Supporting or Opposing Gov. Christie’s Tax Cap?

In an effort to get New Jersey out of debt, Gov. Christie has proposed a constitutional amendment that would cap the local increase in property taxes at 2.5 percent per year. Cory Booker is a supporter. Critics bring up California’s famous Proposition 13, which capped property taxes in the state, but led to a drastic drop in the quality of its public schools. What do you think?

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27 COMMENTS

  1. I wish you guys could learn to construct a fair poll. You always “split” the conservative choice to favor the liberal choice.

  2. It’s a terrible idea, it goes without saying. But what is the alternative? Leadership from our wide officials at 205 Claremont Ave?
    Yah.

  3. We do not need a tax cap, we need better collective bargaining rules and Mayors/Council-Persons who do not solicit votes from public sector union members with unsustainable promises!
    Municipal Gov’t is not a jobs/works program. Also this is true at the county level as well, and Joe D is doing a great job reducing staff there. This is also true at the state level, and the Governor will be sending pink slips to public sector workers as soon as the Jon Corzine bulls**t promises for no furloughs or layoffs is over.
    A quote from our Governor Chris Christie:
    “”I understand accountability, and I think you‚Äôre absolutely right, I think one of the things that that these times have brought into great focus for us is that we have to hold each other accountable. All of us understand, we were taught by our parents I suspect, that you don‚Äôt get something for nothing in this world ‚Äì ever. Yet government has tried to sell you over the course of time this idea that – We‚Äôre not going to give you something for nothing but we‚Äôre going to give you something and someone else is going to pay for it.
    So it’s not for nothing but it’s for nothing to you. What has happened in our state and in our country over the last couple of years is that those chickens have come home to roost. And we now have a situation where we are in a deep hole and we’ve got two choices. We can continue to do what we’ve always been doing before and I don’t think we should, because that’s crazy, that’s what got us here. But the new path and the bolder path is a path that will be lined with resistance from those who are benefiting from the current system and they will attempt to scare you. They’ll attempt to scare you about change and they’ll attempt to tell you that you’re ox is the one that’s going to get gored. The same people who are telling you to get something and someone else will pay for it are not going to tell you watch out, because when change comes they’re going to take it away from you.
    We all know that it‚Äôs being taken away from us as we speak; our standard of living, our way of life is being challenged by an economy where we have too much debt, too big of government, too much spending and taxes being too high. We all know it in our hearts, depending upon where we are in the political spectrum we may want to admit it more or less but we all know it. We all know it to be true.””

  4. I support Christie’s plan. If our schools were doing a stellar job with the status quo, I might think differently but they are not. I think very little of the money earmarked for the schools actaully benefits the kids. My 2 cents.

  5. very little of the money earmarked for the schools actaully benefits the kids
    Depends on which kids we’re talking about. Some kids make out like bandits.

  6. JG,
    Though I do not agree we need a “cap” the Governor is proposing a “hard cap” with only an exemption for debt service.
    Just like in Montclair this year, Mr. Sweeney’s “2.9 Cap” would have allowed for the 6% prop tax raise we are seeing!
    This is a better explanation:
    CHRISTIE:
    • Constitutional amendment, which would need to pass the Legislature with three-fifths majorities and be approved by voters in November.
    • Local governments would be banned from increasing property tax collections more than 2.5 percent in a given year without approval of 60 percent of the voters.
    • Only exception would be for debt-service payments.
    ‚Ä¢ Towns that keep taxes under the cap could “bank” the additional levy to use in future years, for up to three years per decade.
    SWEENEY:
    • Law has passed the Legislature and awaits action by the governor. It would limit property tax increases to 2.9 percent a year.
    • Automatic exceptions for health care, pension contributions, energy costs, a cut in state aid, and other circumstances mirroring the current 4 percent cap law, though he has eliminated most categories for waivers granted by the state. Two broad categories remain: for towns, to protect the public health, safety and welfare; and for school districts, to provide a thorough and efficient education. Says he would consider closing some loopholes in future years.
    ‚Ä¢ Towns that keep taxes under the cap could “bank” the additional levy to use in future years without limits.
    TOOL KIT:
    Christie also wants lawmakers to approve his 33-bill “toolkit” to help local governments cope with a cap. Sweeney has said he supports some of the same concepts but will seek changes. Among the highlights of Christie’s plans:
    •Civil service: Allow local governments to opt out of the civil service system governing public employee hiring and firing; and allow governments to get around civil service when conducting furloughs
    ‚Ä¢Public employee salaries: Prohibit any arbitration award for police and fire personnel — including salaries, benefits and other compensation — from exceeding the 2.5 percent annual cap. All school district contracts would have to be approved by the county executive superintendent, who would reject increases above the 2.5 percent cap.
    •Moving the votes on school and fire district budgets to November.

