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Achieving
Economic Success
Through Property Tax Relief,
Defending Home Rule, and
Smart Growth
To improve and sustain New
Jersey's economic prosperity and meet the needs of our people, State
policymakers must take action to provide for 1) Property Tax
Relief, 2) Home Rule and 3) Smart Growth.
PROPERTY TAX RELIEF
By any measure, the property tax burden being born by the residents of the Garden State is staggering. Our State's chronic over-reliance on the property tax threatens our children's future, our continued prosperity and our quality of life. It is a major factor contributing to the failure of so many of our schools to adequately prepare their students for success. It weighs on the minds of corporate executives, as they consider options regarding the siting or expansion of facilities and the creation of employment opportunities. Public safety programs can be shortchanged, as a result of its constraints. And infrastructure improvements can be deferred or under-funded. High property taxes prevent our elderly from holding on to their homes, and our young families from finding affordable housing.
The municipalities search for
ratables can lead to sprawl that consumes agricultural lands and open
space and creates traffic jams, which increase the production of
hydrocarbons that emanate into the air we breath. Efforts to address one
or two of these symptoms of the problem inevitably exacerbate the
others.
Municipal officials have long struggled to balance the
service needs of their constituents with the State's unwillingness to
adopt needed reforms. At this crucial juncture, the need for property tax
relief is urgent.
Here are some specific property tax relief
policies that deserve action in 2002.
A. End the "Pension Offset"
The efforts of municipal officials to control soaring property taxes became even more difficult in 1994 when the State decided to reduce the amount of funding to municipalities.
This reduction, known as the "pension offset" was attributed to certain personnel cost savings. In the following State budget, the "pension offset" reached $103 million and remains at that level today, although those savings have long since evaporated. In other words, even before we consider the baneful effects of inflation, the amount of property tax relief funding available to municipal governments in the current State fiscal year is $103 million less than it should be; because, back in 1995, the State Treasurer "saved" our property taxpayers that amount. But, instead of allowing our local taxpayers to enjoy those savings, he deducted $103 million from the amount that they had coming to them, through statutory property tax relief programs. And, despite the fact that public employee pension costs have risen since then, the State continues to reduce municipal property tax relief funding by that same $103 million, year after year after year.B. "Real" Property Tax Relief
Since 1994, inflation has increased the costs of local programs and services by about 17.5 percent. Added to the "offset," this has raised the property tax relief shortfall to about $350 million.
In the year 2002, we will call on the State to plug this gap and to enact a bill which will prevent inflation from ever again aggravating the burden borne by our beleaguered property taxpayers.
Since 1994, State revenues have increased by about 30 percent. A supplemental appropriation of about $350 million will plug the inflation induced municipal revenue gap and end the "pension offset." And, building on former Senate President DiFrancesco's 1999 "Property Taxpayer Protection Act," future annual adjustments will put our State on the road to shedding its reputation for excessively heavy property tax reliance.C. Maintain "Legislative Initiative Block Grant" Funding
This program, which provides aid on a per capita basis, has been frozen at $33 million since 1995. In the meantime, inflation has reduced the value of this aid. Last year, the Senate approved Legislation to double the Legislative Block Grant, for one year, and to increase it to $133 million, over three years. The Assembly failed to act. The increase is appropriate. And it would be appreciated.D. Cure "Bell Atlantic Depreciation" Shortfall
The current State Budget underfunds vital "hold harmless" property tax relief funding, necessitated by Bell Atlantic's (now Verizon's) decision to change the way it calculated depreciation of its property. That 1999 change resulted in a significant reduction in Business Personal Property Tax payments to over 540 municipalities. At that time, we told the Administration and Legislative Leaders that, absent State action, the shortfall would shift a greater portion of the property tax burden onto the already overburdened backs of our residential property taxpayers. Both the Legislature and the Administration accepted our analysis. They responded, in the FY'01 Appropriations Act, with funding to protect our residential taxpayers from that increased burden.
In the meantime, the Legislature has not found a permanent solution. So, the problem grows. The Whitman Administration knew that. Yet the budget they offered the following year allocated only $16 million. And that $16 million was apportioned among only 43 municipalities.
That left about 500 municipalities with no hold harmless aid.
