I agree and think that maybe the state should just eliminate Abbot funding for municipalities that randomly hand out tax abatements in prime locations.

I posted this on another thread, but it seems this is the one that's getting traction.

So I am posting it again...



Well folks...it's time to pay the piper; and this is just the beginning I suspect.

As I've been saying, over and over again, to anyone who knows me and will listen, the state of New Jersey is not going to continue to pay for nearly all of the costs of running Jersey City schools forever.

Now that we have reached the point where Goldman Sachs, Donald Trump, The Athena Group and the rest of the big name developers who are likely lining up to build large scale projects in Jersey City have come to town, it is only logical that those people who do not live in Jersey City will start questioning why they are spending their tax dollars to pay for schools that are no where near their homes. When this occurs, it will be the property owners in Jersey City who will be left to pick up the tab. Unfortunately, the people who are living in the developments that will likely tip the scale towards lower school funding by the State of New Jersey won't have to foot the bill.

Yes...this is going to be an all out rant against PILOTs. As the city government is handing out PILOTs to large developers like candy, the state is getting itchy about having to overwhelmingly support the school system in Jersey City. Now I understand that what is occurring now is not the revolt I am talking about. I realize they are not cutting funding as much as they are freezing it, but I would wager anything that this is simply the firing of the first shot.

From this point on, every time the state gets into financial troubles, it is going to look mighty attractive to let the property owners of Jersey City foot more and more of their own school cost. And mark my words, eventually those people who don't live anywhere even close to Jersey City are eventually going to force the state legislative body to reconsider funding schools in a city that is known as the Gold Coast.

The thing is, we cannot blame those on the state level. Ultimately, we have only ourselves to blame. It is us who continues to elect council members who repeatedly vote to hand out PILOTs to large developers on or near the waterfront. It is our own city government who is selling us down the river.

One of the problems is that I believe most people do not truly understand the issue. First of all, I'm not sure that many of us even know there is a difference between and "abatement" and a PILOT program. For this reason, let me explain to the best of my knowledge.

The "normal" property taxes we pay are divided three ways. I will admit that I do not know the percentages off hand, but I do know that the city gets the largest portion of the tax bill and the rest is divided up between the local school system and Hudson County.

Now the city, by law, can give people property tax breaks; and they can do this in one of two ways. The first way is by granting a tax abatement. A tax abatement is a discount (usually 30%) given to people who make significant improvements to their property or to small scale new construction. Abatements are a tool to encourage "the little guy" to improve their property, thus improving the overall area where that property is located. Tax abatements are generally for a term of 5 years and the moneys collected are divided amongst the three entities using the same percentages that are used for all property taxes in Jersey City. Just as a point of full disclosure, my condo unit has a 5 year abatement.

The other way that the city can give a tax break is through a PILOT program. PILOTs are not taxes, however. They are Payments In Liu of Taxes.

PILOTs are handed out to large developers (such as Trump) within a redevelopment zone. Because they are not technically taxes, they do not have to be divided up between the city, the schools and the county. The city of Jersey City gets essentially all of the monies collected from PILOTs. So since the city is not having to "share" the money, even though the rate is substantially lower than the standard property tax rate, the city ends up with more money in the end.

When looked at this way, it is very easy to see why the City Council could become addicted to PILOTs. Essentially they are like crack cocaine. They are a quick fix. It's immediate gratification. Unfortunately, the whole thing is devoid of reality.

Since all of these new units coming on line have or will have PILOTs (and we are talking numbers in the thousands) they will not be participating in the property tax increases that will need to be implemented because Jersey City residents must now foot a larger portion of school costs. That burden is going to fall onto the rest of us.

Admittedly, I am benefiting from an abatement at the moment so I will get a small break in all of this, but my abatement will end in a couple of years. Those owners who live in a property with a PILOT get out of the burden for 20 years or more. Twenty years is a long time folks.

Now I?m not completely against PILOTs. The original purpose of them was as a tool for city governments to encourage redevelopment in blighted areas. Let?s face it; we still have many areas of the city that fall in that category. So I wasn?t particularly upset when The Beacon got a PILOT. I will fully support the developers of the new project in Journal Square when and if they ask for one. I think they should be used to encourage redevelopment around Jersey City University and in the entire Greenville section of the city. I cannot, however, support any more of these things being giving out anywhere in downtown or even on the ?west coast? of the city. These areas are already attractive to development and the big name developers who have the resources to take these sights on. They don?t need incentives. They?re building now simply because they think they can make money.

The time has come for all of us to wake up and begin demanding that our council members stop taking the easy way out thus mortgaging our (as well as our children and grandchildren's) futures because it is easier to hand out a PILOT than it is to do the hard work of living within our means. Those people who can afford to pay half a million dollars or more for a condo unit need to be participating in all forms of the tax burdens just like everyone else. As it stands now, and with the majority of the City Council members thinking that there is no need to stop their habit, the average tax payer in Jersey City is going to get really screwed.

What we need is an intervention and we need it quickly. The piper is going to want far more in payment then what's being demanded at the moment. That's a guarantee.

The Abbott decision does not transfer money from town to town. Abbott funds come from the state and the various ways in which it raises revenue. To the extent that wealthier towns have wealthier residents that pay more in income tax, there is that subsidy. But no property taxes go to the state. And it can work the other way too, since more regressive taxes (such as sales taxes) play a role as well.