  7. Using California’s Proposition 13 as a point of comparison for this poll is grossly misleading because there are fundamental differences that result in Christie’s proposed cap, as restrictive as some may think it to be, to actually be much more generous and equitable than Prop 13.
    Proposition 13 limits real estate property taxes to 1% of assessed value, with annual increases limited to 2% unless overridden by a two-thirds majority of local voters. Christie’s proposed cap limits yearly increases to 2.5%, with no total cap based on assessed value, and this cap could be overridden by a lower 60% super-majority vote among local voters.
    There are two other important distinctions. First, under Prop 13, property tax reassessments may only occur (with certain limited exceptions) when new construction occurs or when a property is sold. This results in a significant disparity in assessments in which a property that has been owned by the same person(s) for many years may have a significantly lower assessment (due to the 1% total and 2% yearly caps based on the value when originally purchased) than a neighboring property that was recently sold and assessed at a more recent market value.
    Second, Christie’s proposal allows local entities to exceed the cap in future years without voter approval if they have remained below the cap in preceding years. For example, if the yearly property tax increase in the Township of Baristaville is 2% in 2010 and 1.5% in 2011, Baristaville could “bank” the 1.5% margin in which they remained below that cap to be used as a credit of sorts to exceed the cap later on, say, to raise property taxes by 4% (2.5% cap + 1.5% credit) in 2012. Of course, at that point the credit drops to 0 and they would need to stick to the 2.5% cap in 2013. I find this to be an appealing approach to reward fiscal restraint and efficiency while at the same time providing them with the flexibility for dealing with evolving local needs.

  8. The BIG problem with this proposal is the same BIG problem with California’s plan. It is DEEPLY unfair because it taxes people at different amounts — and in California, at tremendously and drastically different amounts — for property that is exactly the same and worth exactly the same.
    That is, other than recently, real estate prices generally go up — and up and up, and sometimes by leaps and bounds. In a few years, the $200,000 house is selling for $300,000 then $400,000. Your next door neighbor finds himself taxed at the $400,000 price whereas you, in an identical house, are paying half what he is paying.
    That is DRASTICALLY unfair. If you are not going to also lock in the home’s resale price, and thus value, or tax everyone at the same year’s value of the house, then you merely have a plan under which people who were richer earlier on and got a house before prices went up, are being subsidized by poorer people who have to take more years to save up enough money and continually chase higher and higher prices.
    I say: cap the tax increase, but assess everyone at the same year’s housing price so all are taxed on the same playing field. But also, that tax hike should merely be something that lawmakers can do on their own; there also should be a provision providing for higher tax increases if approved by the voters — because that is only responsible.
    Geez, in California it is now common that one person will find themselves paying $800 a year in property taxes because they bought there house in 1980, but their next door neighbor in an identical house is paying $6,000 or $7,000 or $8,000 a year! And the one who bought in 1980 will be making more money and generally be richer while the next door neighbor is on the verge of foreclosure. That is, the poorer people are subsidizing the richer people.

  9. Everyone seems to be dodging the real driver of our property taxes: how we fund public education, which consumes 60% of our property taxes as well as a portion of our income taxes, whether or not we see a return from the state in our communities. A 2-1/2% cap will not address the costs of rising enrollment, of rising energy or health costs, of rising costs of special education should a district find itself with a high number of classified students.
    In the ’90’s, the state of Michigan declared its funding formula for education illegal, and re-crafted how they funded it. Their situation was parallel to NJ; a powerful teachers union, wide disparities in quality between rich and poor districts. They changed the formula from property taxes to a combination of designated income and sales taxes apportioned to districts based on enrollment. Any district wishing to spend more had to kick back into the kitty to maintain parity. The sales tax gave them some trouble: revenues declined during recessions.
    I’d like to know how their property taxes fared since then, and whether their schools declined, improved, or stayed the same.

  10. Automatic exceptions for health care, pension contributions, energy costs, a cut in state aid,
    In other words, Sweeney’s plan provides automatic exemptions for most of the categories of spending that are driving up property taxes now!
    This is just another example of why our state legislature has been a dismal failure at providing any meaningful property tax reform in the past two decades.

