As I See IT
Towns Have a Right to Tax More than Property
By Vincent Barrella
Mayor, Point Pleasant Beach Borough
A dramatic shift in thinking at the state level regarding the way that municipalities raise revenue is essential. Home rule is a hollow concept when it applies only to the requirement that our municipalities pay for unfunded mandates and local services, while at the same time denying them access to revenue sources within their borders that would provide meaningful property tax relief to their taxpayers. This is especially so given the scarcity of state resources, promised cuts in municipal aid and indications that the levy cap will be strictly adhered to going forward.
Local option taxes targeting discretionary spending can play a significant role in curbing the escalating property tax burden for many municipalities within the state. Point Pleasant Beach, for example, would be able to reduce its municipal property tax burden by 30 to 50 percent were it able to levy fees on discretionary spending. While these fees may slightly increase the financial burden on the nearly two million tourists who frequent us, it is these same two million visitors that require the borough to employ twice as many full time police officers than population statistics would indicate, and nearly triple that amount of special officers in the summer. It is unreasonable is to ask the approximately 5,300 residents and taxpayers of the municipality to continue to shoulder these costs. Imposing user fees would remedy this fundamental inequity.
Objections to granting local taxing options to municipalities vary. One objection is that local option taxes essentially represent a “zero sum game.” This is predicated on a belief that there is a direct correlation between the increased tax burden local option taxes would impose upon residents of a municipality and the property tax savings recognized by those same residents.
While this assumption may be valid with respect to some municipalities, it is flawed when the argument is advanced globally. While local taxing options will not represent a panacea for every New Jersey municipality, to ignore the value of accessing these user fees to the many municipalities that would benefit from them because they are not a statewide solution is shortsighted. For example, it ignores the savings that would derive from the ability to shift costs from residents and taxpayers to the users of services, many from out-of-state, that our localities host each year. Moreover to the extent that some municipalities are able to “cook for themselves,” it will release state resources to assist taxpayers in communities that cannot do so.
The benefits are not limited to taxpayers in tourist communities. Taxpayers in other municipalities, such as those with substantial commercial and industrial activity, would also see a reduction in their property tax burden were they able to tap into their resources.
Another objection is the specter of local governments tripping over themselves as they pursue alternative revenue sources. As evidenced by the fact that only a handful of shore communities have chosen to adopt a local hotel/motel tax the contrary would be true. Local governments would need to be both judicious and thoughtful in deciding whether to add additional levies so as not to put themselves at a competitive disadvantage.
Some harbor a concern that local option taxes would expand the size of municipal government. This concern is not unreasonable; however, because of the spending cap, a municipality, when debating whether to adopt a particular levy, would have to consider additional costs that would be incurred. Thus, there exists a strong deterrent against the adoption of inefficient revenue measures.
Finally some are concerned that local option taxes would interfere with state revenue policies and uniformity. Any perceived interference and lack of uniformity already exists since larger municipalities such as Newark, Atlantic City and Jersey City, to name a few, already possess the power to levy local taxes. There is no justification for denying taxpayers in our smaller municipalities, like Point Pleasant Beach, the same relief from property taxes currently afforded those in their larger counterparts.
The real impediments to change are fear and distrust. This fear would be ameliorated if our elected state officials would get past their partisan distrust. Acting in a bipartisan manner they would represent a target that even those who are least informed would be hesitant to engage.
It is essential that New Jersey adopt a new approach that lessens our reliance on property taxes. The time for real home rule through the grant to local elected officials — those most accountable to the electorate – the right to consider and implement levies they deem reasonable, necessary and appropriate is now.
This article was originally published in New Jersey Municipalities magazine. Vol. 86, No. 3, March 2009