fiscal year 08’s level of $33.5 billion. As I made the point, “flat funding” doesn’t mean no cuts, “flat funding” meant cutting $2.2 billion just to keep at last year’s level. However, in light of the ongoing economic downturn, revenues aren’t even strong enough to support last year’s expenditures. As a result, we have cut another $500 million in the budget. The net result is a budget that spends just under $33 billion -- an absolute reduction of $500 million. To achieve those spending cuts, we began by prioritizing and protecting the core responsibilities of government: Educating our children; Providing for public safety; Caring for the most vulnerable; And in New Jersey, sustaining property tax relief. After these priorities, all spending was on the cutting table.

So … how have we achieved our cuts? We cut thousands of jobs. We cut entire departments. We cut programs … We cut aid, and we cut inflationary increases wherever we legally or humanely could. In this budget … government takes the spending hit … not our hard-pressed taxpayers or the most vulnerable. The cuts are detailed in the “Budget in Brief,” but I’ll give you an overview. This budget significantly reduces the size … and cost of government. Spending is down in every department of the Executive Branch. As best we can tell, this is the first time this has ever occurred.

In total, there are over $350 million in savings directly attributable to a smaller State government. Over the past two years, through attrition and an ongoing hiring freeze, we reduced the size of the State workforce by nearly 2,000 positions. With this budget we will have eliminated a minimum of 5,000 total government jobs, including half of all political appointees. We will eliminate these positions through targeted layoffs, program consolidations, continued attrition and an early retirement program. To ensure these reductions are permanent, we will eliminate funding for specific positions, not just leave them vacant.

Now ... we know from past experience, early retirement actions have achieved short-term savings but at a long-term cost. This has occurred mostly because most positions were backfilled, thereby doubling up retirement costs for the future. To prevent that from happening, we will allow only 10 percent of the vacated positions to be backfilled … and that will be written into law. All of the employees who will be included in the early retirement program are currently eligible … we are simply giving those who can, an incentive to do so. Eliminating positions through early retirement will allow us to shrink the size of government without creating the chaos under the civil services rules that would accompany across-the-board layoffs. The effect of these personnel reductions will create future savings as our departments are forced to reprioritize their programs and activities. They will not only have to do more with less … they’ll undoubtedly have to do less. Digging deeper, we will further reduce the size of government by proposing the elimination of three Cabinet departments: the Personnel Department; the Agricultural Department; and the Commerce Commission. The personnel and operational savings from these actions are not intended as one time sound bites. They are permanent … They will cut costs.

Theses actions will be monitored for savings by the State Comptroller and the GEAR Commission. These proposed initiatives to cut government build on last year’s historic, negotiated agreements with civilian state employees and teachers. These agreements achieved breakthrough long-term savings and reversed years of benefit expansion authored by Governors and Legislators of both parties. Consider, we raised the retirement age for new employees from 55 to 60. We increased pension contributions. We capped the defined benefit pension for new employees. We mandated for the first time state employees share in the cost of their health care. And … we kept wage increases well inside the levy cap. Now, we should work to apply these and additional reforms to all units of government and, we need to make certain the levy cap is considered by mediators and arbitrators in settlements imposed on local governments.

We should also revisit some of the unfinished business from last year’s special session on property tax reform such as eliminating defined benefit pensions for part time workers. The next broad area for savings involves painful reductions in base-budget aid and grant programs. This includes some property tax rebates, municipal aid, higher education, hospital assistance and Medicaid. Cuts in these areas will total almost $1.4 billion. These cuts are unavoidable as nearly 75 percent of all State spending is grant based or pass through aid. In terms of property tax relief programs 90 percent, repeat, 90 percent of all homeowners who received a rebate last year… will again. Those earning $100,000 or less, 70 percent of all households, will receive exactly the same $1,000-plus rebate they received last year. Those earning between $100,000 and $150,000 will receive at least two-thirds of last year’s rebate. We will also expand the eligibility for the senior freeze to an income level of $75,000 … helping another 150,000-plus of senior households. Unfortunately, residents earning more than $150,000 will no longer be eligible for rebates. In addition, renter rebates will be narrowed while increases in special assistance rental vouchers partially offset this cut.

