On June 15, The League of Women Voters of New Jersey proudly co-sponsored a public forum on capping property taxes with Bergen Community College’s Institute of Public Policy and The Record. The following entry is a brief summary of the forum discussion and is written by LWVNJ Vice President, Michelle Bobrow, who was in attendance.
Property Tax Caps: The Massachusetts Experience Informing the New Jersey Discussion” was the first in a series of public programs on the newly-formed Bergen Community College Institute for Public Policy. Moderator Richard Keevey, director of the Policy Research Institute for the Region, Princeton University, opened with the observation that Governor Christie had no choices about the budget, with no projection for any rosier outlook; he and we are captive to past bad decisions, with school and municipal funding.
Jon Shure, former director of the New Jersey Policy Perspective, discussed the need to reapportion state revenues among sales, income and property taxes. The 1988 proposal to rely on a more broad-based tax was rejected. Caps force wholesale changes without targeting priorities. The difference in the Massachusetts tax cap, enacted 30 years ago, is that the state increased state aid to municipalities at the beginning, which New Jersey does not plan to do. Also, Massachusetts was experiencing declining school enrollment, as opposed to New Jersey’s projected continuing increase in school population.
Josh Barro of the Manhattan Institute, felt that fees could be substituted for taxes, with lower fees receiving differential treatments.
Jay Ash, City Manager of the town of Chelsea for ten years, felt that lower property tax revenue makes local government more efficient. The 2.5% limit can be shifted between commercial and residential areas. With an average inflation rate of 3.9% and an average increase in health insurance of 10%, maintenance of infrastructure has been deferred. Capital investment and healthy reserves are sacrificed. The ability to override the cap by voter approval has led to disparity between small towns and cities, between rich and poor.
Charles Lyons, superintendent of a school district for 23 years, feels that the cap law is very popular. An additional levy on new growth has led to a rate of 4-4.5%. The law includes elimination of binding arbitration, unfunded mandates. It has encouraged local collaboration for revenue and fiscal planning, and a focus on long range planning. Also, the state is mandated to remit to municipalities 22-24%, on which municipalities can rely.
One of the interesting observations is that Massachusetts eliminated county government, but kept those geographic areas for court systems. Also, in Massachusetts the cap is mandated legislatively, while the proposal for New Jersey is by Constitutional amendment. Constitutional amendments are exceedingly difficult to change, while a law can be amended, rescinded, etc., if in the future it is deemed to be unworkable or unnecessary.
Two states, two similar approaches to a major problem, with differing means for achieving the goals.
Recent coverage of the property tax cap debate in NJ
“N.J. Assembly passes alternative property tax cap bill” – 6/29/2010
“N.J. Senate approves 2.9 percent property tax cap bill” – 6/28/2010