Lyman Stone, Economist at the Tax Foundation Center for State Tax Policy, has an interesting blog post today regarding New Jersey’s open space taxes. As Stone points out, land is a “stock”, or fixed amount which can never change. Open space taxes are a “flow” which generally means the amount grows each year as the tax is collected.
As each New Jersey county (or the state) accumulates more open space revenue to purchase land, the amount of land available for development decreases. In turn, the value of the land available for development goes up resulting in higher property taxes.
Adding injury to insult, as available land for development shrinks, the price of existing land will be pushed higher, and New Jersey’s already high property taxes will increase. Having beautiful open land nearby further increases the property values of neighboring areas. The open space tax, by artificially inflating property values, can cause the burden of other property taxes to be higher.
Earlier this year, Senate President Steve Sweeney (D-03) tried to jam through an open space ballot referendum that would have siphoned off $200M in sales tax revenue each year for the next 30 years — $6B in total — so the state could purchase open space. Fortunately, this misguided and fiscally reckless bill, which would have only worsened our property tax problem, didn’t pass the senate and find its way onto this year’s ballot. (Read AFP’s press release here.)
Of course, the biggest elephant in the room when it comes to New Jersey’s high property taxes remains school funding. Until the Abbott decisions are rolled back or something akin to Sen. Doherty’s Fair School Funding Amendment is adopted, suburban and rural taxpayers will continue sending hundreds of thousands of dollars into the 31 former Abbott districts. And the taxpayers in the remaining 500 or so districts will have to pony up again in property taxes to support their local schools.
Open space measures just add fuel to the fire of our state’s ridiculously high property tax burden and should be opposed by anyone looking for some relief.