Governor Jon Corzine and a bipartisan pair of legislators have expressed serious concerns about making any change to the property-tax “fairness clause” of the State Constitution, saying they fear it would have a negative impact on business and the economy.  The clause requires municipalities to tax all properties, commercial and residential, at the same rates.  Rutgers University law professor Robert Williams also told a legislative committee that property tax reform is possible without changing the Constitution; he warned that amending the clause could result in higher property taxes on business with virtually no limits on how high those taxes might go.  “The unintended consequences (of altering the fairness clause) are usually bad,” Williams said.

This commentary on the fairness or “uniformity” clause came at an August 17 hearing held by the Legislature's Joint Committee on Constitutional Reform.  NJBIA has made protection of the fairness clause one of its top priorities, and is encouraging members to contact their legislators using its quick online service.

“The uniformity clause is the most important protection for fair treatment of all taxpayers," said NJBIA First Vice President Arthur Maurice. “Without it, you would have discriminatory taxes on businesses, and there could be no limit on the amount of property taxes they would have to pay."

Two of the six lawmakers on constitutional reform committee, Democrat Louis Manzo (D-Hudson County) and Richard Merkt (R-Morris County), said they opposed any change to the fairness clause. They noted that this would only shift more of the property-tax burden onto business in a state that already has a poor business climate.

In a news conference on the same day, Governor Corzine said he was wary about making changes to the fairness clause.  "I think that one would have to seriously consider its implications," Corzine said. "I believe it is absolutely essential that we grow our economy if we are to have long-run economic success, and we need to be doing those things that enhance it, not limit it."

The “fairness” clause of the State constitution protects property owners from tax discrimination by requiring municipalities to tax all properties, whether commercial or residential, at the same rates.  Removing or altering this clause would allow municipalities to tax commercial properties at higher rates, thereby shifting more of the property-tax burden onto employers.  One recent proposal would increase business-property taxes in one year by a whopping $2 billion, a 40 percent increase.  A tax increase of this magnitude would be devastating to business property owners and renters.

NJBIA has maintained from the start that the only way to achieve real and lasting property tax reform is to curtail the government spending that drives those taxes higher in the first place, particularly spending on employee pension and health benefits, school aid, and administrative costs associated with multiple layers of government. The constitutional reform committee and three other legislative committees considering property-tax reform will make their recommendations by November 15.  For more information, contact Art Maurice at ext. 247.

NJBIA Named 'Mover and Shaker' in Property Tax Debate—The Star-Ledger on July 28 named NJBIA and its President Philip Kirschner as one of the “movers and shakers” in the debate over property tax reform.  The Star-Ledger said NJBIA was working hard to prevent a shifting of the property-tax burden onto business through new business taxes or higher rates on commercial properties.  NJBIA was the only business group named.  Kirschner said he was pleased with the recognition and praised the Association’s lobbying team for its aggressive efforts on the issue.

Send Your Property Tax Reform Suggestions to Legislature—Individuals who have ideas for reducing property taxes can send their suggestions directly to the State Legislature via a new Web site.  The site also provides resources for people interested in following the progress of the committees.

Bill to Ensure Contractors Are Paid Quickly Goes to Governor—Clients would have to pay contractors and subcontractors within 30 days after their billing date or be liable for the full amount of the payment plus interest, under legislation awaiting action by Governor Jon Corzine.  S-1726 (Sweeney, Madden)/A-3174 (Caraballo, Watson Coleman) is aimed at ensuring that contractors get paid in a timely fashion for their work on construction projects.  The bill applies to both public and private contracts.  Clients would have 20 days to dispute any part of the payments, but would have to notify the contractor in writing how much is being withheld and the reasons why.  Any contractor or subcontractor who is not paid as required would be allowed to suspend construction, after giving seven calendar day’s written notice, without penalty for breach of contract if certain conditions are met.  For more information, contact John Rogers at ext. 209.

Senate President Codey, Assembly Speaker Roberts on Sept. 27—Hear directly from New Jersey's two most powerful legislative leaders, Assembly Speaker Joe Roberts and Senate President Richard J. Codey, at a special NJBIA breakfast briefing, Meet NJ's Top Two Legislative Leaders, which will be held on Wednesday, September 27, at the Forsgate Country Club in Monroe Township (just off exit 8A of the NJ Turnpike) from 7:30 a.m. until 10:00 a.m.  Plenty of time will be set aside to answer your questions. Don't miss this informative networking event. The cost is $69 per person for NJBIA members and $105 for nonmembers. For additional information contact Katie Wittkamp at 609-393-7707, ext. 239, or register online. To become a high-profile sponsor, contact Sherry Esteves at ext. 219.

We also encourage you to register for our October 17 Awards for Excellence Dinner and our October 25 Hot Legal Topics for Employers seminar.