TAX NEWS - June 2010

New Jersey Tax: Mendham property tax cap proposal

MENDHAM — Gov. Chris Christie, drumming up support for his 2.5 percent property tax cap proposal, has often said the limited revenues would force towns to make tough decisions and eliminate redundant administration.

And the Governor has not shied from offering up as examples his hometown of Mendham Township and its neighbor, Mendham Borough.

"We each have our own police department, we each have our own governing body, we each have our own business administrator," Christie said Tuesday to a town hall audience in Perth Amboy. "And I can punt a football from my house to Mendham Borough."

Officials in the Mendhams are supportive of Christie's plans and don't mind being singled out, but say a property tax cap is unlikely to be enough of an incentive to complete the difficult task of merging.

"The difficulty in merging is finding a way to equalize tax ramifications," said Richard Krieg, township mayor, who is one of the area's most vocal proponents of sharing services and is currently in talks with Randolph to merge police.

While Christie has repeatedly cited the Mendhams, the Chesters, a short drive away, are actually in the midst of considering a merger. The question of whether the Chesters should merge was slated to be on the November ballot, but is likely to be pushed back at least one year.

Part of the concern, said Bill Cogger, Chester Township mayor, is tax equalization funding, which ensures any additional taxes assessed on homeowners because of the merger would be paid by the state as long as the property owner holds the deed.

Christie's 2011 budget eliminated that funding.

"This is offset by the fact that such tax relief would not be needed in 2011 since no municipal consolidations currently under consideration would take effect in the upcoming state fiscal year," said Lisa Ryan, spokeswoman for the Department of Community Affairs.

But without a guarantee that the funding will be there in the future, towns are hesitant to move forward, Cogger said.

Cogger, Krieg and Neil Henry, Mendham mayor, support the tax cap proposal, but residents, Henry said, are often reluctant to give up autonomy even if it means paying a little bit extra.

That is part of what killed a deal to merge Mendham's two police squads in 2004.

As for a complete merger, Henry said he doubts borough residents have the appetite at the moment.

Krieg agrees, but believes at some point towns like the Mendhams will have to merge.

"It's been in the back of my mind," Krieg said. "Ultimately, I think the two Mendhams have to come back together again."