On July 13, Senate President Steve Sweeney said, "Now that the cap is in place, it is even more essential that we provide communities the tools they need to properly manage their finances without cutting essential services or lowering their residents' quality of life. ... Merely slowing the growth of property taxes is not victory. Now we need to put the reforms in place that can actually make them go down."
On that same day, Assembly Republican Leader Alex DeCroce said, "This legislation is a giant step forward for taxpayers, but it's just the beginning of the many reforms necessary to help municipalities effectively operate within the hard cap."
On July 12, Assemblywoman Mary Pat Angelini said, "It is imperative that the Legislature seize the moment and move forward now on implementing the rest of the governor's government reform agenda so that local governments will have the tools they need to contain costs and operate within the cap."On July 8, Senator Barbara Buono said, "This new cap law is not the final word to be written on reining-in New Jersey's property taxes, but the first broad stroke in reforming a system that is unfair, unworkable and untenable. Property taxpayers won't be happy with only seeing smaller increases. They want their property taxes to go down. Now we need to continue with the momentum from today's vote and work toward meaningful property tax reform.
On July 7, Assembly Republican Budget Officer Joe Malone said, "The bipartisan agreement to place a hard cap on property taxes makes it imperative for us to go further and enact the rest of Governor Christie's proposals that will give local officials the ability to truly shrink the size of government and lower property taxes. People in New Jersey are tired of watching the Legislature fumble the ball with property tax relief. We need to stop delaying and playing games. It's time to show the people that we have the guts to move New Jersey forward and do what we all know needs to be done to address our state's excessively high property taxes. We cannot afford to let this historic opportunity pass by now that there is finally bipartisan momentum to put the priorities of property taxpayers first."
And on June 29, in South River, Governor Christie said, "It's not just the cap. It's the toolkit as well. Both must be done. ... If you do the cap without the toolkit, it makes the cap unworkable. Both have to be done together."
The cap was passed just a week after they had agreed on a State Budget that was, once again, balanced by diverting municipal property tax relief revenues to other priorities. In order to avoid increasing State administered taxes, the Governor and the Legislature agreed to use municipal property tax relief funding to bridge the gap. In fact, most of the Consolidated Municipal Property Tax Relief Act (CMPTRA) and all of the Energy Tax Property Tax Relief (Energy Tax) funding is "revenue replacement funding," that it replaces revenues that were originally collected by municipalities for local use.
Those alternative revenues delivered municipal property tax relief for a long time, before various ‘reforms' took them away from our cities, towns, townships, boroughs and villages – always accompanied by the solemn, statutory vow that we would be ‘held harmless.' Further, pursuant to a ten-year-old State law, which has long been honored more in the breach than in the observance, CMPTRA and the Energy Tax are supposed to be annually adjusted to account for the effects of inflation. Instead, they were cut by over $250 million, in the State's budget.
In two months time, when the new cap takes effect, municipalities all around our Garden State will be forced to operate without "the tools they need to properly manage their finances," without "the many reforms necessary to help municipalities effectively operate within the hard cap," without the reforms they need "to contain costs and operate within the cap." Our taxpayers will continue to wait for the Governor and members of the Legislature to reform "a system that is unfair, unworkable and untenable," and "to do what we all know needs to be done to address our state's excessively high property taxes."
As a result of the failure of State leaders to agree on much of anything, other than cuts and caps, the new cap will be "unworkable."
When pundits look for winners and losers in state government, they tend to bring too fine a focus to bear on the political implications of developments in Trenton. Press Releases are meant to score points. Public opinion polls serve as the scoreboards. But attention to public policy developments often yields a different perspective. The failure of the Governor and members of the Legislature to reach agreement on the management reform and mandates relief initiatives that would allow municipal budget makers to continue to deliver quality services, AND reduce property taxes, means there are no real "winners." And the real losers will once again be the property taxpaying citizens of New Jersey.
All around the State, responsible municipal officials are planning their 2011 budgets. At this point, those plans MUST account for the new cap. At this point, those plans must be based on the assumption that meaningful management reforms and mandates relief initiatives will NOT be in place. At this point, those plans must also be based on the further assumption that next year's State budget, like last year's, and the one before that, and the one before that, will not provide statutorily required revenue replacement funding.
Accordingly, though Mayors and governing bodies will do whatever they can to prevent negative outcomes, property taxpayers should anticipate service cuts. And local government employees should expect lay-offs.
These consequences may be unavoidable in 2011. Going forward, the situation can only improve IF serious reforms are enacted and unfunded mandates are relieved or repealed, AND if the State, after years of neglect, finally honors its statutory commitment to provide full revenue replacement, property tax relief funding.
Based on what was said by a chorus of State policy makers back when this special legislative session began, intellectual consistency and the courage of their convictions require that they do two things.
They must enact meaningful management reforms – beginning with a hard cap on binding arbitration awards. And they must commit to complying with the laws requiring property tax relief funding.
William G. Dressel Jr. is executive director of the New Jersey League of Municipalities.