  11. “All school district contracts would have to be approved by the county executive superintendent, who would reject increases above the 2.5 percent cap.”
    Until we have county-wide rather than town-based school districts, I don’t want another layer of government having a say in how we run our schools.

  12. The BIG problem with this proposal is the same BIG problem with California’s plan. It is DEEPLY unfair because it taxes people at different amounts — and in California, at tremendously and drastically different amounts — for property that is exactly the same and worth exactly the same.
    No, you are mistaken. Read my post above in which I explain the differences.
    While you are correct in your understanding that wide gaps may exist in property tax assessments for similar properties in California that were purchased or constructed at different times, that is not the case now in NJ, and will not be the case under any of the property tax proposals. Property tax assessments on existing homes in NJ are based on periodic town-wide property tax revaluations, such as that conducted here in Bloomfield last year.
    In that sense the assessments are equitable because they are based on values calculated within the same general time frame. So, when I closed on my house in early 2006, my property taxes were based on the value of the house as assessed at the last town-wide revaluation, which occurred sometime in the late 1990’s I believe. It was the same with my neighbors who purchased their houses in 2005; all our tax assessments were based on the values of our homes as determined in nineteen-ninety-whatever. Our property tax assessments did not reset when we purchased our homes.
    However, that example illustrates one of the inequities of the property tax, which is that it fails to account for changes in home values when revaluations occur infrequently. In Bloomfield, there was a 12-15 year difference between revaluations, which means that many properties that had been substantially improved after the previous reval were not being assessed according to current value until this year.

  13. Of course the poll is constructed in an unfair way – I don’t even think Liberals realize that – but you can easily see the result. 75% agree that the tax cap is a good idea or doesn’t go far enough. That percentage would be even higher if the last option – comparing this to California’s Prop 13 – was more fairly written. If they wrote the 3rd option in the poll as, “It’s a terrible idea”, and left it as that, the other two choices probably would have garnered more support.
    Speaking of polls, anyone see MSNBC’s poll about the new Arizona Immigration Law? Last I looked it had 97% of the respondents approving of the law – more than a million voted. Interesting the network is keeping mum on it. Possibly it’s been taken down already.
    Orwellian.

  14. Thank you, Pork Roll, for the great explanation! My SoCal folks could not have afforded to remain in their home (which they purchased in 1965 for a song) had it not been for Prop. 13. That being said, their schools have definitely been adversely affected. However! It seems to me that OTHER spending in the State has not been properly managed or curtailed, so that they are now in a gigantic budget hole. IMO, caps can work if drunken spending stops as well.
    I personally believe there are so many needless layers of government and associated spending at all levels, that we could cap taxes, maybe even cut them, and still have good schools and fully staffed police and fire depts. We just need to cut through the BS and root out the waste. At my company they call it ‘zero-basing’, where everybody has to re-apply for their jobs. Have all government agencies re-apply to justify their existence. Start with a clean slate, consolidate, and eliminate, and I’ll bet all the fundamental necessities can be covered at or below what we’re paying now.

  15. Re Pork Role: As I understand it, each individual property tax bill would rise no more than 2.5% a year. The only way that can be done is if the assessment of the property is locked in, either as what it is assessed at at time of purchase, as in California, or a rule that all property is assessed at what its value was or would have been in a certain year, say 2010, no matter when you bought.
    If the assessment is not locked in, there is no way to limit the rise in tax paid by any individual; rising housing prices, and thus assessments, will cause you to pay more. In fact, property taxes have risen a lot in the past decade because housing prices/assessments have risen a lot, not because the tax rates have changed so much.
    If you don’t lock in the assessment, then you can’t cap individuals’ property taxes at no more than a certain percentage rise.
    They’re not talking about the tax base of the community not rising more than 2.5% a year; they are talking about an individual’s tax bill not rising more than 2.5% a year.