With regard to local aid, hospitals, higher education and health care we sought to minimize, retarget and share the burdens of cuts as responsibly as possible. For instance, while all categories of municipal aid will be reduced, communities with populations of less than 10,000 will receive less direct support. However, these communities will receive priority consideration for $32 million in grants to develop shared services or consolidation agreements. With regard to hospitals, across the board reductions are proposed, although we focus charity care increasingly toward safety net hospitals. We also create a stabilization fund as recommended by the Reinhardt Commission to assist hospitals in the most distress. Higher education and health care -- particularly Medicaid will see the smallest reductions. This is because we carry grave concerns about the level of potential tuition hikes and the need to maintain access to health care for our most vulnerable.

Finally, this budget is shaped and balanced by two additional steps. The first is the elimination of all non-contracted inflationary growth for our various aid and grant programs. This will save about $800 million dollars. Regrettably, many of the same institutions who will experience absolute cuts will lose inflationary increases. Finally, we will reduce the use of accumulated surplus from the current fiscal year. Remember the higher-than-expected surplus was created by our ongoing managerial efficiencies and revenue growth that exceeds projections. Reducing the use of surplus will move us closer to the principle that current expenditures will be funded solely by current revenue. As a point of comparison, in fiscal 08 we used $1.6 billion of surplus to balance the budget in FY09 we will use only $500 million. Of the remaining Fiscal Year 08 surplus, $300 million will go to pre-fund early retirement and unfunded pension liabilities. And $34 million will go to fund selected capital investments. I expect this to be the last year we use any surplus to balance the budget.

So that’s a quick overview of a very tough budget – I don’t like it I’m sure a lot of you don’t, but again it is a necessity. Again, the details are in the “Budget in Brief.” Let me be clear, cutting spending is only the first step we must take to restore our fiscal health and put us in a position to be a sustainable partner in the success of our people. Current-year spending cuts makes balancing the budget next year and in the future easier, but it doesn’t make it easy. The financial restructuring I put forward had four elements because it will take more than spending cuts to cure the broken finances of our State. First, we have to get state spending under control and today I think we’re do just that. Second, future spending must match future recurring revenue. Third, out-of-control borrowing must end. And fourth, we must reduce our crushing debt load and fund infrastructure investments. Now whether or not you agree with every element of my plan, there does appear to be agreement that these reforms are priorities … I understand that the toll proposal is not popular, boy do I understand. I didn’t expect it to be, but as I have repeatedly said I am open to alternatives that will reduce debt and fund transportation. But what is not acceptable and what we must reject is allowing the State to muddle through, with more of the same short-sighted fiscal patterns that created the mess in the first place. Those days are over. Two years ago, I started an effort to put the State on a sound fiscal footing. This budget is the latest and most forceful step in that direction. It will not be the last. Even with the difficult $2.7 billion in cuts in this budget, we project next fiscal year’s budget to have a significant structural shortfall … approximately $1.7 billion. The borrowing and benefits committed to over the past twenty years don't go away. They get more expensive every year.

In fact, debt service is one of the few things that actually goes up in my proposed budget. And it will go up in every budget in the future unless we do something different. Some will argue that our debt burden isn’t a problem … that we should just deal with it some other day. But that’s not an option. It’s not a real option. It’s clear debt service payments crowd out important priorities every year. We should be cutting debt service, not closing parks or raising co-pays. Fixing our fiscal problems without addressing debt reduction is a fiction ... and if we try to do that, we are misleading the public. With these thoughts in mind, I need comprehensive action by all of you to restore the state’s long term fiscal health: First … approve a budget that stays within the strict spending limits I have proposed. Second … pass legislation to limit growth in spending to certifiable recurring revenue. Third … put on the ballot this fall the Lance-Lesniak constitutional amendment to limit state borrowing. And fourth … work with me to develop a plan to pay down debt and fund vital capital investments.

I must say … it is not enough to just reject the toll proposal. If you don’t like that alternative, give me another viable approach to significantly reduce debt and fund important, vital transportation improvements. Many of you have begun that process. I welcome it. When I was given the honor of serving as New Jersey’s Governor, I made a commitment to be accountable and to be honest … not just in my actions, but in the way I approached problems. Our state has spent too much money. And we carry far too much debt. These twin problems are a threat to the well-being of the people we serve. My financial restructuring plan is part of a much larger undertaking. I knew it would be challenging and at times unpleasant ... and it has fully lived up to my expectations. But it has been worth the effort. To see the impact of the debate … the intense level of public discussion and involvement … and the alternatives that have been offered … We are now closer to financial stability – some might say sanity.

