Senate President: ‘We’re Not Massachusetts and, Thankfully, We’re Not California’; Aims for Uniquely Jersey Solution
TRENTON – Legislation Senate President Stephen M. Sweeney sponsored to enact a statutory 2.9 percent cap on property taxes was today passed by the Senate.
The bill (S-29) seeks to build upon the success the state’s current property tax cap has had in slicing annual levy increases by more than half over the past three years. It passed the Senate 23-17, and is awaiting a vote this evening in the Assembly.
“The Governor is finding out that facts are stubborn things, and the fact is the state’s current cap has been successful in stemming the growth in property taxes,” said Sweeney (D-Gloucester/Cumberland/Salem). “By lowering the cap further and tightening other parts of the law, we can continue to drive down property taxes across the board.”
Since the state implemented its four-percent cap in 2007, property tax increases have dropped demonstrably; last year, property tax increases averaged 3.3 percent, 17 percent below cap. Before the cap law was enacted, increases averaged roughly 7 percent.
Under the Sweeney plan, annual increases in property taxes would be capped at a maximum of 2.9 percent. The plan would allow for “cap banking,” meaning that communities that keep increases below the cap would be able to set aside the difference for future use should an emergency arise that would require a budget to increase property taxes above the cap.
The measure would allow exemptions from the cap for items such as pension obligations, a loss of state aid and health care – the current growth rate of which is between 20 to 25 percent annually. The current law’s waivers would be eliminated and replaced: schools could seek a waiver from state education officials for items directly tied to meeting core curriculum content standards; municipalities could ask for relief for items that would directly impact public health, safety and welfare. Sweeney said some exemptions are necessary for budget items whose growth cannot be independently capped, and whose inclusion under a hard cap would all but entirely crowd out spending for essential services.
“If the current cap can contain property taxes to their lowest increases in a decade, then a tighter cap can definitely push increases well below the Governor’s magic 2.5 percent goal,” said Sweeney. “But we need to be smart. A rush to chisel a hard cap into the constitution would inevitably lead to a situation where a town has to close its police department because the price of gas spiked.”
Sweeney also noted that the 2.9 percent cap would more closely mirror the actual rate of inflation, so towns can budget based on realistic cost increases.
The Senate President said that allowing communities to bank against the cap would give them greater long-term flexibility. He said towns and school districts would be more apt to budget below the cap if they know they can tap into the difference should an emergency arise.
“Storms tear the roofs off buildings, floods and blizzards happen, vital equipment breaks, and towns and school districts need to be able to meet the needs those occurrences create,” said Sweeney. “Cap banking will give leaders the real flexibility they need to ensure that they are not hamstrung from being able to properly provide for residents in a time of crisis.”
Sweeney said that by adopting the 2.9 percent cap, New Jersey would be crafting a solution unique to its needs. He noted that even proponents of Massachusetts’ 30-year-old cap have said New Jersey should think twice before mimicking its law, which has led to a yawning gap between wealthy and middle-class communities. And, he noted that since adopting a hard cap through Proposition 13 in 1978, California’s public schools went from being among the best in the nation to among the worst.
“New Jersey is not Massachusetts and, thankfully, we are not California,” said Sweeney. “We need a cap that will fit the needs of our state, our communities and our property taxpayers, and this proposal does.”