Many see a multi-rate system creating chaos
BY ROBERT SCHWANEBERG
Star-Ledger Staff
Business groups and local governments were
unanimous yesterday in warning a legislative committee not to tamper with a
constitutional provision requiring property to be taxed according to uniform
rules.
The provision, known as the "uniformity
clause," prevents the state from taxing commercial property at higher
rates than homes, as is done in some other states. It was the focus of
yesterday's hearing in
But the State League of Municipalities, the
New Jersey Association of Counties and every business group that testified
warned that changing the clause would have unpredictable and unfavorable
consequences. Business leaders said it would make the state even less
attractive to industry.
"Go down this road of removing the
uniformity clause and you will not know the impact you will have," said
Arthur Maurice, first vice president of the New Jersey Business and Industry
Association. He urged lawmakers to take any thought of amending the provision
"off the table."
John Lloyd, special tax counsel to the State
League of Municipalities, said courts have relied on the uniformity clause for
six decades in interpreting the laws on property taxation. If it is changed, he
said, it would be "very difficult if not impossible to ascertain what
those consequences would be."
John Donnadio, executive director of the New
Jersey Association of Counties, said, "We think the uniformity clause
should remain in its current form." He said changing it "will have a
negative impact on business."
The only support for even considering a
change came from two groups concerned with land use. The Regional Plan
Association said that giving towns the option of taxing land at higher rates
than buildings could spur urban redevelopment. Such a split-rate tax system
would require amending the uniformity clause, said Alexis Perrotta, a senior
policy analyst.
Tim Evans, director of research at New Jersey
Future, said the committee might want to consider a different tax rate for new
construction.
"It would be inadvisable to take the
uniformity clause off the table," Evans said.
But Maurice predicted that without the
constitutional guarantee of equal treatment, politicians would find raising
property taxes on businesses in order to lower them for homeowners
"irresistible."
Thomas Bracken, chairman of the New Jersey
State Chamber of Commerce, said that would be "a nail in the coffin of the
business community."
Following the hearing, Sen. Bernard Kenny
(D-Hudson), co-chairman of the Joint Legislative Committee on Constitutional
Reform, said that "meaningful discussion on property tax reform cannot be
held without dealing with the uniformity clause."
The committee is "researching the pros
and cons" of the clause, Kenny said. He also said the panel is evaluating
systems used in some other states that impose different tax rates on
owner-occupied residences, vacation homes, rental properties and commercial and
industrial sites.
Assemblyman Richard Merkt (R-Morris), a
member of the committee, said yesterday's testimony "reaffirms my belief
that tinkering with the uniformity clause could have a devastating impact on
Robert Schwaneberg
covers legal issues. He may be reached at rschwaneberg@starledger.com or (609)
989-0324.