Thank goodness for the 2% budget cap

The 2017 municipal budget, with a tax increase of 1.68%,  was introduced at the BOT meeting this past Monday.  Included in the presentation is a graph which shows the average tax increase 2000 - 2010 of 5.75% (the budget cap of 4% took effect in 2008,) and 2011 - 2017 of 1.75% (the 2% budget cap took effect in 2011.)  

I can remember a BOT meeting around twelve years ago when the Village Administrator, in response to a question, said that the average tax bill in 20 years would be $30,000. I think that the average tax bill is about $15,000 now. 

Kudos to the BOT and Village Administrator for the excellent budget presentation. 

http://www.southorange.org/Doc...

Agreed that the tax cap, enacted by Gov Christie in 2010, has been a good thing for us (although our taxes are STILL obscene compared to most other states).  Jeff Bennett posted the following article about the 2% salary cap expiring this year, which should be a huge concern to everyone.

http://www.njspotlight.com/sto...

michaelgoldberg said:

Agreed that the tax cap, enacted by Gov Christie in 2010, has been a good thing for us (although our taxes are STILL obscene compared to most other states).  Jeff Bennett posted the following article about the 2% salary cap expiring this year, which should be a huge concern to everyone.

http://www.njspotlight.com/sto...

It doesn't seem to be a concern for the Democrats in Trenton. 

While municipalities have been able to operate OK with the 2% cap (in part because inflation has been low for longer than could have been expected), school districts are having a much harder time (because they are much more labor intensive and even if salary increases can be kept low health insurance can not be kept anywhere near 2%). Without relief (an it would be great if that came in the form of increased state aid) there is going to be a crisis in most districts soon.

cramer said:

michaelgoldberg said:

Agreed that the tax cap, enacted by Gov Christie in 2010, has been a good thing for us (although our taxes are STILL obscene compared to most other states).  Jeff Bennett posted the following article about the 2% salary cap expiring this year, which should be a huge concern to everyone.

http://www.njspotlight.com/sto...

It doesn't seem to be a concern for the Democrats in Trenton. 

That's EXACTLY why it should be a concern for all of us.

We should also be concerned with Phil Murphy's stated opposition to a tax cap at all.

http://www.nj.com/opinion/inde...

Cap is especially a boon to senior homeowners, but a benefit to all taxpayers. Even so, senior population in South Orange and Maplewood is 30% less than the statewide average. Taxes the biggest reason. Reduced senior homeowner population also the biggest reason why public school enrollment has been increasing big time, with the result that the board of education is seriously considering even more construction -- recall the addition put on to Maplewood Middle recently. Since families are not having more kids, the reason for the enrollment increase comes down to empty-nesters age 55 and above exiting our two towns. Building more classrooms will only add to the debt that must be addressed through school taxes. Our town officials refuse to connect the dots, refuse to make keeping senior homeowners from leaving priority # one. And that hurts everyone, including school families, who pay taxes as well, and who also have to see less public funding going to their child as the district has to share basically the same financial resources with more and more newcomer students, since the state gives very little aid to suburban districts like ours. Seniors leaving South Orange and Maplewood hurts us all but who speaks about the common good any more or tries to connect the dots and view the big picture? 

Kim

Why are New Jersey's property taxes so much worst than every other state? 

Hint: It's not your town. It's the state. New Jersey does revenue collection and distribution badly.  

And a 2% cap, or any cap for that matter, will not fix that. 

the 2% cap was the lazy person's way out for our governor and legislators. Instead of trying to really fix the problem, they left it to municipal officials and school board members to make the tough choices.

typical.

The 2% cap has school districts in a death spiral.  Salaries and benefits (healthcare) are the two largest spends and they are growing far above 2%. The only choice is to cut manpower and programs every single year to keep up. 

Christie shifted all the hard decisions from the state to the local level by enacting the cap and then keeping school aid flat for the past 8 years.

Gilgul said:

While municipalities have been able to operate OK with the 2% cap (in part because inflation has been low for longer than could have been expected), school districts are having a much harder time (because they are much more labor intensive and even if salary increases can be kept low health insurance can not be kept anywhere near 2%). Without relief (an it would be great if that came in the form of increased state aid) there is going to be a crisis in most districts soon.

Maybe @Runner_Guy can help us with this: 

http://www.state.nj.us/cgi-bin...

Trenton doesn't decide the salaries for our Municipal or District employees.

People closer to home do that.

TomR

Trenton also doesn't do recruitment, retention or contract negotiations. They're helpful that way.

