Singleton Bill to Require Towns to Share PILOTs with School Districts Clears Committee

Trenton – Legislation sponsored by Senate Community and Urban Affairs Committee Chair Senator Troy Singleton, which would require municipalities to share certain payments received in lieu of property taxes (PILOTs) with school districts, cleared the Senate Community and Urban Affairs Committee today.

The bill, S-59, would require municipalities to share certain payments received in lieu of property taxes for urban renewal entities with school districts and to inform counties and school districts of property tax exemption applications.

“A State Comptroller report from several years ago noted that New Jersey’s municipal tax abatement program is pulling critical funding away from school districts and leaving taxpayers to pick up the costs,” said Singleton (D-Burlington). “Specifically, the report noted municipalities often receive more funds by granting tax abatements because they arrange for payments in lieu of taxes. School districts, however, receive no share of those payments and therefore lose out on the municipality’s new wealth. In some cases, the result is schools’ increased reliance on state aid. This bill seeks to change that.”

Under the bill, urban renewal entities that submit an application for a long term tax exemption to a municipality would also be required to provide copies of the application to the municipality’s board of chosen freeholders, the chief executive officer of the county the municipality is located in, the board of education and the superintendent of any school district located in the municipality for informational purposes.

Current law entitles municipalities and counties to collect a portion of PILOT revenue. The revenue gained from PILOT agreements is distributed so that 95 percent goes to the municipality and 5 percent to the county; therefore none of the PILOT revenue is distributed to the school district. This bill seeks to create transparency among municipalities, counties, and school districts and also ensure that school districts receive a portion of PILOT payments as they continue to face budget constraints.

“Urban renewal entity” is defined as a limited-dividend entity, the New Jersey Economic Development Authority or a nonprofit entity that enters into a financial agreement with a municipality to undertake a project that is a part of its redevelopment plan.

“Simply looking at what revenue has been forgone does not tell the whole story. The added development and the economic activity it generates have to be also factored into the equation. Either way you look at it, what cannot be debated is that we need to ensure the highest levels of transparency and accountability to New Jersey’s tax payers with regards to the abatement process,” continued Senator Singleton.

The bill was released from committee by a vote of 5-0.