TRENTON — Asbury Park gave breaks for condos that eventually had trouble selling. The city of Bayonne gained millions by giving developers a tax break, but its school district didn’t get a nickel of that. Gloucester Township gave tax breaks to three expanding Wawas, when there were already 22 of them within five miles of the area. These municipalities...
New Jersey State Comptroller Matthew Boxer.TRENTON — Asbury Park gave breaks for condos that eventually had trouble selling. The city of Bayonne gained millions by giving developers a tax break, but its school district didn’t get a nickel of that. Gloucester Township gave tax breaks to three expanding Wawas, when there were already 22 of them within five miles of the area.
These municipalities are among about two dozen across the state that widely use tax abatements, giving up hundreds of millions in taxes a year to promote growth. But a report released Wednesday by state Comptroller Matt Boxer says there is little oversight of these tax breaks, and they can enrich city coffers at the expense of school districts and counties.
"The financial scope of what they’re doing is significant, and it has effects on taxpayers in neighboring towns and throughout the state," Boxer said.
Tax breaks could also lead to corruption, Boxer said, pointing to arrests a year ago involving bribes allegedly given in exchange for promises of help with real estate developments. The report says they "present opportunities for unfair favoritism or cronyism."
For years, environmentalists and others have criticized tax abatements as a giveaway to developers. But cities say it’s an important tool to help spur growth.
The practice is used heavily by only 23 of the state’s 566 municipalities, including Newark and New Brunswick, the report found. Most were large, urban areas.
Tax abatements encourage municipalities to make deals, the report said. Cities can make arrangements that leave them with more money, allow the developer to pay less overall, give counties just a portion of the proceeds and provide school districts with nothing.
For example, Bayonne and its school district would have each received about $27 million from a power station up for a tax abatement in November 2009. Instead, Bayonne approved an abatement that brought $45 million to the city, about $2 million to Hudson County, but nothing to the school district.
Frank Belluscio, a spokesman for the New Jersey School Boards Association, said he agreed with the report’s suggestion that school districts share tax revenue from incentives with the municipalities. "The way it is structured now, it shortchanges the school district," he said.
The state League of Municipalities countered by pointing to a requirement for towns to bear the entire burden of unpaid property taxes, while handing over the full amount owed to school districts. Property taxes are sent directly to the municipalities, which send portions to counties, school districts and any other special tax districts.
Gloucester business administrator Tom Cardis said the abatements were an important tool for his town to attract businesses. He pointed out the town of 70,000 is 86 percent residential and needs gas stations like the Wawas. One Wawa also put up a large sign welcoming people to the area, free of charge. "There’s a lot of work that goes into bringing businesses into the community," he said.
Boxer said his office did not have an exact count on the fiscal impact of the tax breaks in part because it is so hard to get information about properties that got them. He said this should be changed as one of several suggestions to improve oversight.
Sen. Michael Doherty (R-Warren) said the report raised "serious questions" and called for a hearing on the issue.