Approved: Property Tax Cap

The New Jersey Assembly overwhelmingly approved legislation capping local spending and property tax increases at 2 percent on Monday, a week after the Republican governor and Democratic Senate president announced a deal to tame the nation's highest property taxes.

The bill allows exceptions to the cap for certain costs towns, school districts, and counties can't control, like pension and health care costs, which have been rising by double-digits. Otherwise, only voters would be able to override the cap.

Assembly sponsor John McKeon said a similar cap in Massachusetts has created a schism between affluent and blue-collar towns, with wealthier voters three times more likely to override the cap than those in lower-income areas.

The legislation is one of dozens of proposals the Legislature will consider this summer to rein in property tax growth. New Jerseyans pay the highest property taxes in the nation, averaging nearly $7,300 per household. Read the complete Associated Press story here.

Gov. Chris Christie's property tax cap of 2 percent and "toolkit" has received mixed reactions from local leaders in Montclair.

When asked what he thought about Christie's plan, Montclair Councilor Nick Lewis said that, as usual, the devil is in the details.

"A real 'hard' cap could be impossible and leave us with few alternatives," he said. "This is because we have so little discretion on much of our expenses.

"Typical increases in insurance and pension costs, combined with the need to bond some of our long-terms debt, might leave us utterly unable to meet that sort of cap," he said. 

Montclair Councilor Cary Africk said everything boils down to a very simple equation.

"It involves two variables: expenses and revenue," he said. "In Montclair, our expenses keep going up, and our revenue down. So we turn to the taxpayer.

"The 2 percent is great ... but ... the '33 Bill Toolkit' must come with it," he said. "Towns have to have the power to change things."

What Chrsitie is calling his "toolkit" is a package of 33 bills that would make it easier for towns to control expenses by changing the state's civil service rules, limiting the ability of employees to accrue sick leave throughout their career, and putting restrictions on arbitrators resolving contracts with public service workers.

And Africk pointed out that the 2 percent will come with exemptions.

"Right now, if we just put in the two exceptions for health and pensions Montclair, if it was at 2 percent, would be closer to 4 percent," he said. "And that's just including two exceptions. What if the final bill has 30 exceptions?"

Africk said people don't appreciate the seriousness of Montclair's economic situation, adding that the 2 percent should force them to the realization that "we're not in Kansas anymore."

The Christie plan includes exemptions for health care costs, pension costs, capital projects, and debt service payments. Drastic increases in school enrollment and emergency situations are also exempted under the cap plan.

Mayor Jerry Fried indicated he's too focused on this year's budget to start thinking about a plan that would affect next year's budget.

The Town Council is on the cusp of approving a $69.9 million budget that would result in an 11 percent tax increase.

"We've had a tough time, as this year we've had a 17 percent cut in revenue," Fried admitted.