  16. me1004, do you own property in New Jersey? If so, I have to say that you are somewhat misinformed as to how assessments are determined for property taxes.
    Re Pork Role: As I understand it, each individual property tax bill would rise no more than 2.5% a year. The only way that can be done is if the assessment of the property is locked in, either as what it is assessed at at time of purchase, as in California, or a rule that all property is assessed at what its value was or would have been in a certain year, say 2010, no matter when you bought.
    In New Jersey, the property tax for individual real estate parcels are already “locked in” by virtue of the fact that property taxes are calculated on the assessed value of the property, as determined by an appraisal conducted during periodic town-wide revaluations. So yes, in New Jersey, property is already being “assessed at what its value was or would have been in a certain year”. Read on for more about this.
    If the assessment is not locked in, there is no way to limit the rise in tax paid by any individual; rising housing prices, and thus assessments, will cause you to pay more. In fact, property taxes have risen a lot in the past decade because housing prices/assessments have risen a lot, not because the tax rates have changed so much.
    No, you are completely wrong on this. Property taxes in New Jersey have skyrocketed because of real dollar increases in municipal, school, and county budgets and lately, decreases in state aid, which requires a corresponding increase in the amount raised by property taxes.
    See my previous post to explain when and how property tax assessments are determined. As I noted in that post, my house was last assessed when Bloomfield conducted a town-wide revaluation sometime in the 1990’s. When I bought my house in early 2006, the assessed value was $121,400, which was less than half of what I actually paid for it. For 2006 thru 2009, the assessed value of my property remained at $121,400, and that is the assessed value upon which my property taxes were based, not the market value of property either when I bought it or at anytime afterward.
    However, during those four years, actual property taxes (municipal, school, and county) increased from $6,203 to $7,399, all due to actual increases in spending at the municipal, school, and county levels, not because the value of my property increased.
    Bloomfield conducted a town-wide property revaluation in 2009, so for 2010 my new assessed value is $253,200. This is the value against which my property tax will be assessed for every year going forward until Bloomfield conducts another revaluation. In other words, my new assessment is “locked in” at the 2010 value, but that will not prevent my actual property taxes from increasing.
    If you don’t lock in the assessment, then you can’t cap individuals’ property taxes at no more than a certain percentage rise.
    To emphasize the point, they are already “locked in” by virtue of the fact that all existing properties are assessed at the same time during the periodic town-wide revaluations.
    They’re not talking about the tax base of the community not rising more than 2.5% a year; they are talking about an individual’s tax bill not rising more than 2.5% a year.
    Yes, I know that, and if you go back and review my posts above, you will understand that this was the precise point that I have been discussing.

  17. It’s not Prop. 13 that lowered the quality of public schools in California. It’s the influx of illegal aliens that have overwhelmed the system. Rather than make attempts to repeal Prop. 13 the State of California and the public schools need to learn to live within their budgetary means. It’s overspending.
    Stop providing free education to those here illegally. If they want an education they can go back to their country of origin. The gravy train has dried up here.
    Cut the budget until it equals revenues. If this means laying off administrators and having the students cut the lawns and paint the buildings that what it takes. We are entering a period of austerity, which is going to require people to contribute more to their and their children’s education. Get used to it.

  18. While I agree with others that there is too much waste and no oversight nor accountability on a municipal level, I do think that the governors proposal is lacking.
    The major fault I see is the existence of a absolute number instead of tying it to the official inflation rate. Same thing happened with the AMT and I think its clear how bad this is.

  19. Kyle, thanks for the link. ROC, I was suggesting that a fixed cap which doesn’t account for rising enrollment may result in damage to the schools —
    populations are elastic; so too perhaps should the caps be within certain guidelines.
    I don’t object to a cap, as long as it accounts for realistic exigencies. Does Christie have a plan to curb energy & health costs? Or does he expect districts to turn down the heat and shed the insurance burden?

  20. That may be true too, but I can say from experience that immediately after Prop. 13 passed, they cancelled my 6th grade summer camp. It had been a tradition since forever – 1 week away in the lovely SoCal mountains. And it was the *only* year that it was cut, because they managed to find the budget for it the following year.
    As you can see, to a 12-year old, it was unforgivable!

  21. Re Pork Role: By our own statement, you get reassessed! Yours was just doubled — and your taxes owed will go up along with it! How do you think your individual bill will be locked in to go up no more than 2.5% even as your assessment is doubled and everyone else’s assessment goes up by their own particular amount depending on their property? What are they going to do, set a different tax rate for every property to make sure you don’t up up more than 2.5%?
    And a detail on that you may not know about is that they use a formula to annually account for the change in value — although that formula is anything but precise, and its imprecision is the reason for the full reassessment every once in a while.
    Whether you get reassessed every other week or once a decade, that clearly means your assessment is NOT locked in, but you keep saying it is. No, it is not. And any reassessment, or application of that annual formula, is going to change how much tax you owe. You cannot have a constant tax dollar amount owed without the base being constant.
    The property tax rates have not changed very much. But the application of that annual formula can make them seem like they have.

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