TAX NEWS - 2010

New Jersey Tax: NJ governor recalls legislature for NJ property tax relief

New Jersey's Legislature was recalled on Tuesday for a special session on property tax relief after enacting a $29.4 billion budget with a slightly higher cap on local taxes than the governor sought.

Gov. Chris Christie, a Republican, persuaded New Jersey lawmakers to shut a nearly $11 billion deficit without raising taxes. He also wants them to ask voters to approve two caps of 2.5 percent each: one on property taxes and one on state operations.

Democrats, who control both legislative chambers, instead put a 2.9 percent cap on property taxes in the budget for the fiscal year starting July 1.

"It's full of holes, like a piece of Swiss cheese," Christie told cable television station CNBC. "There's 10 different exceptions, 2.9 percent is too high, there's no voter involvement," he continued.

New Jersey's property taxes, which are one of the main ways schools raise money, are among the nation's highest. Each year, homeowners pay an average of $7,281, and this levy has shot up 70 percent in 10 years, Christie said in a statement.

Further, Christie wants the Legislature to approve his so-called "tool kit" for counties, cities and towns that will help them balance their budgets by reining in payroll costs.

Democratic Assembly Speaker Sheila Oliver said in a statement: "We will listen to what the governor has to say, but hope he sees the light and signs our tougher new 2.9 percent property-tax cap into law."

Christie said the state's new budget slices spending nearly 9 percent on a year-over-year basis. A $300 million surplus is projected.

"There's going to be pain felt in every place," he said. "Some of the only places we did not cut and increase spending a little bit was in healthcare, and things like charity care for the poor and the unemployed."

The new budget was partly balanced by abolishing property- tax rebates this year, cutting almost $1.3 billion of funds for schools, counties, cities and towns, and skipping a $3.1 billion contribution for the state pension fund.

"This fall, we're going to have to grapple with pension and benefit reforms for current employees to bend that benefit curve so we can stop the growing debt in the pension system," Christie told CNBC.