3/9/2013 7:00 AM
By Miles Jackson N.J. Correspondent
New Jersey landowners may have to earn more in agricultural or horticultural income to qualify for lower property tax rates under the state’s Farmland Assessment Act.
If New Jersey Gov. Chris Christie signs the latest amendment to the 1964 law, which passed both chambers of the state Legislature by wide margins last week, the minimum farm income from at least a five-acre operation will increase to $1,000 from the current $500 in the 2015 tax year.
A spokesman for Christie said the governor is reviewing the amendment and has until April 12 to sign the measure into law.
The new income requirement could remove farmland assessment from upward of 40,000 acres, out of the more than 900,000 acres in New Jersey that currently qualify for the agricultural assessment tax rate, according to a study completed by Rutgers University five years ago.
Other income qualifications for farmland assessment, including $5 in additional income for every acre in excess of five acres or 50 cents of additional income from woodland for every acre in excess of five acres, will stay at the same level.
Although the study indicated a majority of New Jersey residents favored efforts to preserve the state’s farmland, agricultural assessment for properties owned by some of the state’s politicians have in the past come under public scrutiny.
Former Gov. Christie Whitman was criticized during her tenure for gaining farmland assessment for a horse farm she owned in Hunterdon County.
During his successful 2010 campaign for a seat in the House of Representatives, Republican John Runyan was hammered by incumbent Democrat John Adler for claiming farmland assessment for his Burlington County home, where he raised mules. Runyan won by 3 percentage points despite the negative ads.
Such high-profile cases led the latest amendment to be called the “fake farmer” bill.
Amendments to the law since its inception have added a requirement for a woodlot management plan for landowners claiming farmland assessment for forested properties and clarified requirements for land claiming farmland assessment for “boarding, raising, rehabilitating and training livestock animals.”
The two previous amendments were added in 1986 and 1995.
The latest amendment shouldn’t have a significant effect on the state’s efforts to preserve farmland, according to Jeff Beach, a spokesman for the New Jersey Department of Agriculture.
“We really don’t see too big a drop off” in land qualifying for agricultural assessment, Beach said. “Keep in mind that property owners have two years to increase income to reach the new dollar amount.”
Beach noted that some environmental groups were pushing for a $10,000 income level from agricultural or horticultural operations, the same amount that New York landowners need to earn from at least seven acres to qualify for that state’s farmland assessment rates.
Pennsylvania requires properties of at least 10 acres with a minimum agricultural or horticultural income of $2,000.
“But the average farm in New Jersey is 71 acres compared with 170 acres in New York,” Beach said. “Raising the minimum to $10,000 would have a large effect on farmland protection efforts here.”
For some, any increase in income requirement was too much.
Herb Wegner, owner of 100 acres in Salem County, said the increase in minimum income would have its greatest effect on small part-time farmers.
“The ones who are going to be hurt by this are the people who own five or so acres, the small family farmers,” Wegner said. “If they lose agricultural assessment, they’re going to sell to developers. Then, that five acres is going to become two or three lots for more housing.”
Like many claiming agricultural assessment in New Jersey, Wegner rents most of his land out to a farmer who raises vegetables and culinary herbs on the property. The balance of the land is planted in Christmas trees or is forested land that produces firewood.
Studies have shown that farmland assessment is a bargain for state, county and local governments. Land in agriculture and horticulture production requires about 30 cents in spending for fire, police, education and other government services for every dollar paid in property taxes whereas residential properties require about $1.50 in services for every dollar in property taxes.
Wegner, who has been active in the state’s farmland preservation efforts, including his current work in preserving farmland in neighboring Franklin Township, Gloucester County, said there are people who have benefited from agricultural assessment despite having marginal, or nonexistent, agricultural operations.
“What I’d like to see is greater enforcement,” Wegner said. “But I don’t think (the increase in minimum income) is going to solve the problem.”
The increase might actually impair efforts to protect farmland in New Jersey through the state’s Farmland Preservation Program, Wegner said. The program pays landowners a lump sum in exchange for keeping the land in permanent agricultural production. More than 200,000 acres in the state are currently protected through the program.
“The land has to be in agricultural assessment to even qualify for the Farmland Preservation Program,” said Wegner, who has all of his 100 acres in the program.
Salem County currently has a higher percentage of land in agricultural assessment than most other counties in the state. Of the five municipalities with more than 70 percent of total land in agricultural assessment, three are in Salem County.
Salem County Tax Administrator John Snyder called the latest amendment “a step in the right direction.”
“It’s extremely difficult to say exactly what the ultimate inspect of this will be.” Snyder said. “But we’re talking about $1,000 in income on five acres. Even hay farmers make that.”
Snyder said each of Salem County’s 15 municipalities employ mostly part-time tax assessors who are responsible for policing compliance with farmland assessment requirements. Properties are inspected on three-year cycles, and landowners receiving farmland assessment are required to fill out detailed information on crops grown and income received on an annual basis.
“People sign those forms under oath,” Snyder said. “And starting two years ago, we’ve had inspections of farms under 12 acres to check with compliance.”
The inspections found few properties that were not in compliance, Snyder said.
“We’re always taking steps to curb abuse,” he said.
Penalties of up to $5,000 are levied for “gross and intentional misrepresentation” on farmland assessment forms, and any land pulled out of farmland assessment must pay commercial or residential rates for the three years prior to removing it from agricultural or horticultural production, according to state statues.
But those who lose agricultural assessment under the new amendment will not be required to roll back rates for three years, the statues said.