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William G. Dressel Jr, Executive Director - Michael J. Darcey, CAE, Asst Executive Director
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BEYOND THE BLAME GAME TO PROPERTY TAX REFORM
By William G. Dressel, Jr.

For some time now, it has been fashionable for some in the media to blame many, if not most, of our State's environmental, economic, social and, most of all, property tax problems on "Home Rule" - a system of local self government that gives a concerned citizen maximum access to those who are elected to administer public affairs and maximum impact on the decisions that determine the course of public policy. This current train of thought seems to suggest that municipal decision making is necessarily inferior to that brand of polished statecraft and profound analysis of issues routinely practiced in the halls of power, in our Nation's and our State's Capitals.

With annual federal deficits now running around $423 billion (not counting the costs of war); with the national debt now at a staggering $8 trillion and growing by the minute; with the State of New Jersey mired in a $4+ billion deficit; and with all of New Jersey's 566 municipalities able to operate with balanced budgets year after year, who are we to question anyone's preference for the efficiency, effectiveness and inherent equity of larger, more expansive units of government? And who could doubt that the root cause of all the problems that we face is, as the sages assert, local decision making?

In the face of all this evidence, who could ever blame local government's state mandated over-reliance on regressive property taxes? Sure. The property tax does account for about 45 percent of New Jersey's state and local tax revenue. The national average is just slightly above 30 percent. New Jersey property taxes equal about 5.6 percent as a percentage of personal income, compared with the national average of 3.6 percent. And, yes. New Jersey households with incomes in the lowest 20 percent do pay 9.2 percent of their earnings in property taxes; while the wealthiest 20 percent pay 3.6 percent.

But don't property taxes continue to go up year after year, because of the profligacy of local elected officials and despite the magnanimity of state budget makers?

In the budget proposed by Governor Corzine, for the fifth straight year, local property taxpayers will be denied the benefit of annual inflationary adjustments that are required by State statute in major formula municipal property tax relief funding. In the 1990's, Legislators in both parties and in both Houses recognized the fact that increases in population, prices, wages and employee benefits - increases over which mayors and governing bodies have little, if any, control - erode the ability of local officials to keep a lid on property taxes with "level funding." Appreciating that fact, they put laws on the books that were supposed to preserve the property tax relief benefits of at least two programs, into the future.

We appreciate the problems that are being faced by the Administration and by the Legislature, as they struggle to responsibly close a massive, inherited deficit. We only hope that they, likewise, recognize how "level funding" contributes to the problems being faced by local budget makers and the property taxpayers, whom they have sworn to serve.

So be on guard against those who refuse to acknowledge the connection between "level funding" and inflation, on the one hand, and rising property tax bills, on the other. Some, both at the State and at the local level, may find it easier to demagogue the problem, than to confront the need for meaningful property tax reform. As always, it is easier to place blame on others than to accept our share of the responsibility for a failure to advance solutions that can move our State beyond its chronic over-reliance on regressive property taxes to fund essential programs and services. And as always, playing that blame game does absolutely nothing for the people who need immediate relief and who long for lasting reform.

If the property tax crisis is real, then maybe property tax reform would help. If we move beyond the blame game, then maybe we can move towards real solutions. That is why local officials have asked for a special convention dedicated to property tax reform. And that is the crying need of the property taxpayers of our State.

With property tax pressures almost certain to intensify this year, the people of New Jersey must be given a hope for future relief. They expect the Senate, the General Assembly and Governor Corzine, to act on a property tax convention bill, in time to get the question on this November's ballot. They need nothing more than that. They deserve nothing less.

 

 

 

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