New Jersey's property tax crisis

·4 min read
The first New Jersey gubernatorial debate between incumbent Gov. Phil Murphy (D-NJ) and Republican challenger Jack Ciattarelli, pictured, is being held at New Jersey Performing Arts Center in Newark, NJ on September 28, 2021. Republican Ciattarelli appears on stage alone for for a photo opportunity prior to the debate.

There are two crises that are crippling New Jersey’s fiscal and economic well-being. Two crises that impact every person and business. Two crises that place us dead last in the country in these categories. Two crises that, if solved, would brighten our future dramatically.

We’re talking about New Jersey’s property tax and business climate crises. Given that Trenton is overflowing in tax revenue, surplus and federal aid, there has never been a better time to solve these historic dilemmas. Sadly, a permanent fix is nowhere to be found in Gov. Phil Murphy’s fiscal year 2023 budget proposal.

The governor’s budget includes the next property tax rebate, which is a band-aid, not a permanent reform. Governors in both parties — for decades — have created these rebates, yet our property taxes rise every year. In pushing this rebate, Gov. Murphy is trying to buy political goodwill with taxpayer money. There’s something terribly frustrating, if not infuriating about government taking money out of your right-hand pocket and putting some of it back in your left-hand pocket, giving it a fancy name, and calling it a tax cut. It’s insulting.

The governor’s budget does not include anything that makes New Jersey a much better place to do business, especially on Main Street.

Here’s what Murphy’s budget does do: it spends $49 billion. That’s $14 billion more than Chris Christie’s last budget less than five years ago. A 40% increase in total spending. Has anyone’s salary or social security benefits increased 40% over the past four years?

If ever there was a time to implement true reforms and make the structural changes critical to charting a different and more prosperous path forward, this is it. Instead, our property tax and business climate crises will painfully persist, getting worse every year that reforms are not enacted.

In announcing his budget, the governor said, “ . . . the state does not set property taxes.” This is terribly disingenuous. Every Board of Education, Mayor, and County Commissioner will tell you that Trenton’s flawed school aid formula and its confiscation of energy tax receipts and telecommunication surcharges all have direct impact on property taxes.

To permanently lower property taxes, Trenton needs to do four things. First, Trenton needs to adopt a new school aid formula. The current formula is arbitrary, nefarious, and a violation of the equal benefit clause in our state constitution. A new formula would: a) redefine “local fair share,” which determines how much a community contributes to its schools; b) have the state cover 100% of the cost of special education; c) provide each school district with state aid equal to “X” for every English speaking student and “Y” for each English language learner; and d) hold school districts accountable for keeping instructional costs-per-student within a reasonable range.

Second, Trenton needs to give municipalities back the energy tax receipts it collects on utility company installations (e.g., switchyards and generating stations). Afterall, that was the original intent when the tax was created. Currently, most of these tax receipts are diverted to balance the state budget.

Third, Trenton needs to stop diverting telecommunication surcharges or “911 fees.” The revenue from these consumer fees was originally earmarked for counties to help maintain the 911 system. Instead, the fees are being used to balance the state budget. In fact, New Jersey is the nation’s worst offender of 911 fee diversions, which, according to the association that represents all counties, is “creating an emerging public safety crisis and system of double taxation on taxpayers.”

Finally, Trenton needs to freeze property taxes for all homeowners once they turn age 70. It is criminal when retired people are forced out of their homes or faced with choosing between affording their property taxes or life-saving medications. The property tax increases forgone can be recaptured by municipalities in the future.

We can lower property taxes. Not with short-term gimmicks or fancy names for old, tired and failed ideas, but with true, permanent, and bold reforms. Otherwise, when the pandemic tax revenue, surplus, and federal aid have all gone away, so too will Phil Murphy, leaving us in worse fiscal shape than when he started.

As for improving New Jersey’s business climate, that will be the focus of the next Op-Ed submission.

Jack Ciattarelli, the 2021 Republican nominee for New Jersey governor and a likely 2025 gubernatorial candidate, is a regular contributor to the opinion pages of USA TODAY Network New Jersey publications.

This article originally appeared on New Jersey's property tax crisis