Struggling U.S. Capitals Seek More From Tax-Exempt Landowners

Bloomberg Businessweek reports:

From New Jersey to Nebraska, capital cities are crying poverty as states close $103 billion in budget deficits, partly by slashing local aid. Governments own much of those cities’ real estate and pay only a fraction of the revenue that would be due if the land were in private hands.

In Trenton, half of the property is state-owned, limiting the city’s ability to generate revenue. After a 23 percent aid cut in fiscal 2011, the former industrial hub with the slogan “Trenton Makes, The World Takes” was expecting to receive $24 million, or 13 percent of its revenue, from the state in 2012. It may not get any after Governor Chris Christie, a first- term Republican, slashed funding for a program that helps distressed cities to $10 million from $149 million.

“Cities like Trenton can’t survive enormous budget cuts when the biggest property owner in the city is exempt from paying taxes,” Assemblywoman Bonnie Watson Coleman, a Trenton Democrat, said in a June 10 statement.

Just a reminder to Paul Krugman and Princeton: Congress may one day tax you.