Galloway Needs a Tax Abatement Committee

Tax abatements (also known as tax breaks) are a very complicated issue which should be supported only after all economic development avenues have been pursued, as noted in my previous Patch blog posts.

Only a thorough and complete tax abatement plan which considers the impacts to the municipal government, schools and county should be implemented.

Hoboken was used as a tax abatement example in State Comptroller Boxer’s report. For the 2009-2010 school year, Hoboken received $8.73 million in state aid. For the 2010-2011 school year, they received $6.99 million which was a reduction of $1.74 million.

The $1.74 million in lost aid actually is less than the amount of school taxes not
collected because of the Hoboken tax abatements. The abated redevelopment property value in Hoboken was close to $298 million. The lost revenue due to the tax break amounted to $3.51 million.

This lost revenue was more than double the amount of aid cut for that school year.

Many officials put forward the notion of increased employment as one of their main objectives in offering tax abatements. Many of the abatements awarded in Southern NJ have gone to retail chains, as noted in the report.

The problem lies in that retail jobs tend to pay less, are more likely to be part - time, offer fewer benefits and develop fewer marketable skills as compared to jobs in manufacturing, technology and health care. Many times, the employees of these chains remain dependant on government assistance to survive.

As you can see, taxpayers would be paying for the business tax break and the government assistance resulting from the low paying jobs.

Another example, used in the Boxer report, was Gloucester Township. In a span of six months from 2007- 2008, Gloucester Township granted three separate abatements to entice Super Wawa. Each of the Super Wawas is within 2-4 miles of each other.

If you perform a search on Wawa's website, they list 22  Wawa locations within five miles of the area. Obviously, the area is saturated with Wawas - bringing into question the need for a tax incentive.

When a Gloucester Township tax official was asked about the reason for the tax abatement, he stated that all municipal abatement criteria had been met and the township was legally obligated to grant the application.

Going one step further, the official believed that the abatements were not necessary and that national chains do not need these incentives. Regardless, the tax break was granted.

These potential scenarios should be addressed by our elected leaders before they occur.

Galloway Council should form a Tax Abatement Committee consisting of Council, School Board, citizen and Atlantic County government representation. 

The committee members would present their recommendation to Council. Council would make the final determination by passing an ordinance granting the abatement or not.

This reform would demonstrate to Galloway taxpayers that our elected leaders support open and transparent Government.