History

Introduction

County Boards of Taxation have been described as the current descendants of numerous efforts to achieve several aims:

  • development of inter-municipal equalization of assessments within counties and apportionment of shared budgets
  • effective supervision of the assessors within counties 
  • provide a review mechanism of individual assessments
  • adjudicate appeals from taxpayers against their assessments

Property tax is collected for the support of local government, i.e., the county, the municipality, the school district and the special district. The current property tax system follows a governmental chain of command from the municipal tax assessor, to the County Board of Taxation, to the New Jersey State Director, Division of Taxation. This chain was established by an evolution of government that long preceded English colonialism.

The system of infrastructure improvements in twelfth century medieval England required that a town must petition the sovereign for grants of murage (city wall repair), pontage (bridge repair), and pavage (street repair). The grants came in the form of a tax deduction, or a withholding of revenue owed to the Crown’s tax collector. This tradition carried over to the English colonial government of eighteenth century New Jersey, when towns were required to petition for legislative approval for public improvements.

Colonial Basis of Property Tax

In 1664, after 50 years of Dutch and Swedish occupation, England firmly wrested control of the land area we know as New Jersey Colonial “Nova Caesaria” (New Jersey) was organized into a feudal form of English government referred to as a proprietorship. Unlike a Crown colony, another traditional form of English government ruled directly by the Sovereign, a proprietary government was ruled by the English Crown through a Royal Charter. In this instance, the Duke of York (later King James II) granted, by Royal Charter, “Nova Caesaria” to English noblemen Lord Berkely and Sir George Carteret. The Proprietors were authorized to appoint public officials, create laws and courts, hear appeals and pardon offenders, issue decrees, and establish towns, ports, militias, and churches. Governors, at the behest of the proprietors, granted charters to the settlers to form towns. The first property tax was levied in the seventeenth century during the reign of Berkely and Carteret. The proprietors directed the governing body, the Assembly of the Province, “to lay equal taxes and assessments…upon all lands…as oft as necessary… in order to better support the public charge of the said Government…” On the “due date” of March 25, 1670, after a five-year moratorium or “tax holiday,” the proprietors imposed an annual “quitrent,” or property tax of ½ penny per acre. It was permissible to pay the tax in wheat at a slight reduction from the New York/Philadelphia price. Although the quitrent was relatively benign, there was a general refusal to pay, and the proprietors were defied for two more years.

In 1674, the New Jersey proprietorship was divided into two territories, East and West Jersey. East Jersey was subsequently divided into four counties. The establishment of counties was closely followed by The Tax Act of 1682. The Act required that each county select six men “to assess and make the rate for the respective counties…upon improved land and stocks.” The Assembly determined the quota of each county for the apportionment of the provincial tax. Although the tax was not to be an ad valorum tax, from this date forward, property tax was used to raise revenue for local purposes other than the needs of the central government of the Province. Listings were prepared and maintained reflecting ownership of taxable land, stocks, and the taxes owed. The last major taxation legislation of the seventeenth century was enacted in 1686. This legislation required each town to choose five men who were responsible for the determination and levy of rates for bridges and roads as well as the quotas for each county for the apportionment of the provincial tax. Taxpayers were to file returns to the local assessors who prepared a list of taxable property and submitted a report to the assembly. Following the English tradition, throughout the eighteenth century, New Jersey towns were still required to petition for legislative approval to make infrastructure improvements.

During this time, it was customary to make “certainties” (i.e., privately held stock or a career profession) also subject to taxation. Legislated tax rates on land and “certainties” were arbitrary and often inequitable, lacking any uniformity from one county to the next. For example, Middlesex County land was to be valued at a rate not more than 48 or less than 8 pounds. Monmouth County set the upper limit at 45 and the lower limit at 9 pounds. Morris County assigned a maximum rate of 20 pounds versus a minimum of 5 pounds.

