Ninety-eight Proposals – Now How Do We Pay for Them?

Ninety-eight proposals for cutting property taxes in the state of New Jersey. That’s what came out of the four special legislative committees charged with the responsibility of tackling the state’s out of control property taxes combined with our historically irresponsible spending practices. Some of the proposals seem to make sense. Others that call for more state spending could make the property tax situation worse. I am not exactly sure why the Constitutional Reform Committee has proposed cutting property taxes by a full 20 percent (via tax credits), but I do like the concept of tax credits. It was a mistake, however, to pitch a hard number like 20 percent, because it raises expectations of citizens and it is nearly impossible to accomplish. Why not simply shoot for a 10 percent reduction in property taxes over the next two years and anything more be the icing on the cake? I like the tax credit idea because it is targeted to low and middle income families who the committee found “suffer from a disproportionately high property tax burden.” We need to tie property tax more to income and not solely the value of property. Further, tax credits are a lot easier to deal with administratively than the wacky rebate checks the state annually sent to millions of New Jerseyans. Rebates are a costly exercise in political vanity designed to say to voters; “I know you are getting the shaft on your property taxes, but look at this check that we are sending from Trenton. Now, aren’t you going to vote for me next time?” Under one of the 98 property tax rebate proposals, tax rebate checks would still go to tenants, yet home owners would be given a property tax credit of up to 20 percent “for as many taxpayers as resources allow.” Legislative leaders like Senate President Dick Codey and Assembly Speaker Joe Roberts have said that the property tax credit proposal would work on a sliding economic scale. Those who earn the least would get the largest tax credit. It appears that the only citizens who would get the full tax credit resulting in a 20 percent property tax cut will be those earning less than $50,000. If you earn over $300,000 there is a good chance you won’t see any reduction in your property taxes. New Jerseyans who make real good money will be bothered by this, but the approach makes sense. There has to be a cutoff. Tough – as opposed to popular – decisions must be made and this is one of them. Consider this. The School Funding Committee has proposed limiting the annual hike in school taxes to the rate of inflation. It also proposed that every community would get a minimum amount of state aid. Who would be against a proposal put forth by the School Funding Committee to have the state put more bucks into kindergartens in all school districts? In theory, I support these and other initiatives to provide expanded educational services to all students. Only one catch. As you review the 98 legislative proposals, you will find few if any details on how we will actually pay for expanded educational programs and more state aid to local communities. Sure, there is the half a cent from the one penny increase in the sales tax. But that won’t pay the full cost – not by a long shot. Legislators must do the hard work now. Governor Jon Corzine has not given his full support to what the special legislative committees have proposed. The governor has shown that he is pragmatic and practical when it comes to bottom line, fiscal issues (think last summer’s government shut down) and until legislators make it clear how their proposals will be paid for, Corzine will remain skeptical, which he should. We all should. Legislators may look at it differently. All 120 members are up for reelection in 2007 and they want to take credit for reducing property taxes. As a former state legislator, I understand that mindset. However, it is clear to anyone who is truly serious about New Jersey’s dire fiscal situation that the only legitimate property tax reform will occur over time is by our leaders in Trenton coming up with concrete mechanisms to pay the real cost of running government while at the same time cutting those costs. There are no easy solutions and no magic bullets to reducing property taxes in New Jersey, even when you come up with 98 proposals. Citizens – even those of us who feel we pay way too much in property taxes – must understand that this problem took a long time to develop and won’t be “fixed” overnight. In the process of trying to address the property tax problem, something else is going to have to give. We may get hit in another pocket or have certain state and local services reduced. We may actually have to share or consolidate our local school districts as well as police and fire departments with a neighboring community, and that’s just the beginning. There will be no free lunch in New Jersey any time soon, so let’s all be adults and deal with it.

Ninety-eight Proposals – Now How Do We Pay for Them?