Lawmakers Look to Restrict Farmland Tax Break to Working Farmers

Rockers Bruce Springsteen and Jon Bon Jovi, Congressmen Jon Runyan, Scott Garrett, and Rodney Frelinghuysen, and Forbes magazine publisher Steve Forbes are all famous New Jerseyans to one extent or another.

They have something else in common: All own property assessed as farmland that gets a large tax break on the acreage due to its agricultural use -- through raising honeybees, selling Christmas trees, breeding miniature donkeys, or leasing to a farmer.

Legislators in Trenton have finally sent the governor a bill seeking to weed out what one state senator calls “fake farmers” by requiring some farmers to generate more income to qualify for a tax break. Whether the bill will succeed in its goal is unclear.

There are no current statistics to indicate how many farmland-assessed properties would be affected by a provision in the bill (S-589) to double the minimum farm-income threshold to $1,000.

Properties with a woodlot management plan, which outlines how the owner will manage forest acres, would not be affected by the $500 increase. And the bill does not address either corporations that get a tax break by leasing their land for farming or land speculators who keep property in farmland or woodlot status until the time is right to develop it.

Under the farmland-assessment program, enacted after voters overwhelmingly passed a constitutional amendment allowing for differential assessments 50 years ago, a property of at least five acres used for agriculture or woodland management with at least $500 in sales and payments can be assessed at a fraction of market rate. The amounts ranged from $10 to $1,032 an acre last year, depending on soil quality. An analysis of state tax list data shows that roughly 990,000 acres -- about 18 percent of the state’s land -- is farmland assessed.

Sen. Jennifer Beck (R-Monmouth), a cosponsor of the bill, said she worked with the New Jersey Farm Bureau to refine the measure over the past five years and get agreement on its passage.

“There are still a lot of fake farmers doing the bare minimum and getting this tax break,” Beck said last June before a crucial vote by the Senate Budget and Appropriations Committee. “To me, it’s a violation of the public trust.”

Beck has been crusading to amend the state’s farmland-assessment law since joining the Senate in 2008. She defeated then-Sen. Ellen Karcher, a Democrat, in part by criticizing the differential assessment Karcher got on her 8.5 acres for selling Christmas trees and wood.

But Jeff Tittel, head of the Sierra Club in New Jersey, said the final bill was not worth the wait.

“The only thing worse than no reform is fake reform,” Tittel said. “This is going to have a very minimal impact.”

He predicted the bill, if signed by Gov. Chris Christie, will not affect wealthy owners of large tracts of land, real estate speculators, or corporations because they will be able to meet the new income requirement.

That’s OK, said Bob Williams, a forester with Land Dimensions in Glassboro. There are benefits to both companies and the wealthy receiving a farmland tax break for leasing their land to farmers to till or stewarding a forest.

“It does help perpetuate open space,” Williams said. “Although the taxes are significantly reduced, it does still provide tax revenues on land that needs little or no services.”

Much has been written in the past about rich and famous New Jerseyans like Springsteen, Bon Jovi, Forbes and Whitman getting a preferential farmland assessment, but it's not just the rich and famous who are getting a break on their taxes. A number of companies whose primary purpose is not farming, including those with instantly recognizable names -- including Exxon, Merck, and Merrill Lynch -- are all benefitting from lower assessments on hundreds or thousands of acres of land.

A Cumberland County producer of sand and construction aggregates has more than 11,000 farm-assessed acres. Others with farmland assessments include PSE&G, Six Flags Great Adventure, and the Hercules brownfields site in Roxbury. Numerous land development companies and realty firms also own thousands of acres assessed as farmland.

The 2006 Constitutional Reform and Citizens Property Tax Constitutional Convention criticized the last group in its report, stating, “The farmland-assessment program was never intended to serve as a property tax break for land speculators to the financial detriment of other property taxpayers in a community, as is often the case now.”

An Unknown Quantity

Because of the complexity of the issue, it is impossible to put a figure on the amount of money in tax breaks being given to so-called fake farmers, in part, because there is little agreement among those involved in the debate over what constitutes one.

Tittel said that a 1999 study in which the Sierra Club participated found that abuse of the farmland-assessment program cost municipalities $300 million a year. Today, that could be closer to $600 million, he said.

Having a farmland assessment is something politicians tend to not want to discuss. After all, they have been questioned on it time and again. Unlike Karcher, though, having a farmland assessment has not always meant defeat.

For instance, Christine Todd Whitman defeated Gov. Jim Florio in 1993 despite the Democrat’s making hay of Whitman getting a farmland assessment on the 200+ acres known as Pontefract that straddles the Tewksbury-Bedminster border. The properties are now listed in the name of her husband John and children Kate and Taylor.

Still, no one from the offices of any of the three congressmen who receive the preferential treatment -- U.S. Reps. Jon Runyan (R-3rd), Scott Garrett (R-5th), and Rodney P. Frelinghuysen (R-11th) -- returned requests for comment.

Here’s what tax records show about their properties:

Runyan, a former football player, and his wife Loretta have 20.3 farmland-assessed acres in Mount Laurel on which they paid $124 in taxes in 2011 and 2.8 acres that include their home on which they paid $61,627. He reportedly raises miniature donkeys and sells firewood from his property.

Garrett, a former state assemblyman considered the state’s most conservative congressman, and his wife Mary Ellen have 9.9 acres in Wantage assessed at $617 per acre last year and a house on 1 acre, with the land assessed at $137,500, so they paid $6,324 on the home and $125 on the farmland in 2011. He wrote on his campaign website that he and his wife “are raising our family on this land” known as Shale Hills Farm that his brother Mike farms and from which he sells Christmas trees.

Frelinghuysen, a former state assemblyman rated the nation’s 16th wealthiest congressman by Roll Call newspaper last year, lives on 7.2 acres assessed at a market rate of $2.3 million in Harding. He is also listed as the owner of 17.9 farmland acres in Frelinghuysen Township that were assessed at $8,300, or $463 an acre, and on which he paid taxes of $175, or $10 per acre in 2011.

There is farmland-assessed property in the family of Assemblyman John Burzichelli (D-Gloucester) and a cosponsor of the bill that would increase the income required to qualify for the lower assessment.

Burzichelli said his grandmother owned the 6.4 acres in Greenwich, Gloucester County, and had leased it to a farmer for $300 a year for decades because she enjoyed living on the large property and the extra income helped her afford to stay there.

She died and his father and aunt now co-own the land through his grandmother’s estate and are trying to get it preserved. The famer who leases the land grows soybeans and earned more than $1,000 in income last year, so the property is likely to continue to keep its farmland assessment.

“It looks like Thanksgiving dinner is still on,” Burzichelli joked.

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