I know that everyone here has an automatic assumption that every single policy that New Jersey designs is stupid or corrupt, but property tax caps exist in many other states too.  Massachusetts has had "Prop 2.5" since (IIRC) 1981 that limits property tax increases to 2.5% (with some exceptions).   After New Jersey passed its tax cap, New York State copied us too.  New York State's tax cap is actually much stricter than ours, since its 2.0% or inflation, whichever is LOWER.  

A tax cap is appropriate for New Jersey because we have one of the highest costs of government in the nation.  If you look at public employees here compared to the rest of the country, they are more numerous in per capita terms and much better paid.  NJ public employees in fact are among the country's best paid even when you adjust for the high cost of living here.

I suppose the state government could have been very prescriptive and told munis and school districts what to cut, but that would be treating localities like children and not letting them make their own decisions.  

The NJ tax cap, which you bemoan, is also sorta myth, since it can be exceeded in any amount by a vote of the electorate in November.  If an electorate wants higher taxes/more services, it can have that.  

Also, Christie would have gone much farther in eliminating unfunded mandates and weakening public sector unions.  Obviously the Democrats would not go along with that.  

tom said:

Why are New Jersey's property taxes so much worst than every other state? 

Hint: It's not your town. It's the state. New Jersey does revenue collection and distribution badly.  

And a 2% cap, or any cap for that matter, will not fix that. 

I strongly disagree with this contention about a tax cap.

Look at Massachusetts.  

Massachusetts in the late 1970s was "Taxachusetts" and indeed was among the country'st highest tax states, (The "Taxachusetts" epithet was invented by Mass people themselves), but Mass allows referenda and in 1980 it passed "Prop 2.5" which limited property tax increases.

Since then, Massachusetts has ceased to be "Taxachusetts," although ignorant people in both parties still say it is. Average property taxes in Massachusetts are actually only $3900 per household and income taxes are only 5.1%.  The sales tax is ~6.5%.

Is Prop 2.5 the only reason for the reduction of Massachusetts' taxes?  No.  But it has helped.  

As for New Jersey, property tax increases are much lower than they were previous to the tax cap.

"NJ Advance Media analyzed municipal tax figures going back 15 years and found that, when adjusted for inflation, the impact of property tax relief relief measures enacted during Gov. Chris Christie's first term -- including strict caps on local spending and public worker arbitration rewards -- is clear.

Property taxes rose 1 percent when adjusted for inflation from 2010 to 2015 after soaring 35 percent, after inflation was taken into account, from 2000 to 2010, the analysis found."

http://www.nj.com/politics/ind...

I have no problem with a property tax increase cap. My problem is the state did not give municipalities or local districts any tools to deal with it.  The net result is a large decrease in manpower and programs within our school system and local government.  Are services still at the same level they were 8 year ago?  A resounding no. 

It's all a trade off.  I don't think we should be patting Christie on the back.  He passed the buck to the local level.  

The real problem is the Abbott decisions at the NJ Supreme Court.  The state income tax is Constitutionally 100% dedicated to property tax relief.  This was first levied in the mid '70s.  It was supposed to be distributed to the municipalities as a way to shift school funding from a regressive property tax that punished senior citizens to a progressive income tax that spread the burden of education funding across the people who were still in the work force.  Then the Abbott decisions came about and only 31 municipalities were given special treatment, and most of the money.  The rest of us wound up with almost nothing in state aid and continued high property taxes.  In the mean time, Cities like Jersey City, Hoboken, Asbury Park, and Long Branch were able to use PILOTs to hide 10's of billions of dollars in prime real estate developments from the school funding formulas in their cities.  Christie said 7 years ago he was going to fix this and then he didn't.  So we continue to get under funded and Jersey City lives high off the hog.  Unfortunately I don't expect Murphy to do anything about it either. 

Prop 2 1/2 has been a disaster in Massachusetts. Yes, it has kept property taxes relatively low, but municipal services have been drastically cut. Schools every year have to cut staff, because they don't have the money to pay teachers and other support personnel. 

Murphy and Fulop are making backroom deals with each other.  I'm not counting on any formula that will fix what you describe.

Rob_Sandow said:

The real problem is the Abbott decisions at the NJ Supreme Court.  The state income tax is Constitutionally 100% dedicated to property tax relief.  This was first levied in the mid '70s.  It was supposed to be distributed to the municipalities as a way to shift school funding from a regressive property tax that punished senior citizens to a progressive income tax that spread the burden of education funding across the people who were still in the work force.  Then the Abbott decisions came about and only 31 municipalities were given special treatment, and most of the money.  The rest of us wound up with almost nothing in state aid and continued high property taxes.  In the mean time, Cities like Jersey City, Hoboken, Asbury Park, and Long Branch were able to use PILOTs to hide 10's of billions of dollars in prime real estate developments from the school funding formulas in their cities.  Christie said 7 years ago he was going to fix this and then he didn't.  So we continue to get under funded and Jersey City lives high off the hog.  Unfortunately I don't expect Murphy to do anything about it either. 

yahooyahoo said:

I have no problem with a property tax increase cap. My problem is the state did not give municipalities or local districts any tools to deal with it.  The net result is a large decrease in manpower and programs within our school system and local government.  Are services still at the same level they were 8 year ago?  A resounding no. 

