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?