newjerseynewsroom.com

Assembly Democrats don't agree to compromise

BY TOM HESTER SR.

NEWJERSEYNEWSROOM.COM

After lengthy closed-door negotiations Gov. Chris Christie and Senate President Stephen M. Sweeney Saturday reached a consensus to move on a 2 percent cap on annual property tax hikes and local government and school spending increases.

However, Assembly Speaker Sheila Y. Oliver stressed she is not part of the settlement and that the lower house Budget Committee will meet Wednesday to continue its review of proposed cap legislation.

The agreement calls for a cap lower than the 2.9 percent proposed by Legislative Democrats as a response to Christie's 2.5 percent proposal. The governor's office describes the 2 percent cap as a hard cap with limited exceptions. The agreement would allow local voters to decide when their municipal or county government or school district could exceed the cap.

"It's been an unprecedented week of bipartisan negotiation and, finally, consensus to work together to end the property tax nightmare for New Jerseyans," Christie said at the Statehouse. "This formula finally has as its centerpiece a hard cap that will bring discipline and careful planning to local spending — the heart of the problem with property taxes — while providing just enough flexibility to deal with certain unpredictable costs."

Under the compromise — which will come via a conditional veto by the governor of the Democrats' previously passed 2.9 percent cap (S-29) — the 2 percent cap will be approved without the need for a constitutional amendment to be approved by voters statewide on the November ballot.

Local officials will be granted exceptions to the cap for health care and pension costs — which are dictated by the state — and debt service. School districts would be granted an exemption for unanticipated increases in student enrollments. Spending over the cap would be allowed for certain emergency situations, including localized severe storm damage that does not lead to a state of emergency declaration. Officials who budget beneath the 2 percent cap would be able to "bank" the difference for three years.

All other exemptions in current law would be eliminated.

"Hopefully today will go down as the day when New Jersey was finally able to declare independence from its onerous and broken property tax system," Sweeney (D-Gloucester) said. "This debate has never been about whether or not New Jersey needs a property tax cap — it does — but how best to enact a cap that will protect both taxpayers and our quality of life. I applaud the Governor for not only pushing this issue, but for being willing to work towards a compromise.

"I have always maintained that given the right tools, communities would not only be able to meet the governor's demand of stemming property tax growth at 2.5 percent, but could actually do better," Sweeney said. "This new cap law will allow us to do better. It will give taxpayers real control over their futures. It will give local officials the flexibility they need to ensure essential services do not suffer. This is a cap that will work for all of New Jersey."

Sweeney said he will post the governor's conditional veto for a Thursday in the Senate. He said the upper house Budget and Appropriations Committee and other committees will still meet throughout the summer to review the related bills.

Oliver did not join Christie and Sweeney at the press conference.

"The Speaker has not been part of any closed door deal,'' Tom Hester Jr., her spokesman said. "As the Speaker has said repeatedly, we will thoroughly vet any proposal. The Assembly Budget Committee will meet on Wednesday to consider proposed legislation that represents the Assembly plan."

But Assemblyman John Wisniewski (D-Middlesex), chairman of the lower house Transportation Committee, offered a different comment.

"The agreement announced by Senate President Sweeney sounds a lot like what Democrats in New Jersey have stood for several years and have recently passed legislation on — a statutory cap with reasonable exceptions for factors local governments can't really control,'' Wisniewski said. 'While the amount by which taxes are allowed to increase may be different, it's a small difference — but it's significant progress and I look forward to reviewing it right after the Fourth with my colleagues. Once we get this done, we need to move on to solving the impending crisis with the Transportation Trust Fund."

Assembly Republican Leader Alex DeCroce (R-Morris said, "Republicans are at work today tackling the most critical issues in New Jersey — curtailing government spending and controlling property taxes.'' He added, "The agreement announced by the governor finally puts New Jersey on the road that will return fiscal sanity to our state. Voters will now have a say on how their tax dollars are spent, instead of Trenton politicians. This is a key component in our effort to cap government spending.''

Christie's effort to reduce government spending is driven by figures that show that since 2001, spending at the local level has spiked 69 percent — from $26.5 billion to approximately $44.7 billion this year. His aides argue that had a hard cap been in place for the last decade, the average family's property tax bill today would be $5,167, rather than the current $7,281.

Here are the highlights of the impending 2 percent cap legislation:

• A Hard 2 percent cap — With this hard cap, in any year, the property tax levy cannot increase more than 2 percent, with very limited exceptions.
• Letting the people vote — Allowing for the people to decide their own fate and determine when increases in property taxes should exceed the cap is central to achieving meaningful reform.
• Limited exceptions ends — Currently there are 14 exceptions or waivers, including a catch all that allows for exceptions not covered in the first 13, which has made the current 4 percent cap porous. The new agreement allows for few exceptions:
• Capital expenditures and pay required debt service
• Pension benefits
• Health benefits
• Expenses incurred in connection with a state of emergency as determined by regulations to be defined.