Tax Policies
New Jersey’s fragmented system of local governance and its disproportionate reliance on property taxes for funding local services (particularly schools) combine to create incentives that have powerful, distorting effects on land-use decision-making.
Because municipalities are so often on their own to pay for local schools (regional, multi-municipality K-12 school districts are the exception, not the rule), every municipality has an incentive to adopt zoning that discourages any residential development that might attract new schoolchildren and hence require a hike in property tax rates. Instead, municipalities compete for the limited number of “clean ratables,” such as office parks and shopping malls, that their region can sustain. This results in the sub-optimal location of major projects and a self-reinforcing downward spiral of disinvestment for those municipalities that are unable to score these major projects, as rising tax rates continue to chase away the more prosperous residents and businesses.
Hunterdon County is considering moving to a single, county-wide school district. This would not only save overhead and administrative costs, it would have significant land-use benefits, including the possibility of cheaper and more diverse housing.
The proposed Grow NJ bill in its current form undermines the Urban Transit Hub Tax Credit goals. We urge adoption of four amendments that will keep the incentives properly focused.
An analysis of properties in New Brunswick and the Morristown area finds that compact downtown developments pay significantly higher property taxes per acre than lower-density development located outside downtown areas.
The New Jersey Board of Public Utilities has issued a proposal that would reverse its policy of targeting energy-efficiency incentives to smart-growth areas, and is soliciting public comment.
Should a new bill that uses funds originally allocated to the Urban Transit Hub Tax Credit program raise a red flag for smart growth and transit advocates?
Some frequently-asked questions about how smart growth would affect New Jersey’s future development, including how it affects traffic, taxes, and land preservation.
Research that examines whether the popular belief is true that municipalities with the highest concentrations of commercial properties also tend to have the lowest residential property tax rates. July 2010.
An examination of the problems caused by recent development patterns in New Jersey, and recommended steps to address them through smart-growth principles. April 2001.
Oct. 12, 2009 — A recent Monmouth University/Gannett New Jersey Poll offers some surprising insights into what New Jersey residents are willing to do to address the problem of high property taxes—including taking some significant steps that would improve the way land-use decisions are made, and allow for more regional governance and cost-sharing.
See all Future Facts and Articles in this category »
Reports, Presentations and Testimony
- Financial Benefits of Density in Two New Jersey Downtowns 7-11 (Intern report)
- 10/14/2011: Comments: OCE Clean Energy Incentives Proposal
- 11/30/2011: Coalition Statement on Grow NJ Bill
- Chasing Their Tails: Municipal Ratables Chase Doesn't Necessarily Pay 07-10
- Presentation: Reining In Local Budgets 05-10
- Property Tax Reform and Land Use 07-06
- Impact Fees 01-04
- Tax Reform 09-03
- Realistic Opportunity? The Distribution of Affordable Housing and Jobs in New Jersey
