Senate approves 2 percent cap on N.J. property tax hikes, local government and school spending | State | -- Your State. Your News.

May 29th
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Senate approves 2 percent cap on N.J. property tax hikes, local government and school spending

statehousenjgov010510_optBill passes 35 to 3


The New Jersey state Senate Thursday voted overwhelmingly in support of bipartisan legislation that sets a 2 percent cap on annual property tax hikes and county and municipal government and school district spending.

The proposal, a compromise involving Republican Gov. Chris Christie and the Democratic-controlled Legislature was approved 35-3. The bill moves to the Assembly.

Meeting in a rare summer and morning session, the Senate approved the legislation at 11:26 a.m. and immediately adjourned. Regardless of what the Assembly does, the Senate Budget and Appropriations Committee is set to meet July 19 to begin reviewing versions of over 60 bills that Christie and the Democrats have proposed to help local government and school districts get control of spending.

The Senate vote was part of a compromise reached Saturday between Christie and Senate President Stephen M. Sweeney (D-Gloucester). Christie agreed on the 2 percent cap instead of a 2.9 percent version sent to the governor by the Democratic-controlled Legislature.

Over four hours after the vote, Assembly Speaker Sheila Y. Oliver (D-Essex) announced the Assembly will vote Monday "to give final approval'' to the 2 percent cap.
The session is scheduled for 10 a.m. and the cap bill will be the only measure on the agenda.

"We know that the residents of this state want to see tighter restraints put on their property taxes, but we also know our work is far from finished," Oliver said. "This will be a strong step, but concerns about how schools will fit the costs of special education services so vital to many children are among the many areas that will need to addressed going forward."

Oliver also said the Assembly will also continue with her plan to spend the summer considering related legislation.

"This will be an extensive effort to properly analyze reforms put forth by Democrats and Republicans and develop a real plan of action to bring relief to taxpayers," Oliver said. "This is going to be a thorough review that brings smart reform to New Jersey."

Under the proposal, there will be a so-called hard 2 percent cap that would have limited exceptions while giving local voters the ultimate decision making authority in whether or not the cap should be exceeded. The cap or any future changes would need to be approved only by the Legislature and the governor and not voters statewide on the November ballot.

Following the vote, Sweeney announced he has introduced legislation to create a six-member property tax advisory panel to track the progress of the new 2 percent cap and recommend potential changes to the law.

Sweeney said the panel -- with two members chosen by each the governor, Senate president and Assembly xpeaker -- is necessary to ensuring the cap remains relevant as economic conditions change.

"The greatest advantage to a statutory cap is the ability for us to make changes to the law when they become necessary," Sweeney said. "Only by carefully tracking the data will we be sure that the cap is having the effect we need. This panel will ensure that we are getting independent, data-driven advice based on what's actually going on in New Jersey and not what may be the political cause of the moment."

Under the bill, the task force would undertake a three-year study of the impact of the cap law, working within, but not as part of, the state Department of Community Affairs. The panel would take into consideration the overall property tax burden and its constituent parts, including municipal finances, the structure and functions of county and municipal government and labor contracts. The task force would issue its final report to the governor and the Legislature by November 1, 2013.

"The cap can only be effective so long as we quickly respond to new pressures that threaten to push municipalities to the brink," Sweeney said. "Just because we are putting reform in place now does not mean we can simply wipe our hands and walk away."

During debate on the bill (S-29), Sen. Loretta Weinberg (D-Bergen) said Republicans should not expect bipartisanship when the Legislature begins reviewing the related government spending bills.

"Would I would have preferred to see a couple of more exemptions (to the cap), absolutely," Weinberg said. "The best thing is that we did not make it a constitutional amendment (a referendum on the November ballot). By making this a state statute, we are allowing future Legislatures to correct problems in the future The fact that we have the right to change this statute is the most important concession we got under your leadership (Sweeney) from Governor Christie.''

Weinberg then added, "Let me say the so-called tool kit (the cost-cutting bills) might end up being a whole series of alternates. I don't think anybody on this side of (Democratic) aisle has signed on to this tool kit. Nobody on either side of the aisle should think this is the took kit we are moving ahead on.''

Senate Majority Leader Barbara Buono (D-Middlesex) said following the vote, "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.''

The Democrats are particularly leery of Chrisite's proposal to allow local governments and school districts to eliminate civil service protections for employees.

Sen. Ronald Rice (D-Essex) cast one of the three votes against the cap. He said the Legislature needed to move on the related proposals first.

Senators Nicholas P. Scutari (D-Union) and Paul Sarlo (D-Bergen) warned legislators they must guard against local governments and school districts not following cap by instituting so-called user fees, such as charging for school bus use, playing school athletics or summer school.

"We all have to be vigilant that we don't create in the future a series of patchwork user fees and taxes at the local level,‘' Sarlo said.

Bill Dressel, director of the League of Municipalities, is anxious for the Legislature to move on the cost-cutting bills.

"Caps do not address the real cost drivers confronted by local leaders,'' he said. "So when the governor called the cap ‘unworkable' without the toolkit, he was correct. But the administration has pushed forth an "unworkable" cap, with the Legislature's support, without first advancing the toolkit. Local leaders, defending the interests of taxpayers, are now told that the real reform will come in the fall.

"We see no reason why we should wait any longer,'' Dressel continued. "For years local leaders have called for reform, including binding arbitration reform, COAH reform, health benefits reform, mandates relief, civil service reform, flexibility to deal with pension costs, utility costs, disaster and emergency response costs and other costs imposed by factors beyond the control of local leaders, and conformity of any new local caps to a new state spending cap.

"The League of Municipalities can support a property tax levy cap, if an only if it moved as the final piece, not the centerpiece of reform. While we appreciate and applaud that the governor and the Legislature have promised reform, until such reforms are passed, no one should declare a cap a victory for property tax reform. Otherwise, like Yogi Berra said ‘It's like deja-vu, all over again' and we will have an unworkable cap with no management reforms. The tax reform agenda remains undone."


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