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GSCS understands the need to spend conservatively and believes that reasonable caps can work; the conversation around 'hard caps' to date suggests that only enrollment growth will be considered outside the new cap - in the meantime health benefits and utility costs (to name some) continue to far outpace a 4% proposed cap...Trenton must address these cost drivers beyond local school district control now, otherwise quality education would undoubtedly erode under this kind of proposal. While also critical of the state for not including yet coming up with a new school funding formula that would look to address 5 years of flat formula funding, GSCS notes that it had suggested to state ledership as early as last spring that developing a new and adequate formula for all communities would take perhaps more time than the state was projecting and that an 'interim' formula for a year might be needed. GSCS also pointed out that stakeholders & the public should be interactively involved any interim process. At this point the new formula seems to be put on hold and some kind of piecemeal formula may be in the wings. As of now, neither proposed formula nor temporary formula aid & distibution impacts have been aired in public. GSCS is quoted in attached STAR LEDGER and RECORD articles.
Democrats: Link tax credits to caps
Party leaders say 20% cut for residents must include 4% ceiling on property levy increases
Thursday, January 04, 2007
BY DUNSTAN McNICHOL AND DEBORAH HOWLETT
Star-Ledger Staff
Homeowners will not see the tax credits of up to 20 percent lawmakers have promised them this year unless the Legislature also approves tight limits on future property tax increases, the state's Democratic leaders said yesterday.
During a rare joint news conference, Senate President Richard Codey (D-Essex) and Assembly Speaker Joseph Roberts (D-Camden) joined Gov. Jon Corzine to announce they have agreed on the need to enact a 4 percent annual limit on local tax increases.
Corzine has been pushing for the cap, and Codey and Roberts said yesterday they will link it to their plan for property tax credits for most homeowners.
"If you're going to vote for the tax credit program, you're going to have to vote for the caps as well," said Codey.
State tax records show the impact of a 4 percent limit on annual increases could be profound.
Since 2000, when the total amount school districts and local governments collected through property taxes stood at about $14.2 billion, annual increases in collections have ranged from a low of 5.6 percent in 2001 to a high of 7.5 percent in 2003.
Last year, collections rose 7.1 percent, bringing the state's total property tax bill to $20.95 billion. Had a 4 percent limit been in place last year, property tax collections would have been reduced by a total of $606 million, the tax records show.
Yesterday's agreement among the governor and legislative leaders raises the stakes for lawmakers as they prepare to return from their holiday break and resume their push to rein in the property taxes that critics say are driving homeowners out of
Facing election this year, lawmakers are enthusiastic about the proposal to give tax credits ranging up to 20 percent to homeowners earning less than $250,000 a year. But the proposal to impose tax limits on local government officials and school boards have sparked opposition.
"We have a concern that in the name of property tax relief the Legislature and the governor are wielding a broad ax, and not working this through so it would really help communities," said Lynne Strickland, executive director of the Garden State Coalition of Schools, a lobbying group for scores of upper- and middle-income school districts.
The New Jersey State League of Municipalities yesterday urged mayors to contact lawmakers to oppose property tax caps.
"Please let your State Senator and your Assembly representatives know how an artificial 4 percent levy cap would force you to cut programs and services," the League's Executive Director, William Dressel, said in a letter to mayors yesterday.
To counter such resistance, Roberts has dispatched Assemblyman John McKeon (D-Essex), the mayor of
"The speaker asked me to become engaged and help wade through the component of fine tuning the legislation in a way that is not under the glare of lights at a public hearing but rather in a sleeves rolled up room to hear from individuals most affected," said McKeon.
McKeon said meetings will be held with school officials next Tuesday, when lawmakers will be in
The drive to enact wide-ranging property tax reform, which stalled during the Legislature's last sessions in 2006, will resume Monday when both the Senate and Assembly are in session.
Codey said lawmakers will likely take votes on a bill to set up an appointed state comptroller to monitor local and state spending (A2) and another to set up a 10-year trial program in which administration for all the school districts in one county would be consolidated into a single county-wide school board (A8).
All three legislative leaders agreed there is still a lot of work remaining.
"This will unfold through the month of January as we work with the Legislature," said Corzine. "But we have a concept which we believe works, and we're going to go out and sell it."
Staff writer Tom Hester contributed to this report.