Now in closing … We often hear New Jersey is too expensive a place to live. We hear how our business climate has become uncompetitive and our residents are fleeing for greener … or at least cheaper pastures. At the heart of these concerns lies New Jersey’s broken finances. Today, we can’t make the investments that we all know we should make in transportation, alternative energy, mental health facilities, schools, and medical research. Just look at the missed opportunity in stem cell research. That research would not only save lives …it would have potentially driven an economic boon for the medicine chest state of the world…Unfortunately --our finances are so broken, the public wouldn’t support that investment. This must change … and this budget is a start. It’s certainly not a budget designed to please … I can tell from the applause lines… but it is a prudent blueprint to meet difficult economic circumstances, correct past mistakes and it lays a foundation for a responsible future. It doesn’t spend more than we have. It doesn’t borrow to pay operating costs. It doesn’t raise taxes. It does contain the largest increase in school aid ever; It does preserve property tax relief for the middle class; and it does protect the most vulnerable in our society. It meets the public’s expectations that government live within its means. Make no mistake -- this is a turning point … not the end point. By itself, these cuts won't solve the problem. They can’t. A long term answer requires deeper changes.

My friends ... in the next three months, let us come together let us come together in a bi-partisan demonstration of responsible governance and find the common ground to restore our state’s fiscal viability."

New Jersey Governor Jon Corzine announced this morning that he planned on eliminating three departments: Agriculture, Personnel and the Commerce Commission as well as eliminate 3,000 state employees from the payroll as part of his plan to balance the New Jersey budget next year. If Governor Corzine’s plan is in fact enacted, New Jersey’s budge next year will be approximately $33 billion, a dollar amount that is approximately $500 million dollars less than New Jersey’s budget this year.

During his speech this morning, Governor Corzine stated that “New Jersey has a government its people cannot afford” one in which “requires many unpleasant choices” and “will inevitably mean reducing spending in areas that we all support.”

The full text of Jon Corzine’s speech will be posted on The Property Tax Blog as soon as it becomes available.

As a result of the recent appointment of Judge Patrick DeAlmeida to the bench, the judges of the Tax Court of New Jersey will be reassigned, effective Tuesday, February 19, 2008, as follows:

REVISED TAX COURT ASSIGNMENTS FOR JUDGES

Judge Bianco: Essex County (except Newark)

Judge DeAlmeida: The following municipalities in Bergen County: Carlstadt, East Rutherford, Fair Lawn, Franklin Lakes, Glen Rock, Lyndhurst, Mahwah, Montvale, Oakland, Paramus, Ramsey, Ridgefield, Ridgewood, Rutherford, Westwood, Woodcliff Lake and Wyckoff

Judge Hayser: Hudson County, Union County, Essex County (only Newark)

Judge Kuskin: Morris County, Passaic County, Sussex County, Warren County

Judge Menyuk: Burlington County, Camden County, Mercer County, Middlesex County, Monmouth County

Judge Pizzuto: Remainder of Bergen County

Judge Small: Atlantic County, Cape May County, Cumberland County, Gloucester County, Hunterdon County, Ocean County, Salem County, Somerset County

Lakewood Courtyard Hotel v. Township of Lakewood: Schneck Holtzman was successful in implementing an $800,000.00 tax abatement for the Lakewood Courtyard Hotel. This case took years of litigation and negotiation in order for this result to finally be accomplished.

In 1997, the plaintiff made a proposal to the Township Committee which involved demolition and new construction of a 77,972 square foot +/- assisted care facility on the subject property for the purpose of serving the Lakewood community along with surrounding area. The Tax Abatement Application provided significant financial savings for the plaintiff, and was a significant motivating factor for the plaintiff improving the subject property. Unfortunately, when the Tax Abatement Application was reduced to a written agreement, and then subsequently adopted by the Township of Lakewood as Ordinance 98-61 on October 22, 1998, key language was inadvertently omitted that would have granted the plaintiff a tax abatement on the subject property’s entire parcel.

The plaintiff tried for several years to have the township’s assessor approve the tax abatement application for the entire parcel. Unfortunately, each time the plaintiff tried to do so, the plaintiff was unsuccessful, as the Township Assessor merely relied on the words of the Ordinance instead of the intent illustrated by the Tax Abatement Application. Finally, after several years of negotiation, in the summer of 2007, the Township of Lakewood passed a resolution that effectively stated that it has always been the Township’s intention to grant a tax abatement for Lakewood Courtyard Hotel. However, despite the Township’s Resolution stating that a tax abatement should be granted, the Township’s Assessor still refused to grant the abatement. Schneck Holtzman responded to the Township Assessor’s complacency and filed a motion in the Chancery Division in Ocean County. The Honorable Edward M. Oles residing, granted Schneck Holtzman’s motion and thereby ordered the Township’s Assessor to grant Lakewood Courtyard Hotel the $800,000.00 tax abatement.

