New Jersey pushes back against property tax cap unrest

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TRENTON In a handful of New Jersey towns, residents who already bear the burden of the nation's highest property taxes are starting to see new and increased fees on everything from recreation programs to ambulance service.

Local officials argue it's their only means of coping with the rising cost of government and meeting state mandates under a sweeping 2010 law that imposes a 2 percent cap on property tax increases.

Just defeating the purpose

But the emerging practice has riled both Republican Gov. Chris Christie, who made reining in property taxes a signature issue of his 2009 gubernatorial campaign, and Democratic state Senate President Steve Sweeney. They contend it violates the intent of the law, which allows municipalities to exceed the cap only with voter approval, and they have promised to close what they say is a loophole.

"Municipal governments must do more to control property taxes," Sweeney said. "Paying lip service to their residents' needs for cost containment, then turning around and hitting them with a separate bill, is just taking more money out of the same pocket."

Christie spokesman Michael Drewniak said that while not many towns have tried to go around the cap yet, the governor wants to put a stop to it.

"Our intention is to prevent this from becoming a slippery slope," he said.

New Jersey has the nation's highest property taxes, averaging $7,758 per household. More than 40 states have some kind of property tax limit, the first of which was imposed in Florida in 1855.

Sweeney is sponsoring legislation aimed at stopping municipalities from using new or higher fees to circumvent the property-tax cap. The Senate passed the measure and sent it to the Assembly on May 31.

Bill Dressel, executive director of the New Jersey League of Municipalities, said the cap is too strict, and decreasing aid has made the situation tougher. State aid to municipalities has fallen from nearly $2 billion to less than $1.5 billion.

Municipalities have limited revenue

Unlike local governments in many other states, those in New Jersey can't enact local sales taxes, personal property taxes, amusement taxes, etc. That leaves property taxes and a limited hotel/motel tax to support a wide range of services.

At the same time, Dressel said, towns are facing increasing state mandates for things such as environmental permitting and employee training.

In Passaic, officials have gone so far as to consider charging fees for using the jaws of life at major car wrecks, said Assemblyman Gary Schaer, who is also the city's council president.

"At some point it's going to hit fundamental services, police, fire and EMS," said Schaer, a Democrat. "Although we might differ on how many times if at all municipalities should pick up garbage, or on building recreation centers, I think all of us would agree that every government includes, necessarily, protection."

Local officials said the state's withholding of more than $1 billion a year in energy tax money due municipalities is another part of the problem. For nearly 100 years, cities received payments from energy companies with operations in their communities. But for the last 25 years, lawmakers have diverted some of that money to balance the state budget.

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