Subjects most State property to local property taxation beginning on July 1, 2026.

S3326

SENATE, No. 3326

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 5, 2026

Sponsored by:

Senator� SHIRLEY K. TURNER

District 15 (Hunterdon and Mercer)

SYNOPSIS

���� Subjects most State property to local property
taxation beginning on July 1, 2026.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning the taxation of State property and amending
R.S.54:4-3.3 and
P.L.1971, c.370.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� R.S.54:4-3.3 is amended
to read as follows:

���� 54:4-3.3.�
a.
� Except
as otherwise provided by article 1 of this chapter (s.54:4-1 et seq.),
[
the property
of the State of New Jersey;� and
]

the property of the respective counties, school districts and taxing districts
used for public purposes, or for the preservation or exhibit of historical
data, records or property; school district property which is leased to a
nonprofit organization which is exempt from taxation under R.S.54:4-3.6, for
use by that organization in its exempt functions; school district property
which is leased to another� board of education or governmental agency;� and
property acquired by any municipality through tax title foreclosure or by deed
in lieu of foreclosure, if not used for private purpose, shall be exempt from
taxation under this chapter, but this exemption shall not include real property
bought in for debts or on foreclosure of mortgages given to secure loans out of
public funds or out of money in court, which property shall be taxed unless
devoted to public use.� The lands of counties, municipalities, and other
municipal and public agencies of this State used for the purpose and for the
protection of a public water supply shall be subject to taxation by the
respective taxing districts where situated, at the taxable value thereof,
without regard to any buildings or other improvements thereon, in the same
manner and to the same extent as the lands of private persons, but all other
property so used shall be exempt from taxation.� Property, the title to which
is in the Morris Canal and Banking Company, in trust for the State, shall, so
long as the title is so vested, be deemed to be the property of the State
within the meaning of any tax law.

����
b.��� (1)� Commencing on
July 1, 2026, notwithstanding any law to the contrary, the tax exempt status of
property of the State and its agencies and authorities created by the State
shall cease and the property shall be assessed and taxed locally in the same
manner as other property, except when a certification is filed with the
municipal tax assessor, by the appropriate official, that removal of the tax
exempt status of a specific parcel would impair the rights of bondholders
pursuant to a covenant entered into prior to July 1, 2026.� Property for which
a certification has been filed shall continue to be subject to the requirements
of P.L.1977, c.272 (C.54:4-2.2a et seq.) regarding State payments in lieu of
taxes.

����
(2)�� Liens for delinquent
taxes against property owned by the State or its agencies or authorities
created by the State shall be enforced in the same manner as all other tax
liens.

����
(3)�� The State shall not
offset any property taxes due and payable with a reduction in State formula
aid, except with respect to State payments in lieu of taxes for properties
subject to taxation.

(cf: P.L.2016, c.65, s.2)

���� 2.��� Section 2 of P.L.1971,
c.370 (C.54:4-3.3b) is amended to read as follows:

���� 2.��� Where real property is
acquired by the State or by a State agency, or by an authority created by the
State, by purchase, condemnation or otherwise, such property shall
[
become tax
exempt on January 1 of the calendar year next following the date of
acquisition, provided that the tax assessor of the municipality in which such
property is located is given written notice of the acquisition by certified
mail on or before January 10 of said calendar year next following;� provided
further that if real property is acquired between January 1 and January 10
inclusive and the prescribed notice is given on or before January 10, such real
property shall become tax exempt as of the date of� acquisition
]

continue
to be taxable
.

(cf: P.L.1971, c.370, s.2)

���� 3.��� This act shall take
effect immediately.

STATEMENT

���� This bill would end the tax
exempt status of property owned by the State, its agencies, and authorities
created by the State, although the tax exempt status of property owned by local
units of government would continue.� State property would become taxable on
July 1, 2026, except when a certification, prepared by an appropriate official,
is filed with the municipal tax assessor stating that removal of the tax exempt
status of a specific parcel would impair the rights of bondholders pursuant to
a covenant entered into prior to July 1, 2026.� Those parcels would continue to
be subject to the law concerning State payments in lieu of taxes,
N.J.S.A.54:4-2.2a et seq.

���� If the State becomes
delinquent on the property taxes due and payable for a parcel, then the tax
lien would be enforced in the same manner as all other tax liens.

���� This bill is intended to
require the State and its agencies and authorities to pay their fair share of
the local tax burden so that the local residents and businesses are not unduly
burdened by the cost of subsidizing State government operations.� The bill also
prohibits the State from reducing a municipality's formula aid in an attempt to
offset the new property tax liability due and payable to that municipality,
except with respect to State payments in lieu of taxes for those properties
that will now be subject to taxation.