John Galt is referring to the Mount Laurel decision. Mount Laurel basicly said that it is not permissible for towns to exclude, via zoning, the development of affordable housing and that each town had to allow its "fair share" of affordable housing. After eight years of doing nothing, the Supreme Court ordered the lower court to establish actual targets for municipalities. To provide flexibility, the courts later allowed towns to refrain from allowing affordable housing to be built if they contributed to it elsewhere.

Joshua

I disagree with the idea that rich towns should help out the poorer towns. I grew up in Westfield, a fairly well off NJ town and when I was in Jr High the town was given the decision to either allow a certain amount of new affordable housing or contribute money to the school systems places like Elizabeth and Plainfield. Well since the town did not want the property values to go down by building affordable housing, they decided to give a portion of our tax dollars so Elizabeth could put and olympic size swimming pool and other such amenities into their high school. As a result the jr high after school sports programs were cut as well as a bunch of classes at the jr high level.

What this amounts to is basically blackmail by the state. It is Robin Hood stealing from the rich not to give to the poor, but to give to the corrupt and poorly run school systems and local governments. Instead of taking money from successful school systems how you remove the corruption in the local governments of the poorly performing districts first.

I think its arguable that the combination of Abbott funding and abatements meant that people in richer towns were actually funding JC development rather than schools.

I don't have a problem with the idea that richer towns contribute to education in poorer towns -- that's to correct the inequalities created by the property tax-based system of funding schools. But I can't blame the state for saying other towns shouldn't be funding tax breaks for waterfront condos.

My kid is probably going to be in the Jersey City schools in a few years, but I agree. If the state is going to tell rich New Jersey towns to help out poor New Jersey school districts, well, that's common sense. If the state is going to make the New Jersey suburbs help Mayor Healy and members of the city council give away the candy store to a bunch of Sopranos building cardboard condos in Newport and Paulus Hook, that's robbery.

Maybe the abatement for the Jersey City Medical Center project is warranted, but, aside from that, I can't imagine that there's a good excuse to abate a single project in the city.

If the city wants to support development in Greenville and Bergen-Lafayette, for example, it ought to do it by adding light rail spurs to make those neighborhoods more accessible, not by robbing the schools.

This is one way in which tax abatements hurt us.

Jersey City has been abusing the Abbott program for way too long. The NJ Supreme Court's decision held that funding schools based on property taxes alone was unconstitutional. This is because urban areas have significantly more expenses and a population that requires significantly more money to adequately educate, as well as commuter populations from out of town that require expenditures. As such, the court reasoned, it was unconstitutional to require urban districts to fund their schools through property taxes alone, because their expenses are higher and they have other spending necessities. The result is that the court said the state must chip in to directly fund the schools.

How does this work with the tax abatement program? Tax abatements allow developers to pay a fixed amount, rather than the regular assessment. They actually pay MORE to the municipality than they would in municipal taxes, they get their break on the county taxes and school district taxes.

So the city hands out these abatements like candy, because the actually receive MORE money into the municipal treasury. The funding gets transferred from the school district taxes. All fine and well, so long as the state was willing to pick up the tab.

Well, Corzine has said he has had enough. The Supreme Court is willing to recognize that urban areas need to spend money on things other than school taxes. On the other hand, when you have a development boom, there is no reason to keep allowing large developers to avoid paying school taxes for the sake of a quick fix to the Treasury. With the increase in potential ratables, one could argue that Jersey City doesn't even deserve to be an Abbott district.

I am not looking forward to seeing my taxes go up. Still, I have to say it serves the city right. The Abbott decision was a generous decision to municipalities, recognizing the realities of funding an urban education system. It is a shame that both this and prior administrations have taken advantage of it to avoid adequately funding the school system for the sake of plugging a budget gap.

Joshua

Schools learn who wins, loses in Corzine budget
Friday, March 24, 2006
BY JOHN MOONEY
Star-Ledger Staff

Two days after Gov. Jon Corzine warned that state funding for schools would be frozen again next year, aid figures unveiled yesterday contained a few surprises, with some individual districts seeing big drops or increases.

Two in three districts would see nominal changes or none at all for a fifth straight year. But while past funding freezes have been largely across the board, this time some fast-growing districts would get a boost, while schools with declining enrollments would see cuts.

And the needy districts that fall under the state Supreme Court's Abbott vs. Burke court order, which were expecting increases, found out their overall aid will be nearly flat.

On top of that, eight of those districts were told to expect steep cuts under a new Corzine administration strategy to require local taxpayers to bear a larger share of Abbott school costs. Newark would lose more than $8 million, and Jersey City would see a reduction of $6 million.

The proposed aid figures released yesterday by the state Department of Education also include cuts for some suburban districts, including a more than $1 million reduction in Woodbridge and $515,000 in Montclair.

"This is a very difficult budget year, and the governor has said he will not permit a continuation of past practice that allowed New Jersey to spend year after year more money than it takes in," said acting Education Commissioner Lucille Davy.

But a few districts, urban and suburban, won unexpected increases.

Perth Amboy is among those Abbott districts the state wants to raise more through local taxes. But because of its rising enrollment, it would receive an overall aid increase of $2 million, officials said.

In one of the state's wealthier districts, the Chathams schools could get nearly $200,000 more, also due to rising enrollments.

"That was a complete shock," said Superintendent Jim O'Neill. "We never get more aid, only less."