New hurdle to tax relief: caps on local spending
Thursday, January 4, 2007
Governor Corzine and leaders of the Democratic-controlled Legislature announced the arrangement Wednesday as part of package of measures they say will get the now-stalled property tax reform effort moving.
Wednesday's agreement essentially ties the fate of the promised credit to a plan that caps local tax rates. Many politically powerful groups -- including the public school teachers union, local officials and municipal workers -- have opposed such caps because they essentially limit spending.
"We have a concept that we believe works and we have to sell it," Corzine said.
The agreement covers two of the biggest reform proposals but the third, a new way to pay for public education, will likely take several more months of work, Corzine said.
Democrats had hoped to distribute aid to public schools in a way that would allocate $1 billion more to suburban districts, but a new formula will not be in place by April, when residents vote on their school budgets. The issue is critical, since the cost of running schools represents the largest piece of the property tax bill.
Legislators are still drafting the bill that would limit tax increases by local governments. It will likely include several exemptions and provisions for local governments to exceed the 4 percent increases now proposed, legislators said.
"The governor has framed the issue in a very realistic and sustainable way," said Assembly Speaker Joseph Roberts, D-Camden. "Our goal has to be property tax relief and property tax credits for the overwhelming majority of the state's residents."
Caps on local tax rates and spending have long been politically troublesome. Local unions and officials often oppose such measures because they make it difficult to create new programs, hire new workers and offer higher salaries and benefits.
The 20 percent tax credit would go to property owners earning $100,000 a year or less. Those earning $150,000 or less would get a 15 percent credit and those earning $200,000 or less would get a 10 percent credit.
The promised 20 percent tax break for New Jersey homeowners would mean a windfall for about 900,000 households in Bergen, Passaic, Morris and Hudson counties that earn $100,000 or less, or slightly more than 70 percent of property owners in the region, according to 2005 U.S. census estimates. Statewide, 1.4 million households would be eligible for the break, according to legislators.
The tax credit could cost up to $2 billion, with most of the money coming from an increase in the sales tax passed last year combined with $900 million that would have been spent on the Homestead Rebate program.
More money will come from measures designed to cut spending at the state and local level.
"That's why reforms are such an important part," Corzine said.
Corzine's administration is considering ways to cut state debt by selling off property and other assets including the New Jersey Turnpike and the
But that decision is at least several months away and any money from such deals could take years to reach the state treasury. Officials insisted that money from any such sale was not part of the property tax deal.
"Absolutely, positively not," said Senate President Richard J. Codey, D-Essex.
When Corzine called legislators last summer and told them to get working on reforming the nation's highest property taxes, he gave them a December deadline to produce results. The effort stalled last month as Corzine and legislative leaders fought over key elements of their 98-point reform plan.
Corzine had insisted that any property tax credit program be financially sound and include significant changes to how schools and local governments are financed.
As legislators held hearings and back-room talks on cutting property taxes last summer, the bills sent out to property owners continued to climb.
The median property tax bill for
While legislators made progress on the tax credit and other issues, work appears to have slowed on the promised changes to the formula for public education funding.
Corzine said that while proper funding is essential, it is not necessary to force the process this year to meet a self-imposed deadline. "It's not an essential element to do it this year," he said.
Lynne Strickland of the Garden State Coalition of Schools, which represents suburban districts, said she is disappointed with lawmakers for failing to come up with a new school funding formula.
"I would consider this a failure on the state's part," Strickland said, adding that not having a formula will leave schools in a quandary come school budget season.
The advocacy group has been pushing lawmakers to come up with a new formula for the past six years, Strickland said.
"It just feels like shaky ground," she said. "How is this going to play out district by district?"
David Sciarra, executive director of the
"We're now in a position where we don't have any study and we don't have any time. We've got to do this right and we can't rush this through," said Sciarra, whose lawsuits over the years have forced the state to pay for public education in the state's poorest schools.
E-mail: mcalpin@northjersey.com and fasbach@northjersey.com
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Fast facts
Lawmakers want to create a credit to homeowners based on their income. The credit amount is based on the size of their property tax bills.
Household income - Size of tax credit
Earning $100,000 or less - 20 percent
Earning $100,001-$150,000 - 15 percent
Earning $150,001-$200,000 - 10 percent
$200,001 or higher - no credit
