New Jersey Tax: Think tank says Christie's property tax cap would hurt New Jersey education, public services
A report released today by a left-leaning think tank said a proposal from Gov. Chris Christie to cap property tax increases at 2.5 percent a year would likely reduce "essential educational programs and services" while failing to address the root cause of high property taxes.
The Center on Budget and Policy Priorities said a similar Massachusetts law, used by Christie as a model for his proposal, indeed kept property taxes low - but at the expense of basic services, "from deteriorating roads to poorly lit streets to longer police and fire response times."
The group wrote the paper in response to an analysis released last month by the right-leaning Manhattan Institute for Policy Research, which said a cap would not harm the quality of public education.
Massachusetts' statewide policies and targeted school funding have kept test scores competitive, but schools also increased class sizes and cut art, music, foreign languages and athletics, the CBPP's report said.
"The bottom line is that property tax caps do not change state policies in ways that can make government operate better, smarter or more efficiently, nor do they necessarily change local policies in ways that improve government," the report's author, Iris Lav, said on a conference call with reporters. "Caps can reduce property taxes, of course, but there are many better ways to do that."
Massachusetts state Rep. Jay Kaufman, a Democrat and chair of the state's Committee on Revenue, painted a picture of a state falling apart, naming communities laying off dozens of cops and teachers, cutting library hours to next to nothing, . He named some "randomly selected" examples he knew about.
"The city of Quincy, in its 2011 budget, is laying off 150 city employees," he said. "Every department is impacted. Police, fire, schools, DPW, social safety net, libraries, you name it."
The Christie administration disagreed with the "premise and conclusions of the study," a spokesman said in a statement.
"This is not about tying the hands of schools and towns to fund the services New Jerseyans need, but providing the tools to make education and government affordable again for taxpayers," the statement said. "To simply focus only on the cap and ignore the rest of the reforms is wrong and not what the governor is proposing at all."
The 2.5 percent cap is the centerpiece of Christie's plan to stem the rise of property taxes, which rose on average 3.3 percent last year to a statewide average of $7,300. The proposed amendment would require a 60 percent vote by residents to raise taxes above the cap, with exceptions for debt payments and some major projects.
To help municipalities deal with rising costs, Christie has also proposed changes to arbitration and civil service rules that would give towns more power over public worker unions.
Lav said Christie's accompanying proposals are deficient because they largely focus on employees.
"Almost the entirety of the tool kit is aimed at saying employees are the problem, and I would say that policies are the problem," she said. "The things that are in the governor's tool kit are very unlikely to solve the problem."
Kaufman, the Massachusetts politician, had a more colorful take on the "tool kit."
"If this is a tool, it's a chainsaw," he said. "It doesn't do what a hammer does. it doesn't do what a pair of pliers does. It just chops and cuts. I think you make much better policy with scalpels than you do with chainsaws."
The Manhattan Institute analysis said Massachusetts spends 20 percent less per student while scoring about the same or better than New Jersey on national tests. The CBPP report attributed that to New Jersey spending more on special education students and educating more of them.
As an alternative, Lav said the state should consolidate school districts and municipalities — one of the top complaints about New Jersey's government structure. The report warns a cap could prevent towns and school districts from consolidating and sharing services, because mergers - which could include building joint facilities - could initially be expensive.
In addition, the report said the state should give property tax refunds to people based on their income, and make sure the tax relief is well publicized.
Lav challenged the idea that teacher salaries drove costs up, citing a difference of under 0.4 percent between the average salary of $62,769 in Massachusetts and $63,018 in New Jersey. But she acknowledged she did not have a comparison of pensions and benefits.
Christie, a freshman Republican, has been touring the state promoting the idea for the tax cap, which he wants passed as a constitutional amendment. To have it on the ballot by November, the Democratic-controlled Legislature would have to pass it with a three-fifths majority by early August.
Massachusetts Prop 2.5 primer
The law, enacted in 1980, places several limits on how much cities and towns can raise in property taxes. That limit is automatically increased by the state every year by 2.5 percent -- up to a maximum "ceiling" of 2.5 percent of the total value of the private taxable property. So, for example, if a town raised $100 million in taxes one year, it would be allowed to collect $102.5 million in taxes the next year, and so on every year. Voters, however, can approve an "override" of the cap and allow the town to collect more -- but never more than the "ceiling." The town does not lose ground, so to speak, if it only increase taxes 2 percent. It is allowed to bank the difference and make it up whenever it wants in the future. An exception is made for new construction, which increases the property tax base.