The Berkeley Heights PILOT Problem Part 3: The ‘Same Taxpayer’ Fallacy

The third in our series Correcting the Council-Aligned Narrative Misinforming Our Community

So one of the more simplistic arguments being used in the Council-aligned narrative on PILOTS and one that many residents feel borders on insult to intelligence is the ‘well the taxpayer is going to have to pay for it one way or another’ line that appears intended to convey the message of ‘don’t worry about it too much taxpayer since you’re going to end up paying the same amount.’

While it’s so fundamentally incorrect, its used likely because of it’s simplicity – it makes buying into the Council-aligned narrative easy.  And if we assume that those pushing out the narrative actually understand PILOT’s it comes across as willfully innacurate marketing of bad information.

Take a straightforward hypothetical.

Let’s assume a development (residential) brings in $1M in annual revenue.  Under a conventional structure that money is split between the School, Township and County while under a PILOT the Town keeps nearly all of it while the school gets none.

Now assume that development generates students.

The District still has to educate those students (along with the students that come from other conventional developments the Township claims somehow offsets pilots).

Teachers, classrooms, special education, transportation do not get a dime in support.

The Township gets the revenue, controls how its used and an interesting incentive is created and this is where the ‘same taxpayer argument’ falls apart.

Here’s a purely made up hypothetical.

The Township now has $1 million in revenue that it says goes to pay for a municipal building which creates an inherent flexibility within the budget. This flexibility allows it to even spend on discretionary items.

Again, purely as a hypothetical.

The Township then decides to fund something like a “community happiness” campaign or a politically connected public relations firm to post on Facebook or increased spending in connection to OPRA and a slew of other attorneys.

While framed as a positive initiative or a ‘needed service’- it is for all intent and purpose discretionary spending – money the taxpayer doesn’t directly get back in core services or a tax break – and in the final example something that is typically always used against residents and journalists seeking information.

This makes the Township very happy.

At the same time, the school district could be facing $1.6 million in student-related costs tied to those same developments without any of the revenue it would normally expect which pushes it into a set of uncomfortable choices – service cuts, reduced staff, increased class sizes or tax hikes.

So the structure incentivizes a system that allows for discretionary spending on the municipal side as a District struggles to fund core services.

That is far from ‘oh in the end the Taxpayer ends up paying the same thing anyway’ because every dollar the Township spends on a ‘happiness campaign’ or defensive legal maneuvers is a dollar that was generated by residential growth that’s being actively withheld from the classrooms that growth impacts.

This makes the District and the Taxpayer very sad.

The Township’s position is that PILOT revenue is committed to long-term obligations like the Municipal Complex debt which reinforces the point – that cash is being directed toward one set of priorities as the full obligation of educating students from those developments falls entirely on the school with no revenue to support it.  What’s the more important priority?  The education those students receive or a Municipal building?

So yes, the taxpayer is the same but the outcome isnt.

PILOTs don’t eliminate costs they simply  change where the money goes, create incentives on the municipal side to preserve flexibility and discretionary spending while leaving schools on their own to manage the bill.

And when that happens, residents can end up paying more.

As I wrote in part 2, students, working families and seniors will need to decide for themselves whether developer dollars not supporting the students that live in PILOT properties is fair to our community.