Deal Reached to Cap Property Tax Hikes in NJ

New Jersey Gov. Chris Christie and the Senate's Democratic leader struck a deal to cap annual local government spending and property tax growth at 2 percent, ending a two-day standoff that threatened to keep the Legislature working through the July Fourth holiday weekend.

The compromise announced Saturday ends the impasse between the Republican governor and Democrats who control the Legislature - if Assembly Democrats go along.

“What we've achieved is a bipartisan consensus to finally provide a hard cap on property taxes in New Jersey,” Christie said. “Everybody stood up to the plate and decided that progress, significant, real progress, was more important than any one person getting sole credit or sole blame.”

Assembly Speaker Sheila Oliver left the Statehouse before the compromise was announced. Her spokesman, Tom Hester Jr., said she “has not been part of any closed-door deal.”

However, Assembly Budget Committee Chairman Lou Greenwald said Democrats in that chamber have been discussing similar proposals and support the concepts announced Saturday. Fellow Republicans will go along with Christie's compromise. The Assembly budget committee is scheduled to meet Wednesday to discuss the compromise plan.

Christie said the agreement cuts the current 4 percent property tax cap in half and lowers the number of exemptions towns and school districts can use to exceed it from 14 down to 4. Otherwise, they would need voter approval to exceed the cap.

The deal allows towns and school districts to exempt costs they cannot control, like health care and pension costs. Schools and towns would get a reprieve for debt payments and capital expenses like fire trucks.

New Jerseyans pay the highest property taxes in the nation, averaging nearly $7,300 per household. High property taxes are often cited as a reason residents and businesses leave the state and why senior citizens cannot afford to stay in their homes.

“The biggest winner today was the taxpayers of the state of New Jersey,” said Assembly Republican Leader Alex DeCroce. “For the first time in 30 years, somebody is listening to them.”

Before the ink on his first budget had dried, Christie recalled the Legislature to Trenton and threatened to keep them at the Statehouse until property tax reforms were passed.

Democratic leaders in the Assembly and Senate ignored the governor's order to meet over the July Fourth weekend. They set a summer agenda to consider ideas to stabilize property taxes and said they would be ready to consider legislation before Labor Day. Any new laws would have no effect on property taxes until next year.

Greenwalk said lawmakers wouldn't solve during a weekend a problem that's plagued New Jerseyans for 30 years.

Christie originally proposed a 2.5 percent ceiling on property tax and spending increases for towns, school districts and counties that would be written into the constitution and could only be exceeded by 60 percent of voters.
The Legislature answered by passing a 2.9 percent cap with 10 exemptions and no voter-override. Christie refused to sign it, saying it contained too many exemptions.

Christie said Saturday he plans to conditionally veto that bill Tuesday and return it to the Senate with recommendations that it include the changes announced Saturday. The new bill lowers the cap to 2 percent but adds exemptions, including one that allows towns to exceed the cap to pay for union contracts already negotiated.

Bill Dressel, executive director of the New Jersey League of Municipalities, said mayors need additional cost controls to govern within the cap. The Legislature is expected to consider 33 bills this summer that include limits on the raises and benefits arbitrators can grant police and firefighters and eliminating mandated costs on local governments.

He called the cap pact “artificial property tax reform,” and said the property taxes would continue to rise unless companion measures are enacted.