In 1702, New Jersey became a Crown colony governed by a Royal Governor appointed directly by the crown. Until 1738 only one Royal Governor administered New York and New Jersey. From that point until the separation from England by independence, each colony had its own Royal Governor. The colonial tax evolution reveals a gradual rise from 1,000 pounds in 1702 to 3,000 pounds in 1770. Converted to dollars on an 1883 scale, that increase represents $3,300 to $10,000. Generally, half of the total tax revenue was earmarked for the government, and the remainder as follows: an additional $500 to $1,000 for the Chief Justice; the second Judge, the Clerk of Council, Doorkeepers, and the Clerk of Assembly received lesser amounts. Assemblymen received $.50 per day plus mileage and $250 for printing expenses. The Assembly acted as their own comptrollers, and duplicates of their accounts were sent to the English Rolls Office, where they remain today in perpetuity. A legislative “supply bill” of this era would grant a supply for government rarely exceeding two years, and set the quota to be raised. For example, the Act of 1756 required raising 3,000 pounds in tax revenue.

The bill set tax rates of: 1-30 shillings on householders 4-80 shillings on ferries 2-40 shillings on merchants 4-15 shillings on trading sloops 5-80 shillings on saw-mills 6 shillings on cartmen 4-80 shillings on grist mills 4 shillings on laboring men 4-40 shillings on fulling mills 1 shilling on a bought servant 30-70 shillings on furnaces 9 shillings on a coach 7-35 shillings on forges 3 shillings on a chaise 75 shillings on glass-houses 1 shilling on a chair 120 shillings on molasses stills 1-2 pounds on peddlers. The remainder of the quota was ordered to be raised by pro rata assessment on cattle (25 shillings per head); sheep (3 shillings per head); tracts of land of which a part is improved or cultivated, the lowest lawful assessment for 100 acres set at 8 pounds and the highest at 40 ($27 and $133 converted to 1883 value). The customary valuation for improved land in 1770 was approximately $60 to $70 (1883 dollars); an amount that barely exceeded the rental value at that time, according to then Governor Franklin.

Property Tax Under the First Constitution

Following the evolution from English colonial rule to the creation of a free state, the state Constitution of 1776 recognized the need to provide an avenue for the appeal of assessments. The Constitution established “Commissioners of Appeal,” who were “three or more judicious Freeholders of good character to hear and finally determine appeals relative to unjust Assessment in Cases of Public Taxation.” The Commissioners of Appeal, for the purpose of hearing appeals, were to sit at some suitable time or at a time to be by them appointed, and made known to the People by Advertisements. “Vacancies” were filled by the selection of “some other fit person” by the two chosen Freeholders of the township, in conjunction with one County Justice of Peace.

The Commissioners of Appeal were required to issue a “transcript” of their judgement to the appellant in any appeal where a reduction was granted. The transcript was considered a “sufficient voucher” when presented to the township collector for a tax bill reduction. Any costs incurred by the Commissioners of Appeal were to be assessed against the township if the appellant was successful, and against the appellant when no reduction was granted. The law set the wages of individual commissioners at “the Sum of Six Shillings per Day…” Commissioners of Appeal remained a part of the fabric of the property tax system until the advent of county boards of taxation.

The State Legislature formally incorporated counties and townships in 1798. County boards of freeholders and local governments were granted the power to “vote, grant and raise money” for government function. Township assessors were authorized to make assessments based on the total revenue required by the county.

The earliest township settlements, in Burlington and Monmouth Counties, constitutionally provided that their annual town meetings should “choose…three or more judicious freeholders of good character, to hear and finally determine all appeals, relative to unjust assessments, in cases of public taxation.” By an Act of February 21, 1798, it was indicated that “a township might be fined, however, because of the bad condition of its roads or malpractices of its tax collectors.”

