Dear Mayor:

Today, Governor Corzine spoke before the State Legislature, kicking off the special session on property tax reform.

The governor has put before the Legislature the blue-print of a comprehensive plan for significant and sustainable property tax relief and reform. His recommendations include:

• A call to replace rebates with direct credits on property tax bills. This could begin as early as July 1, 2007. These direct credits would replace the property tax rebates checks mailed each year. It would be funded by $350 million, derived from the recent sales tax increase, plus the value of the current rebate programs.
• A recognition that labor costs, such as pensions and other benefits, inevitably drive up costs for governments. The reforms to be applied to State workers, which include raising the retirement age, limiting who receives benefits, and switching to 401K-style retirement plans, would be negotiated when new contracts are debated.
• Encouraging local governments and schools to consolidate and share services. Those undertaking such actions would be rewarded with money raised from the sales tax increase. The Governor said $250 million of the sales tax increase would be used for that purpose.
• Examining the sale of state assets, as well as sponsorships and naming rights of other properties. This would lower state debt and allow the state to offer increased property tax relief.
• Allowing local municipalities to raise new revenues including but not limited to impact fees.
• Creating a state comptroller position who would audit government spending. The position would be independent of state government and the person would be appointed to a term of six years. The mission of this person would be to get state spending under control.

Additionally, the Governor has called on a 4% cap on property tax increases. This is something we all hope to achieve. We note that such a cap would only be workable, however,: 1) if aid to municipalities was annually adjusted for inflation and population growth, which has not been the case for 5 years; 2) if local cost drivers, such as pension and benefit costs and arbitration awards, were similarly capped; and 3) if local governments were empowered to adopt alternative revenue streams. Absent those considerations, however, any cap will necessitate service and program cuts.

Finally, we appreciate that the Governor made it clear that if the State Legislature fails to act this year, he will support a citizens' constitutional convention next year.

If nothing else, our taxpayers now know that if the State Legislature fails to enact real property tax reform, then they themselves can the next crack. For more information, contact Jon Moran at 609-695-3481, ext. 21.