Convention could find sustainable tax solution

GUEST OPINION, Feb. 11

By: George S. Hawkins
I have attended scores of local hearings over the last seven years, and the most startling lesson I’ve learned is this: If you have kids, New Jersey’s towns don’t want you.
   I don’t mean our elected officials don’t value children. They just don’t want them moving into their towns. And this is a logical choice, given the perverse economic incentives created by our property-tax system.
   Our property-tax system is anti-family, anti-environment and anti-business. Reforming the property-tax system, which should be the charge of a constitutional convention now under debate in the Legislature, is an absolute necessity. Here’s why:
   In New Jersey, property taxes account for 76 percent of local government revenues — the fifth highest percentage in the United States — as compared to 45 percent nationwide. These property taxes are the chief source of revenue for education. But the median cost of educating a child is $10,652, while the median property tax on a single-family home in New Jersey is $4,047. The math is simple. Even if 100 percent of local property taxes were dedicated to education, the property tax paid by one household doesn’t cover the costs of educating one child.
   Municipalities have only three options. First, a town could cut the quality of public education. For most, this is not a desirable outcome. Second, a town could raise property taxes. Yet our property taxes are already the highest in the country, with the median level $1,000 more per year than the runner-up state (Connecticut). Third, a municipality could entice commercial ratables to town, so that commercial taxes can buttress the budget. To some, this seems the best bet.
   Unfortunately, this bet has been a huge loser. For various reasons, including unforeseen costs to attracting and servicing commercial development, municipalities that have attracted the most new commercial development have still seen some of the highest increases in property-tax rates in the state.
   Other significant problems arise. Towns entice commercial enterprises from older cities and towns. The older communities see their tax base shrink, and then must increase property-tax rates to maintain their schools and services — which hits the poor and seniors hard, and tends to drive new businesses away. This cycle leads to deteriorating budgets and schools. We then invest substantial public funds to try to shore up these communities and their schools.
   There’s an environmental consequence, too. Businesses relocated to the countryside eat up our last remaining open space and farmlands, and degrade habitat, water quality and often the quality of life in rural communities.
   New Jersey Future supports a constitutional convention charged with resolving this crisis. We support limiting the convention to identifying suitable sources and percentages of revenue. A convention charged with finding sustainable solutions could reverse the perverse incentives in today’s system; encourage investment, housing and public funds to return to our cities and older towns; and restore New Jersey’s welcome to families with kids.
George S. Hawkins is executive director of New Jersey Future, the state’s oldest and largest smart-growth organization.