“Sales of large commercial buildings have dropped nationally, but the downswing in north-central New Jersey has been particularly chilly.” - Maura Webber Sadovi in today’s Wall Street Journal (please click here for the article.)

According to the article, sales of commercial, industrial, and multi-tenant properties that are valued in excess of $5 million, have fallen by more than 75% since the fourth quarter of 2006. The article states that one of the primary reasons sales of commercial real estate in New Jersey have all but stopped is the fact that commercial rents in New Jersey have not increased as much as rents in nearby Manhattan.

Office vacancies for the fourth quarter of 2007, as stated by the article, stood at a whopping 17.8%.

An excellent article by Josh Barbanel in Today’s New York Times walks you through Manhattan and the borough’s “Crazy Quilt of Tax Laws.” The article titled “Who Pays the Most Taxes” provides vivid examples as to how unfair and how disparate Manhattan’s multi-million dollar residencies are taxed. To read the full article, please click here. I highly suggest it.

What is the worst team in New York City right now? The answer, the New York Knicks. What team in New York City is being targeted and singled out by the New York City Council? What should not come as much of a surprise, the answer is the same, the New York Knicks.

Yesterday, on Wednesday, January 30th, the New York City Council voted forty to three to end Madison Square Garden’s property tax exemption, an exemption that has been in place since 1982. Ironically, while voting to take away the New York Knick’s property exemption, the New York City Council is currently planning on granting tax exemptions to the Yankees, Mets and Nets in packages that are worth over $1.4 Billion.

Whether or not one agrees with granting private corporations tax exemptions, this current scenario, is clearly not right and seems to be based on putty politics.

As stated by Barry Watkins, senior vice president of communications for Madison Square Gardens, “The City Council’s decision to single out Madison Square Garden, an engine of economic activity that provides jobs for New Yorkers, when more than a billion dollars in benefits have been given to the other pro sports teams in New York City, is obviously based on politics, not sound public policy . . .”

All is not lost for the Knicks, as Madison Square Garden’s Tax Exemption battle will now be moving to Albany. Without Albany’s approval, the New York City Council’s vote yesterday is essentially meaningless.

“If the true problem is that political leaders are unwilling to face the voters with the reality that there is no free lunch, then the problem we seek to solve by tolling [roads] . . . will not solve the problem at all. In fact, our research suggests that it will only make the problem worse.” - Peter Swan of Penn State -- Harrisburg and Michael Belzer of Wayne State University

As most are aware, Governor Corzine proposes to drastically increase the tolls on New Jersey’s toll roads in order to help alleviate, in part, the state’s property tax crisis. However, as found in a study by Professors Swan and Belzer, significantly increasing tolls on roads results in significant diversions of truck traffic to ancillary “free roads,” and likely results in more automobile accidents.

The study, after examining Ohio’s Turnpike system in the 1990’s, found that toll hikes cause several problems.

“First, many of the substitute roads are two-lane highways with crash rates many times that of the Turnpike. Second, the increased traffic has reduced the quality of life for communities located along diversion routes and dramatically increased the maintenance costs of many of these roads. . . . Finally, higher truck tolls have two negative effects on the economy. Motor carriers eventually pass all tolls to consumers in the form of higher prices for goods. While higher toll rates may not decrease the efficiency of non-diverted trucks, they have raised costs. Furthermore, diversion reduces the efficiency of these trucks because they clearly are taking a second-best route. The resulting loss of efficiency can stifle economic activity, according to the study. Many of these economic and social costs may not be considered in future leases or sales, especially when such costs are paid by people in states other than the one making the lease agreement.”

For the full article, "Empirical Evidence of Toll Road Traffic Diversion and Implications for Highway Infrastructure Privatization" presented on January 14, 2008 at the 87th annual meeting of the Transportation Research Board in Washington, D.C. please click here.

January 4, 2007: SAC Family, LLC v. Borough of Fair Lawn and ARC Family, LLC v. Borough of Fair Lawn.