We will urge the State to address this shortfall by appropriating enough Business Personal Property Tax Depreciation Aid, so that no residential taxpayers will be asked to solve a problem neither they, nor their municipal officials, created.E. Property Tax Relief Constitutional Convention
The Legislature has been reluctant to implement fundamental restructuring of revenue sources without the clear support of the general public. Collecting taxes, then returning some part of them in the form of New Jersey Saver payments and Homestead rebates is an inefficient and costly way of providing a measure of tax relief, which contributes nothing to permanent reform of the current tax structure. Convening a Constitutional Convention for the sole purpose of recommending amendments to the New Jersey Constitution and changes to the statutes is the most appropriate method of building a consensus for reform.
DEFENDING HOME RULE
It seems few appreciate the relationship between Home
Rule and the health of our American Democracy.
Every year fewer
qualified citizens register and a smaller percentages of registered voters
make the effort to actually vote. Why are so many Americans - so many New
Jerseyans - "voting with their seats?"
In order to reinvigorate
participatory democracy, we need to start at the grassroots. And, when we
get to the grassroots, we will find a voter who lives in a municipality,
and whose life is affected every day by decisions made by municipal
officials.
From the homes we live in, to the roads we drive on, to
the schools we send our children to - virtually every aspect of our
everyday existence is shaped by decisions made by municipal
officials.
And, on virtually any given day, citizens can contact
their municipal officials. They live in the same neighborhoods. They shop
at the same stores. They worship with the same congregations. And whenever
and wherever citizens encounter municipal officials, they have the
opportunity to comment favorably about some recent development, to
complain about conditions in town and to suggest whatever changes they
deem appropriate.
All too often, the Mayor agrees with the
constituent and would like to do something. But the Mayor cannot because
some State or Federal statue or regulation has denied the Mayor the
opportunity to make the town a better place in which to live. The citizen
leaves such an encounter feeling a little more frustrated and a lot less
sure that his or her ideas and opinions really matter.
That is just
one aspect of the relationship between Home Rule and the strength of our
American Democracy.
We have had great success in our struggle
against unfunded mandates. But we continue to face new efforts to preempt
local government rights. Here are some examples of efforts to thwart the
will of the majority of the voters in "Anytown, N.J." and to supplant it
with preemptive State standards.
A. The Regulation of Businesses in Residential Zones
New Jersey was a pioneer in land use management. Its Land Use Law serves as a standard for similar legislation in states all across the nation. Early on, concerned State and municipal officials saw the need for local control of construction. And the decisions made by local planning and zoning officials over the years helped keep this most densely populated State among the most livable and the most prosperous.
A big part of the reason for our success rests on the ability of local officials to decide what kinds of uses promote public health and safety, and enhance the quality of life, in any given neighborhood. This enables people to choose to live in a mixed use zone, or in a zone that is restricted to residential uses.Recently, individuals who are illegally running businesses in residential zones have asked the Legislature to give them protection. We continue to oppose efforts to deny local officials the right to regulate business activity in residential zones.
B. The Regulation of Mining and Blasting Operations
State efforts to give local officials greater control over these important, but dangerous, activities will be welcomed. State efforts to usurp what control we currently have will be opposed.C. Resolution of Inter-municipal Land Use Disputes
Care must be taken to address this important issue that arises when a proposed development in one municipality might cause negative consequences in another.
We have advocated a proposal that emphasizes consultation and communication. We oppose proposals, that would take the decision making power away from municipal officials.
PROMOTING SMART GOVERNMENT
In March 2001, the State Development and Redevelopment Plan was adopted by the State Planning Commission. Although the League strongly supports the state plan and the cross acceptance process we oppose any effort by the State which would preempt local planning decisions.
Impact Fees
The concept is simple: new residential development means new residents. With new residents come added demands on the programs and services, and additional stresses on infrastructure. And, under the current system, who pays for these additional demands on municipal budgets? The property taxpayer. A fairer system would be implemented if the Legislature enacted a law allowing municipalities to enact impact fees. The developer who makes his business building new homes ought to contribute to a municipality's cost of supporting those homes and the people they bring.Timed Growth
The concept of timed growth recognizes the reality that additional development in a community should be done in conjunction with its master plan and with its infrastructure needs. Too often, development is forced upon our municipalities. This results in sprawl. Therefore, the Legislature should pass a law that allows timed growth, so that our Mayors, Governing Body members and Land Use Officers and Administrators can determine the shape of their communities.
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Contact:
William G. Dressel, Jr.
Executive Director
(609) 695-3481,
extension 22
Permission to display the above granted by the Director.