The need for assessments and taxes to be properly recorded is reflected in a 1799 legislative act. Should revenue need to be raised for the state or counties, this enactment required the assessor of each municipality to attend an annual meeting and present a “duplicate”, showing the assessed value of real and personal property. The nascent appearance of the current process of equalization of property tax ratables in the aggregate also occurs in this 1799 legislation. At the county level, the equalization function was performed by the local municipal assessors acting as a body at an annual meeting. The law stated that the assessors were responsible to “compute and ascertain the whole value of real and personal estate...taxed according to the value thereof contained in the duplicates of the several assessors...and to fix and adjust the proportion…of tax to be levied and collected in each township…in proportion to said value; provided that if it shall appear to the assessors that the value of the property contained in any duplicate is relatively less than the value of other property in the county, they may, for that purpose only, add to such percentage as shall appear to them just and proper….” In 1801, taxable property was clearly defined by law to include “ all tracts of land held or owned by deed, patent, occupancy or otherwise; all houses and lots, all single men, horses or mules, neat cattle, shopkeepers, tanyards, fisheries, sawmills, gristmills, fulling mills, furnaces, rolling and sifting mills, ferries and toll bridges.” This development was still a far cry from the modern notion of the wealth of a community being the basis of the taxation structure, and a fair and equitable tax policy.

The Constitution of 1844

The New Jersey Constitution of 1844 set forth a new policy for taxation that read: “Property shall be assessed for taxes under general laws and by uniform rules.” A new tax system was soon adopted which aimed to establish equality in assessments and tax levies. However faulty the law may have been, it marked the beginning of legislative responsibility under the Constitution for the system of taxation in the state.

In 1851, an important change was made. All property, real and personal, was to be taxed upon an equal ratio according to actual value. However, this law failed to define a standard of value.

Governor Fort, in his annual message of 1852, attacked the provision of the tax law that exempted the property of citizens up to the amounts of their debts owed outside the state. He advocated the taxation of all fixed property at the point where located. Governor Fort also stated that “some better mode of obtaining a fair and equal assessment of real and personal estate should be devised.” He urged the establishment of township boards of revision consisting of three elected “reputable citizens,” to meet annually with the assessor for the purpose of equalization and correction of real and personal property valuation. Governor Fort further recommended the establishment of a “county board of

revision” to perform similar functions on a countywide basis. In 1875, the New Jersey Constitution of 1844 was amended to provide that “property shall be assessed for taxes under general laws and uniform rules according to its true value.” The immediate effect of this amendment was to require the assessment of railroad property at true value instead of cost, and the long-term results were negative. First, the law froze the inadequate techniques of property taxation into the fundamental law of the State. Secondly, in 1884, when the assessment of railroad and canal property was taken from local assessors and placed with a State Board of Assessors, the “true value” standard resulted in heavy discrimination against property assessed at the State level.

The supervision of assessors, a present day function of the county tax board, was originally designed for implementation at the state level of government. The State Board of Taxation, established in 1891, was legally authorized to order the reassessment of a property that it considered to be inaccurately assessed. If an assessor refused to comply, the board was empowered to “appoint some other person” to render a new assessment. The State Board of Taxation was also required to investigate the methods used by local assessors in calculating their values. Equalization, another duty of the current county boards of taxation, was carried out on the local level. Implemented with no objective guidelines set forth for the equalization of the figures in the assessor’s duplicate, the process pitted the local assessors against one another for a share of the county budget. An article recorded in the New Jersey Courier newspaper, dated September 11, 1902, concerning the annual meeting of the Burlington County Board of Assessors indicated that it was “resolved to add ten percent to the real and personal valuations reported by the assessor of Union Township.” And further “resolved that the clerk notify absent assessors to appear at the office of the county clerk at an early date and make affidavit and subscribe their name to the Abstract of Ratables as required by law. Resolved that it shall be the duty of each assessor to bring to the annual meeting an accurate table of the footings of his duplicate arranged in the order of this abstract of ratables and showing each item separately… .” From this account, we can only surmise that the Union Township Assessor was possibly absent, and was arbitrarily penalized by the body of assessors in attendance. In 1905, the State Legislature adopted the Hillery Act, a maximum tax rate law instructing the counties to impose a tax rate not to exceed 50 cents per hundred dollars of assessed valuation. In cities with a population greater than 50,000, the tax rate for county, schools, and local purposes was capped at $1.70 per hundred dollars. Likewise, municipalities with a population less than 50,000 were limited to $1.50 per hundred dollars.

