Galloway’s Elected Leaders Should Consider Tax Abatement Reforms

In the June 10 Press of Atlantic City article titled "Galloway will try again to develop its White Horse Pike corridor," it was stated that “under the abatement program the pike developers would be eligible to apply for five-year tax abatements. Under this program developers pay reduced taxes on the value of improvements to their land for the first five years, on this schedule: year one=0%; year two=20%; year three=40%; year four=60%; and year five=80%. With abatements developers do not have to pay school taxes and only 5% of county taxes.”

Consider this example: a piece of land worth $500,000 under this program would continue to be taxed under the normal tax rate (with the municipality, school and county receiving their share).

Then, said developer builds a structure along with other land improvements valued at $500,000. The first year would be tax free on the $500,000 improvement. Year two - the developer would ONLY pay 20% of their normal tax payment on the $500,000 improvement and continue on with above said schedule through Year five. The majority of the payments will be kept by Galloway government from Year two through Year five.

You can see how these payments could help balance Galloway’s budget
deficit now and in the future.  Potentially, more businesses equals more residents
(with children) which equals more school services which equals more taxpayer money.

Take a look at the tax abatement history of Galloway’s neighbor. According to a 2010 Press of Atlantic City editorial, Egg Harbor Township’s tax rate was
almost one and a half cents lower than it would have been with no tax abatements, and the school tax rate was more than three cents higher. EHT’s
municipal government claimed victory while blaming the schools for raising
taxes.

One of NJ State Comptroller Matthew Boxer‘s recommendations in his 2010 Tax Abatement report was that payments in lieu of taxes should be divided between the municipality, schools and county. Tax abatements should be used to ease the property tax burden as a whole, not shift the burden from the municipality to the schools.

Coming soon, I will go further into suggested recommendations & reforms in PART II of Galloway’s Tax Abatement/Economic Development Program.