COMMITTEE ON TAXATION AND FINANCE
RECORD OF PROCEEDINGS

STATE OF NEW JERSEY CONSTITUTIONAL CONVENTION OF 1947
COMMITTEE ON TAXATION AND FINANCE
Tuesday, July 1, 1947
(Morning session)
CITY OF NEW BRUNSWICKTax Exempt PropertyBreakdown of Rutgers’ Exempt Property for 1945:

Auditing: Our century-old Constitution reflects a general lack of appreciation of the character and advantages of the independent Auditor in controlling fiscal matters. In Article VIII, the present Constitution provides that ‘The Secretary of State shall be ex-officio an auditor of the accounts of the treasurer, and as such it shall be his duty to assist the legislature in the annual examination and settlement of said accounts, until otherwise provided by law.’ In 1933 the Legislature attempted to correct prevailing defects by creating the office of the State Auditor, his duties to include the post-auditing of the accounts of the State and all state departments, institutions, agencies and political subdivisions. At the same time, the office of State Commissioner of Finance was created to satisfy the need for a financial manager. In recent years, the need for more adequate supervision of municipal affairs became acute, so that in 1938, under the Local Government Acts, a Department of Local Government was established for the purpose of auditing and supervising the financial operations of municipalities.

The addition of statute upon statute through the years has resulted in greater confusion instead of simplification of the state fiscal structure. There is no proper balance between the Legislature and the Chief Executive in managing the State’s finances. The function of post-auditing touches upon the financial relationship of the Legislature and the Governor so greatly that in my opinion it should be permanently incorporated within the revised Constitution.

Pre-Auditing and Post-Auditing: We cannot overemphasize the importance of post-auditing in any sound system of budgetary control, yet the value of this function has been more or less neglected in New Jersey. In the past, there has been no clear line of demarcation between the administrative functions of the Comptroller, and the functions of post-auditing. In preparing the revised Constitution, it is my belief that we should distinguish carefully between pre-auditing and post-auditing. If the Comptroller is to have the administrative duties of an executive then he should be appointed by the Governor and should be responsible to him. The post-audit of state finances should be conducted periodically by an independent State Auditor appointed by and responsible to the Legislature. On the other hand, if the Comptroller is to be appointed by and responsible to the Legislature, then he should be the official post-auditor and accordingly should be removed from all executive duties, including pre-auditing.

In reply to those persons who fear that reorganization of the state fiscal structure would centralize responsibility and power in the Chief Executive and a few other officials, I say that proper emphasis upon the position of the post-auditor would provide the Legislature with the desired means of a check upon the Executive and his subordinates in financial matters.

Revenue System: The present revenue system in New Jersey may be criticized as being inequitable and outmoded. Taken as a whole, the revenue system is not sufficiently flexible. Because of existing exorbitant taxes on real estate, many property owners lost their properties to mortgagees or municipalities prior to World War II. Real property bears a greater share of the tax burden than it does in other comparable states. Many of the municipalities in our State are in serious condition, because of exorbitant realty taxes, and are finding it more difficult to collect these taxes each year.

Tax Clause: Our old Constitution provides in Article IV, that ‘Property shall be assessed for taxes under general laws, and by uniform rules, according to its true value.’ We all know that this constitutional law is being grossly disregarded, since not all property legally taxable is being taxed. Some real property and much personal property are not being listed. Property is being assessed neither at its true value nor at any uniform percentage of true value. We are faced with a serious condition of inequality in the assessment of property throughout the State.

Many tax authorities have been of the opinion that if a modern state

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