Supporting Tax Relief, But Not Reform?

May 13th, 2005 by Tim Evans

Assembly lawmakers on Monday (May 16) are expected to vote on a controversial bill allowing voters to authorize a tax convention aimed at finding solutions for easing property taxes.

The Assembly bill, A5269, carries the same number as the average NJ property tax bill when it was introduced in January: $5,269. That number has since risen.

The fate of the tax convention is uncertain, though evidence that lawmakers understand the need for property tax relief was abundant this week as leaders rallied behind efforts to restore property tax rebates for the budget year beginning July 1.

Assembly Democrats proposed $450 million in spending cuts to fund the rebates. Acting Governor Richard Codey announced some portion of an unexpected $1 billion revenue windfall will also be prioritized for property tax relief next year.

TAX CONVENTION BEST CHANCE FOR TAX REFORM, SMART GROWTH

New Jersey’s leaders appeared united this week in finding ways to restore next year’s property tax rebates.

But they are sharply divided about seeking longer-term reforms through a tax convention, made up of delegates to be chosen by voters. The convention’s recommendations for easing taxes would also need voter approval, in November 2006.

Rebates don’t address the deeper problems in the state’s property tax system. In its testimony this week supporting the convention, New Jersey Future noted today’s property tax system is not only hard on the pockets of residents, it’s changing the landscape and character of New Jersey: It pushes mayors to “chase ratables” when they need more revenues, even when the new development erases open lands, adds to traffic and changes a community’s character. It leaves communities with low real estate values at an insurmountable disadvantage in funding the schools and services they need to recover and prosper. Increasingly, it causes communities to reject housing that might attract families with children, and so higher school and service costs.

Some have challenged the convention’s ability to find permanent solutions to the property tax problem, without which we risk sliding back into damaging land-use practices. Former State Senator Bill Schluter, a leading convention proponent, countered this week with testimony offering a detailed list of “sustainable” options for property tax relief that could be considered by the convention under the current bill, many already in use in other states.

Several legislators and acting Governor Codey have expressed concern that the convention would not examine government spending, only sources of revenue. Assembly Majority Leader Joe Roberts, a prime sponsor of the convention bill, told the Assembly Budget Committee this week that “reconfiguring (today’s) spending priorities is not the point” of the bill, and urged legislators to “stay focused on the primary goal…righting the large inequities in tax collection so (solutions) last over time.” Other legislators have argued that spending is and should be addressed annually by the Legislature, through the budget process.

Convention opponents who argue for a special session of the Legislature to develop tax reforms “offer a false choice,” according to many convention proponents, including the NJ League of Municipalities. Assembly Budget Chair Lou Greenwald noted at this week’s Committee hearing releasing the convention bill on a split partisan vote, “If we can’t agree on the technicalities of a convention, how are we ever going to agree on tax reforms?”

New Jersey Future believes that while not the first choice, a tax convention is the best choice for finding solutions to the state’s property tax problems.