While unsure if special session will have results, locals agree rising property taxes are a big issue
By: Joseph Harvie
Local officials say something must be done about rising property taxes, but that a proposed special session of the state Legislature is not likely to fix the problem.
Municipal and school officials, as well as state representatives and others, say property taxes have been rising for years and that there is no end to the increases in the foreseeable future. A change in the way state, county and municipal government functions is necessary and a state constitutional convention would offer the best hope of reform, they say.
Gov. Jon Corzine and the leaders of both houses of the state Legislature are planning a special joint session of the Legislature for this summer to address the property tax issue. The plan is to have four committees, one each to discuss school funding, public employee benefits, government consolidation and more general constitutional issues. The committees are expected to begin meeting by the end of the summer. Once committee work is completed, the Senate and Assembly will meet jointly to review recommendations and consider legislation.
Bill Dressel, executive director of the state League of Municipalities, is not optimistic about the special session. He said the issue has been on the table in New Jersey for more than three decades, but that legislators refuse to make decisions to lessen the state’s dependence on property taxes to fund schools and municipal government because of the impact decisions could have on their re-election prospects.
"We firmly believe that property tax reform is the number one issue, not only now but its been at the top of our legislative agenda for the past 35 to 45 years," Mr. Dressel said. "Quite frankly, we are quite frustrated by previous administrations and legislators who have literally done nothing about tax reform."
A special session on property tax reform was called in the 1970s, he said, but nothing came of it. Mr. Dressel said the issue should be taken out of the hands of the politicians and instead given to the citizens at a constitutional convention.
"The constitutional convention is the priority for us," Mr. Dressel said. "If they want the special session then lets get the constitutional convention on the ballot in ’06. If they come up with a recommendation that can solve the problem then we don’t have to go to convention. Let the people decide by voting this November."
For a constitutional convention to occur, both houses of the state Legislature would have to pass resolutions by Aug. 24 supporting it.
South Brunswick Mayor Frank Gambatese said he would like to see a constitutional convention that would look at the all components of New Jersey’s tax code.
"For the Legislature to try to do something without the people’s input is a mistake," Mayor Gambatese said. "What is the best plan? Is it a separate sales tax for schools? We need to look at the entire tax package, because it is so out of whack at this time."
Dawn Smith, vice chairwoman of the South Brunswick Municipal Republican Organization, said she would also want to see a constitutional convention rather than a special session of the Legislature.
"Everything I read and everything I feel about the state of politics in New Jersey tells me that the taxpayers could do a much better job than elected officials," Ms. Smith said.
Assemblyman Bill Baroni, a Republican whose district includes South Brunswick, supports a constitutional convention.
"I trust the people of New Jersey," Mr. Baroni said. "It would be easier for people if they don’t have the specter of the next election, and in New Jersey it seems there is an election every year, to influence their decision. Delegates can’t run for re-election."
He said the last major constitutional convention in New Jersey occurred in 1946 and 1947, when the citizens chose New Jersey’s current governmental structure with a strong governor, a state assembly and a senate.
If a convention is called, he said, citizens from all communities are elected and meet to decide whether or not to change to state constitution. He said a convention could focus on a single issue, in this case the state’s tax structure. Once a proposal is completed, it is put before the voters as a ballot question during a November general election, Mr. Baroni said.
Assemblywoman Linda Greenstein, a Democrat whose district includes South Brunswick, also believes a constitutional convention is necessary, but that it should be held in conjunction with a special session of the legislature.
"I believe the convention would work with a special session of the Legislature that would meet to frame the issues out with the knowledge they have," Ms. Greenstein said.
Assemblywoman Linda Greenstein, a Democrat whose district includes South Brunswick, said that the best way to change the way the state collects and uses taxes is to hold a special session of the legislature and combine it with a constitutional convention.
"I believe the convention would work with a special session of the Legislature that would meet to frame the issues out with the knowledge they have," Ms. Greenstein said.
Ms. Greenstein said she thinks shared services and consolidation should be reviewed, along with school funding and the state pension system.
State Sen. Peter Inverso, a Republican whose district includes South Brunswick, also believes a convention would be best. He said he is concerned about the politics of the proposed special session.
"The parameters of the special session are still being worked out now, and nothing is finalized, but here the Democrats intend not to provide for equal representation on the committees," Sen. Inverso said. "It is a bad start and it certainly can lead to the politicization of the process."
Sen. Inverso said there are 566 municipalities in the state and he would want to see the municipalities share costs for services.
"We should be looking at more shared services and forcing required shared services and anything else short of consolidation," Sen. Inverso said. "Off the top of my head that’s one of the things I want to see come out of these committees. And hopefully, the public can come in and testify on these things."
Local officials say the biggest issue is how to fund schools. Out of every property tax dollar raised in South Brunswick, 69 cents is for the township’s school district.
Gary McCartney, South Brunswick schools superintendent, said relying on property taxes for most of the state’s school funding places too much of a burden on the homeowner. In South Brunswick, 78 percent of the district’s $126.1 million budget is funded via local property taxes.
