Beyond the thick greenery in Kearny lie protected and environmentally sensitive marshlands that are part of the Meadowlands and off limits to builders and developers. It cuts Kearny out of tax revenues it could be collecting from growth and development.
To make up for that, Kearny, 13 other towns with land in the Meadowlands and the state are in a tax sharing agreement. Some towns, largely the ones that can build on their share of that land, send revenue from a 3 percent hotel room tax to the state, while others — who largely can’t build on it — receive it. Kearny’s on the receiving end.
What are the towns that are on the receiving end doing with the revenues generated from the tax sharing district?
“Well they’re doing with the revenues precisely what we expect. They’re keeping taxes low, they’re running effective government,” said Assemblyman Gary Schaer.
The revenue collected has fallen short of projections over the years, leaving lawmakers and the governor to scramble to bail out the fund. Schaer was a prime sponsor of a bill the governor just signed into law to expand the 3 percent room tax. It now includes all hotels and motels in all 14 towns of the Meadowlands district.
“We believe through expansion of the hotel and motel occupancy tax that indeed we can reach those numbers without having to look to the state for bailout,” Schaer said.
The new law expands the geographical reach of taxation within the 14 town Meadowlands district. For instance hotels in South Hackensack, as of Aug. 1, must levy a 3 percent tax for each room it rents. That money goes to the state Treasury Department.
South Hackensack’s mayor says the tax sharing should include the big tenants of the Meadowlands to ease the burden on small towns.
“I’ve never been in favor of the tax sharing formula from the beginning, even before this tax on the hotels; it was used to offset it. We have approximately half of one percent of the land in the Meadowlands district, and yet we were paying 5 percent of the total tax sharing bill,” said South Hackensack Mayor Gary Brugger.
The hotel industry disapproves of the expanded tax base. In a statement it said, “Tourism used to be the state’s second largest industry and is now down to seventh. Why? We aren’t the only ones who have a beach, gaming, shopping, etc. If we are going to tax the hotel industry, we should put more money into tourism promotion.”
“We’re still extraordinarily competitive, the differential is minor and the results will be stellar,” Schaer siad.
NJ Spotlight budget and finance writer John Reitmeyer says mayors of the 14 towns are eager to see how this all works.
“From their perspective, they want the money to make this setup work. And so if it comes from this new tax, then it satisfied their local needs. But I think it will remain to be seen if this works, and I think if it works they’ll be in favor of it,” Reitmeyer said.
The tax sharers will know the results by the end of next June — the end of the current fiscal year.