Will Governor Sign Measure to Allow for a Municipal Tax to Fund Arts and Culture?

John Reitmeyer | January 6, 2020 | Budget
The bill would let municipalities establish a special property tax to pay for a range of programs — if local voters gave go-ahead
Credit: Newark Arts
Newark Arts works to bring arts and culture to the whole community.

It’s now up to Gov. Phil Murphy to decide whether New Jersey municipalities should be granted the power to levy a special property tax to fund local cultural and arts programs.

A bill seeking to give that new taxing authority to municipal officials has already cleared both houses of the Legislature and is now sitting on Murphy’s desk awaiting final consideration.

Under the proposed legislation, municipal officials would be granted the option to establish the new tax for arts and cultural programs but they would not be required to do so. In addition, the tax could only be created if a majority of voters in a community vote for approval.

Sponsors of the legislation have pointed to the role that vibrant arts and cultural programs can play in local economies, citing theaters and museums as places that draw people into communities and help support local businesses. But critics have cited New Jersey’s already high property-tax bills among their concerns with the measure.

Under current state law, municipal officials can levy general property tax rates to support local government operations like road maintenance, law enforcement and other municipal services. They can also levy separate property taxes to support several specific activities. For example, about half of New Jersey’s municipalities, and all 21 counties, currently levy a small tax to preserve open space, often equal to a few pennies for every $100 of assessed property value.

Unspecified amount

The legislation now awaiting action from Murphy, a Democrat, would permit local officials to establish a new property tax to support cultural and arts programs in the same fashion. (While the bill does not specify an amount, a one-cent arts tax levied on a $300,000 house would cost the owner $30 in additional property taxes annually.)

If local officials want to establish the new tax, the bill would require them to specify a rate of taxation or amount to be raised. It would also require the proposed tax to be put before voters in the form of a public question. The public question could also originate within the community itself if supporters can gather enough signatures to equal at least 15% of the total number of voters who participated in the previous municipality-wide general election.

If voters approved the special levy, the bill calls for the revenue that would be raised by the new tax to be deposited into a designated “arts and culture trust fund.” The bill defines “arts and culture” as activities that include performance, visual and fine arts, music, dance, graphic design, film, digital media and video; it also includes architecture and urban design, humanities, literature, arts and culture education, historic preservation, museum curation, crafts, and folk arts.

The revenue generated could only be used for a different purpose if a municipality goes into “fiscal distress” based on the determination of the director of the state Department of Community Affairs’ Division of Local Government Services, according to the bill.

As it moved through the Legislature over the last several months, the tax proposal picked up support from local arts groups and the New Jersey State League of Municipalities. But groups advocating for lower taxes and other critics noted that New Jersey property tax bills are already at a record high, with the average property tax bill rising in 2018 to $8,767. The state’s property taxes rank among highest in the nation, according to the Washington, D.C.-based Tax Foundation.

Lawmakers voted along party lines

The Democratic-sponsored bill — which would take effect immediately — won final approval in the Senate and Assembly in mid-December. The votes in both houses, each controlled by Democrats, largely reflected party lines.

Credit: NJTV News
Sen. Joe Cryan (D-Union)

“Theaters, museums and other cultural attractions and activities are significant parts of local communities,” said Sen. Joseph Cryan (D-Union), one of the bill’s primary sponsors. “They are good for business and they are meaningful expressions of a community’s cultural identity. This will give local residents the ability to authorize dedicated funding to support the arts in their home communities.”

“If we provide assistance to the arts, we can support and sponsor local artists to expand their work and expose many New Jersey residents and people who visit our state to our culture and the works of art our artists create,” added Sen. Brian Stack (D-Hudson), another primary sponsor.

It’s unclear what Murphy is planning to do with the bill as the current legislative session winds down. If he doesn’t sign it into law by Jan. 14 when the lame-duck session ends, it would have to be redrafted and reintroduced in the next legislative session. And if the governor has any misgivings about specific language in the bill and wants to issue a conditional veto so that lawmakers could tweak the legislation accordingly there’s little time left for them to consider any such recommendations.

The governor’s office did not respond to a request for comment on Friday.