The State Board of Taxation was abolished in 1905 in favor of the formation of a State Board of Equalization of Taxes. The first annual report of the new board in 1905 featured a statement from member, E. A. Armstrong, suggesting that a “Board of Assessors” should be created in each county to assume the local assessment of all property on a countywide basis. The state board members felt that this change would be the key to equal distribution of the tax burden and would quiet complaints of “municipalities against each other.” Subsequently, in 1906, state legislation was enacted creating the county boards of taxation.

The State Board of Equalization of Taxes, in their annual report for 1906, indicated that the exercise of legal powers granted to county boards of taxation in the statutes “justifies to the critical observer the belief that the work of these County Boards will be of powerful influence in rehabilitating the taxing system of New Jersey. For example, the State Board issued an order directing that, with the exception of farmlands, land and improvements thereon should be valued separately, and that the value of the improvements should be placed in separate columns in the assessment list and duplicate.” Continuing, the report remarked that “the greater accuracy and uniformity of valuations obtainable by the employment of this method is obvious, and most of the assessors in the State complied with the direction... In a number of instances…assessors, through negligence, indolence or even obstinacy, continued in the old-fashioned, haphazard manner, and the State Board was unable to discover and correct all such instances… the books of the assessors in each instance come directly under the eyes of the County Boards, and this direction has in consequence been much more obeyed.”

Governor Stokes, in August of 1906, addressed a letter to each new county board requesting that a “square deal” be given to every taxpayer. He warned that county boards are “dealing with what next to life and limb is a most sacred right… that of property. The power of taxation is practically the power of confiscation. The opportunity afforded you for rendering service to the people is one that should enlist your most earnest and conscientious efforts.” The governor instructed that the boards “…like the courts, must conduct their business as to be beyond suspicion of permitting any kind of favoritism.”

An article in the Cape May Wave, June 1906, reported that assessors were surprised, upon being instructed at a meeting with the county tax board, that they were to assess all property at its “full valuation.” The assessors also received a document to distribute to individual taxpayers, consisting of a voluntary reporting list of assessable items such as: number of mortgages held; bond holdings; bank stock; jewelry; bank accounts; cash on hand; and automobiles. Taxpayer compliance with this enterprise was not mentioned.

The newly created county boards also had their share of detractors, as evidenced by this excerpt from an editorial in a 1906 edition of a southern New Jersey newspaper: “Instead of remedying the irregularities in valuation and assessments, the bill (creating county boards) promises to make these more unjust…they (county boards) may never have seen the property in question…does an assessor from the northern part of the state know the true valuation of a property in the southern part, which he has never seen? The man…might as well be a resident of California and assess by correspondence…”

Meanwhile, the promotion of uniform treatment and the location of all real property was further advanced by the Tax Map Act of 1913, which directed municipalities to chart the discovery of land and buildings by block and lot for the purpose of assessment. If a municipality failed to voluntarily create and maintain a tax map, the State Department of Treasury was authorized to draw one at the expense of the municipality. By 1953, 70 percent of municipalities had submitted tax maps, of which 70 percent recorded property by block and lot.

In 1916, at a conference of state taxing officials hosted by the State Board of Taxes and Assessments (successor to the State Board of Equalization of Taxes), Governor James Fielder remarked in his opening address: “…the County Tax Boards are very much more in favor…they were originally designed for political purposes…the real purpose…was to keep the tax rate down so that the average tax rate would be low for the benefit of the railroads of the state…that reason…has disappeared…the County Tax Boards have given intelligent thought and study to the performance of their duties…I would enlarge their powers and their scope…I would give the County Tax Board the right to remove a negligent and incompetent or corrupt assessor….”

For many years, County Boards of Taxation operated essentially as 21 separate agencies. Each County Board of Taxation drew up its own rules, developed its own forms and followed its own procedures. Difficulties concerning either the administration of the property tax or appeals from the property tax were often resolved by one County Board of Taxation commissioner, or secretary (now administrator), contacting a commissioner in another county for advice. This led first to informal meetings between members and secretaries of county boards of taxation, and eventually to the formation of an association called the New Jersey Association of County Board of Taxation Commissioners and Secretaries. Although no written record can be found of the early days, the association probably began meeting in 1947.

