New Jersey-2024-S1527-Introduced

An Act concerning the taxation of State property and amending R.S.54:4-3.3 and P.L.1971, c.370.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. R.S.54:4-3.3 is amended to read as follows:

54:4-3.3. a. Except as otherwise provided by article 1 of this chapter (s.54:4-1 et seq.), [the property of the State of New Jersey; and] the property of the respective counties, school districts and taxing districts used for public purposes, or for the preservation or exhibit of historical data, records or property; school district property which is leased to a nonprofit organization which is exempt from taxation under R.S.54:4-3.6, for use by that organization in its exempt functions; school district property which is leased to another board of education or governmental agency; and property acquired by any municipality through tax title foreclosure or by deed in lieu of foreclosure, if not used for private purpose, shall be exempt from taxation under this chapter, but this exemption shall not include real property bought in for debts or on foreclosure of mortgages given to secure loans out of public funds or out of money in court, which property shall be taxed unless devoted to public use. The lands of counties, municipalities, and other municipal and public agencies of this State used for the purpose and for the protection of a public water supply shall be subject to taxation by the respective taxing districts where situated, at the taxable value thereof, without regard to any buildings or other improvements thereon, in the same manner and to the same extent as the lands of private persons, but all other property so used shall be exempt from taxation. Property, the title to which is in the Morris Canal and Banking Company, in trust for the State, shall, so long as the title is so vested, be deemed to be the property of the State within the meaning of any tax law.

b. (1) Commencing on July 1, 2022, notwithstanding any law to the contrary, the tax exempt status of property of the State and its agencies and authorities created by the State shall cease and the property shall be assessed and taxed locally in the same manner as other property, except when a certification is filed with the municipal tax assessor, by the appropriate official, that removal of the tax exempt status of a specific parcel would impair the rights of bondholders pursuant to a covenant entered into prior to July 1, 2022. Property for which a certification has been filed shall continue to be subject to the requirements of P.L.1977, c.272 (C.54:4-2.2a et seq.) regarding State payments in lieu of taxes.

(2) Liens for delinquent taxes against property owned by the State or its agencies or authorities created by the State shall be enforced in the same manner as all other tax liens.

(3) The State shall not offset any property taxes due and payable with a reduction in State formula aid, except with respect to State payments in lieu of taxes for properties subject to taxation.

(cf: P.L.2016, c.65, s.2)

2. Section 2 of P.L.1971, c.370 (C.54:4-3.3b) is amended to read as follows:

2. Where real property is acquired by the State or by a State agency, or by an authority created by the State, by purchase, condemnation or otherwise, such property shall [become tax exempt on January 1 of the calendar year next following the date of acquisition, provided that the tax assessor of the municipality in which such property is located is given written notice of the acquisition by certified mail on or before January 10 of said calendar year next following; provided further that if real property is acquired between January 1 and January 10 inclusive and the prescribed notice is given on or before January 10, such real property shall become tax exempt as of the date of acquisition] continue to be taxable.

(cf: P.L.1971, c.370, s.2)

3. This act shall take effect immediately.

STATEMENT

This bill would end the tax exempt status of property owned by the State, its agencies, and authorities created by the State, although the tax exempt status of property owned by local units of government would continue. State property would become taxable on July 1, 2022, except when a certification, prepared by an appropriate official, is filed with the municipal tax assessor stating that removal of the tax exempt status of a specific parcel would impair the rights of bondholders pursuant to a covenant entered into prior to July 1, 2022. Those parcels would continue to be subject to the law concerning State payments in lieu of taxes, N.J.S.A.54:4-2.2a et seq.

If the State becomes delinquent on the property taxes due and payable for a parcel, then the tax lien would be enforced in the same manner as all other tax liens.

This bill is intended to require the State and its agencies and authorities to pay their fair share of the local tax burden so that the local residents and businesses are not unduly burdened by the cost of subsidizing State government operations. The bill also prohibits

the State from reducing a municipality's formula aid in an attempt to offset the new property tax liability due and payable to that municipality, except with respect to State payments in lieu of taxes for those properties that will now be subject to taxation.