According to the motion filed by defendant, a request for income and expense information under N.J.S.A. 54:4-34 was sent on or about October 6, 2006 to the owner of SAC Family, LLC and ARC Family, LLC. To this point, the Borough of Fair Lawn claimed to have received no response to the “Chapter 91 request,” and thus argued that subject property holder should be precluded from filing tax appeals for the tax year in question.

After an hour and forty-five minute oral argument, Schneck Holtzman was successful in establishing by a preponderance of the evidence that the taxpayer had in fact responded to the Chapter 91 request, but, for some reason outside anyone’s control, said response was never received by the Borough of Fair Lawn’s Tax Assessor. As a result, the Honorable Harold Kuskin denied the Borough of Fair Lawn’s Motion to Dismiss the taxpayer’s cases (that is, the taxpayer’s cases were allowed to continue).

As I wrote earlier today, Governor Spitzer addressed the State of New York today in his second State of the State Speech. One of the main issues discussed was New York’s ever-increasing Property Taxes. Below is a portion of the Senate Majority State of the State Response, which was given by New York Senator Andrew Lanza:

“Providing homeowners with more relief from skyrocketing property taxes is the most important thing we can do.

In my district on Staten Island and throughout the State, families are concerned that they cannot make ends meet and provide for their children because their property taxes are too high. Two years ago, the Senate started a program to give homeowners property tax rebate checks to help them pay their taxes. New Yorkers are paying the highest property taxes in the country and they deserve more relief.

Last year, Governor Spitzer proposed eliminating property tax rebates, but the Senate fought to restore them -- and actually increase the value for most families.

Governor Spitzer also refused to extend this additional property tax relief to senior citizens -- and that was the wrong thing to do.

This year the Senate is proposing to significantly increase property tax relief for every New York homeowner.

We have proposed a comprehensive property tax relief plan that would double the size of the current STAR rebate for most homeowners and triple the size of the STAR rebate for seniors. The Senate plan eliminates the complicated income brackets and eligibility limits put in place last year. No longer will this administration get to choose which families get property tax relief and which families don’t.

Under the Senate plan, most families would see annual property tax rebate checks of up to $1,000 or more.

Another Senate Majority plan would eliminate property taxes altogether as the means of funding our public schools, and replace them with a system of fair, State funding that will ensure a quality education for all our students.

People work hard to pay their property taxes and we need to work hard to provide them with greater property tax relief. No one has done more to protect property taxpayers and provide them with real tax relief than the Senate Majority because there is simply no more important issue facing New Yorkers.

The Governor and Assembly must join us in doing everything we can to get this done so seniors can afford to stay in their homes and people can afford to provide for their families.”

Governor Eliot Spitzer’s second State of the State Speech today will likely appoint a bipartisan commission to study property tax reform in New York. It was originally expected that the Governor would seek to impose caps that would limit by law the amount that one’s property tax bill could be increased. It now appears that the Governor will stop short of calling for a cap, but will appoint a bipartisan commission instead. In order to provide a little insight as to what today’s speech will discuss, the Governor stated: “The entire thrust of what this State of the State is going to be about is, how do we bring back and revitalize the economy of New York State? What are the inputs? What are the investments? What is the new strategic thinking we need to embrace? This is example 1A of how you do it."

Time will tell if this new bipartisan commission will contribute to New York’s stand-still bureaucracy or if it will be an effective tool in the Governor’s arsenal to address New York’s current Property Tax quandary.

The Senate is expected to officially appoint Patrick DeAlmeida tomorrow to be the newest judge of the Tax Court of New Jersey. Patrick DeAlmeida is currently an Assistant Attorney General in the New Jersey Department of Law & Safety, Office of Attorney General’s Appellate Practice Group. Much of his time in this position (and previously as a Deputy Attorney General) has been spent in cases involving New Jersey’s Corporate Income Taxes. It is likely that Patrick DeAlmeida will sit in what was the former Honorable Roger Kahn’s seat in Newark, who retired from the bench in 2005.

This appointment comes at a time of dire need for the Tax Court. Currently, the Tax Court has six judges: the minimum number of judges allowed by state law. Two of these judges (the Honorable Peter Pizzuto and the Honorable Harold Kuskin) must retire within the next year. Although the expected appointment of Patrick DeAlmeida is a step in the right direction by the New Jersey Senate, another judge must be appointed to the Tax Court in the very near future in order to ensure that there are at least six Tax Court judges who are up to speed, and fully trained, once the Honorable Peter Pizzuto and the Honorable Harold Kuskin retire during the next year.