I was very intrigued by some of the seminars given at this year’s New Jersey League of Municipalities convention, which I attended in my capacity as Chief Financial Officer for the Borough of Roselle. The seminars dealing with financial issues and “greening” New Jersey were of particular interest to me, but in this post I will focus on things financial.
Oftentimes, governmental entities and non-profit organizations, e.g., hospitals and churches, seem to take the view that any property they own is exempt from taxes. Municipalities have for years given into this unlawful ownership theory, thus foregoing tax revenues to which the municipalities may be entitled. But one of the things made very clear in the seminar titled “Property tax exemption in New Jersey, issues and answers,” is the fact that tax exemption is not based on ownership but is based on use. So, properties owned by non-profits, school districts, and other governmental entities can be taxed depending on the uses to which they are put. There are four basic theories that determine whether or not a property is exempt from taxation, regardless of ownership: 1) Tax Base Theory, 2) Benefit Theory, 3) Sovereign Theory and 4) Community Theory.*
This seminar also touched on the different types of programs and incentives municipalities can use in an effort to spur economic development, i.e., Redevelopment Area Bonds or "RABs" (also known as Tax Increment Financing or "TIF"), Redevelopment Allocation Districts, and five-year tax abatements, an incentive program I discussed during my recent campaign for the city council.
Another seminar of note was the one sponsored by the State Comptroller that dealt with the need for Accountability, Transparency and Efficiency in government. This topic was one of the themes of my recent campaign. Matthew Boxer, the State Comptroller, is proposing that municipalities rotate auditing firms every 10 years. His office is currently working on developing a template that municipalities would be required to use in soliciting quotes for auditing firms. I asked the Comptroller if his office had any plans to try and identify those responsible for the disappearance of billions of dollars in school construction funds. He responding by saying that his office was looking forward, not backward, and that it would be up to the State Attorney General’s office to pursue the matter of the disappearance of school construction dollars. Given the recent court ruling regarding the Abbott funding formula, I believe it is imperative that the AG follow up on this.
All in all, the convention was very informative and packed with several interesting seminars. It was a worthwhile learning experience.
*NOTE: I will discuss these theories and how they impact the municipalities I serve in more detail in a future post.