Gov. Chris Christie's Tax-Cap Plan: Good or Bad?

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

On Thursday, the New Jersey Senate approved the plan, which would limit annual increases in the state's property-tax bills to 2 percent.

The 36-3 vote came only a few days after Christie and Democratic Senate President Stephen Sweeney announced a compromise last weekend aimed at reining in growth in the state with the nation's highest property taxes, taxes which soared 72 percent between 1999 and 2009. The plan would slice the 4 percent cap currently in place in half and allow for fewer exemptions.

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. "However, it sounds like pension and insurance increases and debt payments may be excluded from the 2 percent cap. So it is really impossible to say how this will impact us until we see the finished product."

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 Gov. 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.