"Too much of any good thing, could be bad for you," he said. "The same goes for property taxes."
Dr. McCartney, who was superintendent of the Parkland, Pa., school district, said school districts in Pennsylvania are allowed to come up with other ways to generate revenue including a local income tax dedicated to schools, taxes on amusement parks and on certain professional services.
He recommended that the state use revenue generated from the lottery and the Atlantic City casinos to help fund schools.
"The state should look at other proceeds like the lottery or some avenue such as gambling to fund education," Dr. McCartney said. "If people are uncomfortable with having gambling revenue pay for education, then use that money to offset something else. Hopefully they can find some solutions quickly."
He said the state also should look to control annual increases in employee health-care benefits. He said districts should also work with its employees to help ease these costs.
"Every school district in the state of New Jersey is looking for ways to minimize growth in health-care costs," Dr. McCartney said. "Every district through collective bargaining is asking its employees to take a greater part in that. The state has to make the call to persuade or dissuade one of its big cost drivers."
He said districts should also look at their own spending to ensure local taxes are being used properly.
"I’m against uncontrolled spending, as well," Dr. McCartney said. "All schools need to be serious about how they are spending money, but every level of government needs to do the same.
Both Mayor Gambatese and Ms. Smith said the state should reduce the number of school districts in the state.
Mayor Gambatese also said he thinks the school budget vote should be moved to November because more people would be likely to vote.
"We need to look at the entire school situation with the idea to make it better than it is not by pouring money into it," he said. "We need to change the way we do business here."
In addition, Mayor Gambatese said that the state should also stop borrowing money for road maintenance and construction, and municipalities should watch how much money they borrow.
"The borrowing of money to fund our roads and everything else is hitting us hard," he said. "The amount of interest they are paying is outrageous. Towns are the same way. Towns can’t deal with it either."
He also raised concerns about state pensions. He said the township set aside $1 million in its proposed budget to cover employees, who are part of the state pension plan, much of it mandated by the state to offset past underfunding.
"Township’s can’t afford to pay for past mistakes," Mayor Gambatese said. "Where are we going to make up the money for it? The only way we make it up is to increase taxes locally."
Reliance on property taxes means that towns must try to bring in businesses, commonly referred to as commercial ratables, to help pay for the services residents want.
"We happen to be a very progressive town," Mayor Gambatese said. "We give people good quality-of-life services here and the people really enjoy their township. But it becomes a battle for ratables, and people come in and say ‘we don’t want this in our town and we don’t want that in our town.’ But where do we get the income to continue to supply these services. It is either that or eliminating the services and that hurts people on lower income levels."
Ms. Smith, who works in the admissions office at state-run Rutgers University in New Brunswick, said changes should be made to the way state employee pensions are structured, but not if it would hurt the employees.
"I’m a company man," Ms. Smith said. "I work hard for the company, I hope they would work hard for me. That’s ‘old school’ thinking, I know. What happened to our pension system is that our politicians have manipulated it and taken advantage of it and sucked it dry. Yes, taxpayers have the right to be upset, but don’t be upset at the workers."
She said government should look at itself and see where cuts can be made internally.
"I’m so sick of politics in New Jersey right now," Ms. Smith said. "Politicians go on and on talking about cleaning up the state government, but that really hasn’t happened yet."
Kendall Park resident Ernest Reock, former director of the Center for Government Services at Rutgers in New Brunswick, said he does not think that a complete tax overhaul is necessary in New Jersey.
"I’m swimming upstream in the river on this one," he said.
Dr. Reock said one of the problems with changing from a property-based tax to one based on incomes is that incomes change with the economy.
"The income tax in New Jersey has become very progressive," Dr. Reock said. "A great deal of tax revenue has been generated from the people with the highest income. It fluctuates quickly during the economic cycle and it creates a boom or bust psychology."
That would mean shrinking tax revenues during economic downturns, he said.
However, Dr. Reock said, there is a need to change the way New Jersey collects property taxes. He said he would to use a formula to spread property taxes out evenly throughout the state. Towns would work with their county boards of taxation to determine how much they need to raise in property taxes to pay for services, he said. The state would make aid payments to offset some of the tax requirements, ensuring that homeowners across the state would pay about the same tax rate regardless of how much property wealth a given community has.
"The tax rate would be about the same in every community," Dr. Reock said. "That would be the objective."
The second part of Dr. Reock’s plan would be to establish a mechanism that limits the amount any single person can pay in property taxes, based on their income. He said he doesn’t know what the percentage of a person’s income should be.
"This will help poorer people who live in wealthier towns, be able to afford to live in wealthier towns," Dr. Reock said.
He said the state could use its current property tax rebate fund which is not working the way it was intended to cover the cost of the new aid.
In the end, Mr. Baroni says, something must be done to stem the rise of property taxes, which he says is driving New Jersey residents to neighboring states such as Delaware and Pennsylvania, where property taxes are lower.
"If the government can’t figure out a way to keep its constituents in their homes, then what we are doing in Trenton is not the most we can do," Mr. Baroni said.