The Constitution of 1947 The tax clause of the Constitution of 1947 (Art. VIII, Sec. 1, Para.1), reads: “Property shall be assessed for taxation under general laws and by uniform rules. All real property assessed and taxed locally or by the state for allotment and payment to taxing districts shall be assessed according to the same standard of value; and such real property shall be taxed at the general tax rate of the taxing district in which the property is situated, for the use of such taxing districts.” Enabling legislation further pushed the property tax system toward the goal of uniform treatment statewide.

In the late 1940’s, at the request of Aaron Neeld, Director of the Division of Taxation, a committee composed of members of the Association of County Board of Taxation Commissioners and Secretaries began meeting on a monthly basis in Trenton. Meetings were originally held in the Stacy-Trent Hotel that stood on the present site of the Division of Taxation Building. The committee, called the Director’s Co-operating Committee of County Board of Taxation Commissioners and Secretaries, was created to advise the Director in property tax matters and policy. A poll of county tax boards in the early 1950’s regarding any activity undertaken to equalize the ratables of municipalities within their jurisdiction received such replies as “None that I know about,” and “There have been no such studies to my knowledge,” to explanations of a rudimentary study of sales prices versus assessed values in just two counties.

In the mid 1950’s, County Boards of Taxation were provided a tool for effective equalization between municipalities within the counties. In response to a Supreme Court decision concerning equalization and the resulting enabling legislation, the State School Aid Act of 1954, the Director of the Division of Taxation was to promulgate a Table of Equalized Valuations to be used in the distribution of state school aid. The Director was given the authority and responsibility to develop and implement methodology to produce a Table of Equalized Valuations for all the municipalities in the state.

The advent of the state assessment/sales ratio program in 1954 finally gave County Boards of Taxation the means needed to accomplish an effective equalization of assessed values of each municipality within their respective jurisdictions. County Boards of taxation proceeded to use the assessment sales database and implement equalization between municipalities. By 1955 distribution of county budgets in proportion to respective municipal equalized valuations was an accomplished fact.

Uniformity of property tax procedures in county tax administration was enhanced with the adoption of statewide uniform rules by County Boards of Taxation in 1974. Under legislation enacted that year and in cooperation with representatives of the Association of County Board of Taxation Commissioners and Secretaries, the New Jersey State Bar Association and the Association of Municipal Assessors of New Jersey, rules were promulgated by the Director of the Division of Taxation. As a result of legislative changes and judicial decisions, the rules have been amended and updated from time to time, but are still in effect today. These rules, set forth in the New Jersey Administrative Code, ensure that property tax laws are administered uniformly and that a taxpayer moving from one county to another will receive substantially the same treatment, before whatever county board of taxation that he might appear.

Statutory revisions in 1979 raised the professional level of training for County Boards of Taxation. Each person appointed to a County Board of Taxation is now required to complete educational training within the first 24 months of a full appointment to the board. An individual appointed to the position of County Tax Administrator must have a valid tax assessor’s certificate and four years of experience in property tax administration on a governmental level. A newly appointed County Tax Administrator must complete a required training course within 24 months. Promotion of uniformity, co-operation, and compliance with statutory provisions through communication among county tax boards and the Director, Division of Taxation continues today. The New Jersey Association of County Tax Boards Inc. meets monthly and representatives from the Division of Taxation are invited to the meetings. The Association sponsors an annual conference to promote continuing education in the field of property tax. A representative of the Association is appointed to the Director’s Cooperating Committee and a representative serves on the Tax Assessor Continuing Education Eligibility Board.

County Boards of Taxation are such an integral part of the administration of the property tax in New Jersey that it is difficult to envision how the tax remained functional, or even continued to exist prior to their formation. County Boards of Taxation have earned for themselves a vital and essential position in the efficient administration of the property tax in New Jersey.


REFERENCES

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