It's all a trade off.  I don't think we should be patting Christie on the back.  He passed the buck to the local level.  

I don't think that this is accurate either because the state gave localities several big tools through Chapter 78.

First, there was the arbitration cap for cops & firemen, which is now expiring.  Second was the requirement that at least school district employees (and perhaps muni & county employees too??) pay for a share of their healthcare. Third there was the requirement that local employees contribute more to their pensions, which reduced the amount of money municipalities and counties had to contribute to the locally-funded pension funds (eg, Local PERS)

You would be correct that Christie never gave towns any additional state aid, but I don't think he should get all of the blame for this, since we had the Great Recession, Atlantic City implosion, and the pension crisis. Since 2010 the state's pension contributions have risen from $0 to $2.5 billion (which is still a severe underpayment).  

Also, the NJ Supreme Court ordered in 2011 that the state give the Abbotts another $500 million.  Had the Supreme Court decided differently, Christie might have put more of that money into the education funding formula (which isn't the same thing as "Abbott") and/or put it into TPAF.

These are some good points. However, I would characterize the "share of their healthcare" as a token payment at best.  In our district, those small payments only apply if family members are on the policy.  I'm not sure if this is uniform across NJ.

Runner_Guy said:

yahooyahoo said:

I have no problem with a property tax increase cap. My problem is the state did not give municipalities or local districts any tools to deal with it.  The net result is a large decrease in manpower and programs within our school system and local government.  Are services still at the same level they were 8 year ago?  A resounding no. 

It's all a trade off.  I don't think we should be patting Christie on the back.  He passed the buck to the local level.  

I don't think that this is accurate either because the state gave localities several big tools through Chapter 78.


First, there was the arbitration cap for cops & firemen, which is now expiring.  Second was the requirement that at least school district employees (and perhaps muni & county employees too??) pay for a share of their healthcare. Third there was the requirement that local employees contribute more to their pensions, which reduced the amount of money municipalities and counties had to contribute to the locally-funded pension funds (eg, Local PERS)

You would be correct that Christie never gave towns any additional state aid, but I don't think he should get all of the blame for this, since we had the Great Recession, Atlantic City implosion, and the pension crisis. Since 2010 the state's pension contributions have risen from $0 to $2.5 billion (which is still a severe underpayment).  

Also, the NJ Supreme Court ordered in 2011 that the state give the Abbotts another $500 million.  Had the Supreme Court decided differently, Christie might have put more of that money into the education funding formula (which isn't the same thing as "Abbott") and/or put it into TPAF.

"Had the Supreme Court decided differently, Christie might have put more of that money into the education funding formula (which isn't the same thing as "Abbott") and/or put it into TPAF."

Doubtful. He would have tried to parlay it into income tax cuts, targeted at the top brackets of course.

And the Income Tax was going to Lower Real Estate Taxes/Fix School Funding..   (hint hint.. this is Reason #1 to avoid a VAT at Federal Level Ex an Amendment to Constitution prohibiting both at same time).  

Go Back and Read about back drop.  Jersey City didnt have "rateables" to adequately fund Schools.. I wonder why?    Its all a circular problem..  Not enough money to spend + spending inefficiencies..   

End of Rant

Rob_Sandow said:

The real problem is the Abbott decisions at the NJ Supreme Court.  The state income tax is Constitutionally 100% dedicated to property tax relief.  This was first levied in the mid '70s.  It was supposed to be distributed to the municipalities as a way to shift school funding from a regressive property tax that punished senior citizens to a progressive income tax that spread the burden of education funding across the people who were still in the work force.  Then the Abbott decisions came about and only 31 municipalities were given special treatment, and most of the money.  The rest of us wound up with almost nothing in state aid and continued high property taxes.  In the mean time, Cities like Jersey City, Hoboken, Asbury Park, and Long Branch were able to use PILOTs to hide 10's of billions of dollars in prime real estate developments from the school funding formulas in their cities.  Christie said 7 years ago he was going to fix this and then he didn't.  So we continue to get under funded and Jersey City lives high off the hog.  Unfortunately I don't expect Murphy to do anything about it either.