Reforming Property Taxes? That’s A Good One.

They are going to call it property tax reform. They are going to say while it wasn’t everything they wanted, a lot of progress was made. Our leaders in the Statehouse will say a lot of things about this most recent effort to tackle what everyone agrees is virtually the only issue that matters in New Jersey these days–reducing out of control property taxes. Here’s the deal. Earlier this week, the Assembly voted an overwhelming 71-8 to sign off on a plan to offer a 20 percent tax credit to most New Jersey residents as well as a four percent “cap” or limit on local property tax increases. First, if you earn over $250,000 you can forget about getting any break. The state figures you don’t need one and you can afford to live without it. Put that argument aside for a moment and consider a few other painful facts of life when it comes to property taxes in our state. The average annual increase in property taxes is 7 percent per year. That means over the past five years the average property tax bill has risen 35 percent. That’s insane. There is no other state in the nation that has property taxes rising at anywhere near this level. So, the powers that be in Trenton have decided that if you earn less than a quarter of a million bucks, you get about a grand in a tax credit. Not bad. It’s better than nothing. But who are we kidding when we say we are going to try to limit property tax increases to four percent per year and limit the growth of municipal budgets four percent per year when in reality such an agreement was reached only after massive exemptions were built into this so-called cap? Think about it. The logic goes that the way to cut property taxes is to cut spending on the local level. Fine. Except school budgets are rising exponentially, with increased salaries, pensions, energy and insurance costs. So what does the legislature do? In the four percent cap on local spending, they exempt pension, health care and insurance costs. Where is the logic there? The other problem is that many residents, while crying the blues about property taxes, are demanding more services. Of course we want more for our kids in our schools. We want neighborhood schools. We want good teachers. But of course, we don’t want to pay the real costs for any of these things. As State Senator Steve Sweeney, a Democrat from West Deptford stated recently; “These people want a Mercedes Benz, but they only have Oldsmobile money and you know Oldsmobile went out of business.” Sweeney’s comments were related to a weak effort to push for consolidation and mergers of local school districts and tiny municipalities. Instead of mandating that many of our 618 school districts and 567 municipalities start sharing services and merging, the legislature appears ready to create a commission to “study” the problem and propose recommendations. Of course these recommendations can be undone by local residents who have become addicted to having their own everything–their own school system, police and fire department. We want it all, even if our town has 2,000 people and the town next door has 4,000. Together, it would make a town of 6,000 people, with one police chief, one fire chief and one superintendent and God forbid one high school. But nobody wants their kids to go to school with kids in the neighboring town. “Why do you think we moved here in the first place?” they say. But if a politician crazy enough to tell constituents that this is just the attitude that contributes to 7 percent increases in property taxes, those same citizens would rail about government spending, not realizing that they are contributing to the rising costs of government by demanding so much. Look, the property tax problem wasn’t solely created by citizens. I’m just saying members of the legislature, together with local officials and our governor, are trying to give people what they want, which is part of the problem, because most of us keep talking out of both sides of our mouths. So it is easy to blast our leaders in Trenton for this ridiculous effort toward property tax reform because on the merits, it is not even close to cutting into the problem. Yet, the real tough solutions that would actually create an environment that would begin to stabilize, if not reduce, property taxes are totally off the table. Why don’t we finally take on the 800 pound gorilla and acknowledge that we’ve got to take another look at our income tax structure? Don’t get me wrong, I don’t really want to do it because who wants to pay more in income taxes, but it is the only place left to look. The state is never going to mandate that local towns merge or consolidate. The public employee unions are so strong that they are going to cut good deals for their members. It’s their job. So why not finally have a meaningful discussion about restructuring our income tax system? Maybe, just maybe, we need to ratchet up the percent of taxes we pay based on our income. I’m talking about virtually everyone, except those who earn small annual salaries, say $30,000 or less. Restructuring the income tax is a nonstarter because “the people” would never accept it; yet again, “the people” are demanding that something drastic be done to deal with this property tax mess. Okay, you don’t like my idea about restructuring the income tax? What’s yours? The status quo won’t get it done and neither will this lame tax credit and four percent “cap” being moved through the Statehouse. If you have a better idea, write to me at sadubato@aol.com because democracy is not a spectator sport. We are all in this property tax mess together.

Reforming Property Taxes? That’s A Good One.