LEGISLATIVE FISCAL ESTIMATE
ASSEMBLY, No. 4465
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JANUARY 24, 2025
SUMMARY
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Synopsis: |
Concerns assessment of farmland for property tax purposes. |
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Type of Impact: |
Annual local government revenue loss. |
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Agencies Affected: |
Local governments. |
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Fiscal Impact |
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Annual Local Revenue Loss |
Indeterminate |
· The Office of Legislative Services (OLS) concludes that the bill will result in an indeterminate annual revenue loss to local governments, specifically counties and municipalities, by limiting the number of farmland properties that would be subject to roll-back taxes when agricultural activity ceases without active conversion to another use.
· The magnitude and timing of the revenue loss cannot be determined due to a lack of information on the number of properties that would avoid roll-back taxes under the bill's provisions.
BILL DESCRIPTION
The bill prohibits roll-back taxes from being assessed on farmland when agricultural or horticultural activity ceases, unless there is an active conversion of the land to a non-agricultural or non-horticultural use. Roll-back taxes are additional taxes assessed when land loses its farmland assessment status, calculated as the difference between what was paid under farmland assessment and what would have been paid if the land was assessed as non-farmland for the current tax year and two preceding years.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes that this bill will result in an indeterminate annual loss of local tax revenues, specifically to counties and municipalities, by limiting the number of farmland properties that would be subject to roll-back taxes.
Under current law, farmland properties are assessed based on a preferential standard of value, thereby reducing the property taxes that are imposed on these properties. However, when a parcel of farmland property is converted to a use other than agricultural or horticultural purposes, roll-back property taxes are assessed on the property. The bill provides that roll-back taxes may not be assessed solely due to the cessation of agricultural or horticultural activities on a farmland-assessed property, without an active conversion to another use. As a result, the bill will reduce the number of farmland properties that are subject to roll-back taxes, thereby reducing local revenues.
The magnitude of the anticipated revenue loss will depend on several factors. Primary considerations include the number of farmland-assessed properties where agricultural activity ceases without land use conversion, the difference between farmland assessment rates and regular property tax rates in affected municipalities, the size and assessed value of affected properties, and the timing of agricultural cessation relative to potential future land use changes.
The OLS notes that information is not readily available to identify the annual number of farmland properties in which agricultural activities have ceased, without an active conversion to another use, and the average roll-back taxes assessed on these properties. Without this data, the OLS is unable to quantify the magnitude of the total local revenue losses that may result from this bill.
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Section: |
Revenue, Finance, and Appropriations |
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Analyst: |
Associate Fiscal Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).