Cutting “In Lieu” Payment Breaks Faith

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by Michele S. Byers, Executive Director, New Jersey Conservation Foundation

With New Jersey’s unprecedented budget deficit, Governor Chris Christie is proposing unprecedented spending cuts.  But cutting and possibly phasing out the Payment in Lieu of Taxes program breaks trust with the public and will discourage towns from protecting their critical open spaces and natural lands.

When open space or farmland is acquired for preservation purposes by the state or a non-profit group, it usually becomes “tax exempt” and comes off the local property tax rolls.  The state’s Payment in Lieu of Taxes program, or PILOT, was established to mitigate the loss of tax revenue from preservation by providing annual payments to the affected municipalities. Funding for the program comes out of the voter-approved Garden State Preservation Trust.


For some local governments, the loss of these PILOT payments would deal a significant financial blow because a very high percentage of their town is preserved land.

When the Garden State Preservation Trust was formed in 1999, it continued a previously established practice of compensating municipalities for property tax revenue that was lost when land was preserved. These PILOT payments are especially important for rural communities with large percentages of tax exempt open space and few other sources of property tax revenue.

In 2009, nearly 729,000 acres of state lands and 32,000 acres of conservation and recreations lands, all permanently protected and owned by nonprofit organizations, were eligible for PILOT payments.

Today, 26 municipalities receive over $100,000 in PILOT funds.  And even though it’s significant revenue for them, the total cost of the PILOT payments is a very minor portion of our state’s budget.

Governor Christie has proposed to cut $3.5 million out of the total PILOT budget of $9.8 million, and his budget describes this decrease as a “phase out” of the program. The implication is that the program may be permanently eliminated. But it makes little sense to eliminate a program that supports and encourages the state’s preservation program.


The loss of PILOT payments to New Jersey towns would have a chilling effect on future decisions on open space preservation.  Local officials would resist preserving additional lands, no matter the importance of their conservation and recreation values. And state elected officials would likely have difficulty supporting future open space preservation measures in the Legislature.

For very little money invested (in state budget terms), the PILOT program returns a huge benefit.  It provides towns with an incentive to preserve land, and builds good will toward preservation programs.

Few would dispute that cuts to the state budget are needed, and fewer still envy the difficult choices our governor faces.  But the PILOT program is worth saving.  And if cutbacks must be made, they should be done in a ways that encourage and foster the preservation of lands in this state we’re in.

I hope you will consult New Jersey Conservation Foundation’s website at or contact me at, if you would like more information about conserving New Jersey’s precious land and natural resources.

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