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Saturday, December 02, 2006

The Farmland ‘Roll-back’ Tax

Under the state's constitution, real estate owners can qualify for a special farmland assessment and pay reduced property taxes. Obviously if farmland was taxed at the same obscene rate as home and commercial property, rather than on its productivity value, no one could afford to use land for agricultural purposes in the Garden State. But now Democrats want to amend the state’s constitution and add new taxes on farmland as part of their “property tax relief” plan.

The New Jersey Farmland Assessment Act of 1964 permits farmland and woodland actively devoted to an agricultural or horticultural use to be assessed at its productivity value. The Act does not apply to buildings of any kind, nor to the land associated with the farmhouse. Buildings and homesites on farms are assessed like all other non-farm property. When and if the land qualified under the Act changes to a non-agricultural or non-horticultural use, it is subject to a roll-back tax.

To be eligible for Farmland Assessment, land actively devoted to an agricultural or horticultural use must have not less than 5 acres devoted to 1) the production of crops; 2) livestock or their products; and/or 3) forest products under a woodlot management plan.
The roll-back tax currently equals the amount in property taxes the owner has saved because of the special assessment during the current year and previous two years. Democrats want to amend the state constitution to extend the roll-back tax to six years, plus the current year and add a new tax on farmland owned for seven years or fewer before it is sold.

First, this change is completely unfair to current landowners who would see huge tax bills should they need to sell their land - a seven year roll-back tax, a tax on land owned less than seven years and a state real estate transaction tax. Second, the goal of the Special Legislative Session was to reduce property taxes, not to increase and enact new taxes. And finally, why should the state receive revenue from a roll-back tax? It is the counties and municipalities where farmland is located that have “lost out” on higher property tax assessments, not the state.

"By pandering to their urban constituency, the Democrats are courting disaster for New Jersey's farmers and agriculture-related businesses," state Sen. Robert E. Littell, R-Sussex County, said in a statement.
That explains it. This proposed change to farmland taxes is just one more scheme by Democrats to take money from the suburban and rural areas of the state for the benefit of the urban centers. Fairness never enters into the equation as it’s all about finding every possible angle to squeeze more money from taxpayers to give to the tax eaters – consequences be damned.

"I think it would lead to more farmers leaving farming," Senate Minority Leader Leonard Lance, R-Hunterdon/Warren counties said about the roll-back tax expansion. "I think it's a very bad idea, and I shall fight it tooth and nail."

Both Lance and Littell cited a 1999 study by Cook College that estimated 67,780 acres of farmland would be lost under the kind of roll-back tax change recommended by the committee.

Peter Furey, executive director of the New Jersey Farm Bureau, said that loss in acres would theoretically come from farmland being prematurely withdrawn from the program and sold for development to avoid the beefed-up tax.

"Sen. Littell is bringing up some concerns that a lot of people hold about making changes to farmland assessment," Furey said. "We think it needs to be examined very carefully."
We have a better idea that’s in keeping with the purpose of the Special Legislative Session. Revise the New Jersey Farmland Assessment Act such that revenue from the three-year roll-back tax flows directly to a municipality where a farmland use change or sale occurs. That would be real property tax relief without an increase in taxes. Isn't that the point?


At 9:55 AM, Blogger WjcW said...

My family was lucky enough to purchase 75 acres in Hardwick, NJ about 10 years ago. Although this land in not in the highlands preservation area, it is in the 'smart growth' area. About 2 years ago, I was able to purchase 1, 15 acre lot to build on. All 75 acres were 'farmland assessed' except for the one where the original house was located.
I can't tell you how many obstacles are put in your way to discourage building, but I can list a few.
1st, the COAH fee, in my case, I believe this was $3500, but I'm not sure it wasn't more, I'd have to check my records. I'd love to know the justification for this fee, I'm imagining that because I built a house, I have to subsidize affordable housing for someone else somehwere. It seems to me that this should only hit developers, or people who do not plan to live in the houses they build, but apparently that is not the case.
The second ridiculous issue I had was with BPU rules. My lot was one of four undeveloped, without electical service on a right of way. Apparently, the rule in a 'smart growth' area says that right of ways with 3 lots or more, the first owner to build pays for electrical installation for ALL the lots, with no rebate offered in the event the other owners utilize the infrastructure I installed. This is truly ridiculous, before this law the power company would have been responsible for the installation as it is their capital equipment and their investment they will recoup through years of selling electicity. Now though, the first builder pays THE POWER COMPANY, not the state, for the cost of installation. It seems to me the state only succeeded in increasing the power companies bottom line, I think I would have been more OK with this if the BPU got a development fee, but the only one who wins here in the utility companies, I can't imagine why any lawmaker would support initiatives that increase the utilities bottom line and reap no benefit for the state, except the fact that now its almost prohibitively expensive to build on certain right of ways if you are the first one.
Last, rollback taxes, my bill is $8200, and the town is being a little obtuse about payment. I was hoping the would offer an installment plan. But apparently they want their money all up front.
These are just a few of the many obstacles the building process has in NJ. I won't even go into the permitting, inspection nonsense, it seems to me its really a scheme to generate revenue more than anything else.

At 1:17 PM, Anonymous Jim - PRS said...

Only in New Jersey would one of the elements of a property tax relief plan include increasing property taxes.

At 8:08 AM, Blogger John Pangia said...

Fast forward to the year 2026 - The new Agricultural Museum will display a single Jersey Tomato, sealed in a glass case - There will be photographs of what blueberry fields used to look like, and lectures on the differences between Jersey Sweet Corn and plain old midwestern yellow - On exit each visitor will receive a single cranberry, from a bog in Massachusetts.

We will however have the largest concentration of McMansions found anywhere in the country, but each will have a For Sale sign on it to pay off the taxes,

At 8:45 AM, Blogger Dino P. Crocetti said...

This is yet another way for state Democrats to secure victory for themselves.

Where is the passionate voice of Republican outrage? Where is the desire to fight this kind of nonsense?

As much as I detest state Democrats for putting us in a bigger hole I am also infuriated by the lukewarm attitude of the Republicans.

I've said it before and I'll say it again. Republicans NEED to start taking the fight to Democrats in their strongholds. We're in the bind we're in because Republicans have left the Northeast region of the state for dead. They will NOT spend so much as a dime up here and it's gotten to the point where they can't even win in Bergen anymore. Are we going to give up Bergen County too?


Republicans need to go for the jugular and make Democrats spend money to work in their own backyard. This always seems to fall on deaf ears of the over the hill, dinosaur elites who refuse to step aside for the good of the party and allow a younger more passionate group to take over the reigns of the NJGOP.

We need to stop allowing Democrats to run on cruise control before they kill the State of New Jersey.

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