Bill aims to weed out ‘fake’ farmers

AFP Correspondent

Though introduced as a means to preserve farmland in the mid-1960s, New Jersey’s Farmland Assessment Act has come to be viewed as a tax shelter for wealthy individuals and corporations.
That perception may be on the way to changing, as legislation (S-589) aimed at preventing the abuse of the law unanimously passed the New Jersey Senate in June, 39-0.
The legislation now awaits approval from the State Assembly, which should take up the issue in the fall, before it possibly heads to Gov. Chris Christie’s desk.
“This bill modernizes the law to better ensure that only those who actively work the land receive the 98 percent property tax break on their property. I strongly urge my colleagues in the state Assembly move this legislation and send it to the governor’s desk,” said Sen. Jennifer Beck, R-Dist. 11, who sponsored the bill with Senate President Steve Sweeney, D-Dist. 3.
Taking time to understand the issues surrounding the situation, Beck talked with tax assessors, consulted studies and worked with the state Board of Agriculture and Farm Bureau to understand the fears surrounding making changes to the program.
Through that process, all parties involved began to understand where improvements to the program could be implemented.
These revisions amend, supplement and repeal certain sections of the act, taking aim at “fake farmers,” who produce at or near the bare minimum to earn the lucrative tax break farmland assessment offers.
While completely legitimate production allowable under the letter of the law, this use of the act does not adhere to the spirit of the law.
“All of this legitimate but ‘sketchy’ production takes a toll on the public confidence in the program,” said Farm Bureau research associate Ed Wengryn.
Property developers skirt the edge of legitimate production in order to “land-bank” property on which they can build during the next real estate boom.
“Clearly this program is being taken advantage of and it’s the taxpayers who ultimately lose the most. It’s long past time we update the farmland assessment law,” Sweeney said. “This protects both real farmers and the taxpayers of New Jersey.”
This update — iterations of which have been floating around the capitol for nearly five years — doubles minimum sales to qualify for that hefty tax break from $500 to $1,000 from the first five acres, and an extra $5 for each additional acre.
It also provides for a review of the sales threshold every three years.
For woodlands, the income stays at $500 on the first five acres.
As was the case previously, only lands being farmed qualify, leaving houses, barns or any other structure ineligible.
Parcels under seven acres will receive additional scrutiny.
Those growers will have to produce a written description of what they grow and a map of where it is being grown.
Additionally, they will have to submit evidence of agricultural sales and income to their tax assessor.
Those found to be abusing the program would face a $5,000 fine, in addition to restitution of all taxes inappropriately avoided on property fraudulently claimed under the assessment program and other penalties.
By comparison, New York requires a minimum $10,000 in income per seven acres to qualify for the assessment tax break.
A 2007 Rutgers study provided the basis for the revision to $1,000, or roughly $19.23 a week (up from $9.62).
The study calculated how many farms would be disqualified at the minimum revenue qualifications of $1,000, $2,500 and $10,000.
Adopting New York’s minimum requirement would have had grave consequences for smaller operations, disqualifying nearly 400,000 acres — nearly 40 percent — of New Jersey’s approximately 982,000 acres of preserved farmland.
A $1,000 minimum income threshold excludes 47,368 — not quite five percent — of the state’s 982,000 acres of preserved farmland.
The bill also calls for more training for tax assessors and recommends the development of guidelines on what constitutes a farm.
“The big change in the program is the development of standards outlining accepted agricultural practices,” Wengryn said. “By having a better understanding of agriculture and horticultural production, assessors can then evaluate applications. The new guidelines outlined in the bill will describe those common agricultural activities, which bring clarity and uniformity to the program.
“Farm Bureau felt that if done right, changes to the program would improve the public’s confidence that the program is about the working landscape and farms of New Jersey,” Wengryn added. “The voters of New Jersey support farmers and support the program when it is being used correctly. These changes are being made to ensure the integrity of the program.”