The NJ Tax Blog

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.