Jan 20, 2007 9:02 am US/Eastern
AP News: Mayors Tell Corzine His Cap Plan Is A Dud
TRENTON (CBS/AP) ―
No matter where he turns to cut property taxes, Gov. Jon Corzine just can't seem to win.
The latest complaints are coming from New Jersey mayors, who blasted Corzine for his plan to limit the amount municipalities can increase property taxes o 4 percent. Other ideas designed to cut property taxes, like pushing smaller towns and schools to merge and asking government workers to reduce their pension and health benefits, also got chilly receptions.
Piscataway Mayor Brian C. Wahler predicts dire times for New Jersey towns if the state puts a cap on future property tax increases. "Instant layoffs," he said.
Corzine told the mayors the 4 percent cap is essential if the state is going to reduce its highest-in-the-nation property taxes. "The 4 percent cap is absolutely critical to what we are trying to achieve," said Corzine, stressing that property taxes have increased about 7 percent annually for years.
Mayors aren't the only ones worried about a proposed cap. School officials contend it would lead to cuts in school spending. "We don't want to see New Jersey schools fall behind," said Edwina M. Lee, the association's executive director.
It's uncertain whether restrictions on how much counties, towns and schools can increase their property taxes will force drastic steps such as cutting police, letting potholes go unfilled and laying off teachers.
Studies of property tax caps indicate what might come to New Jersey if the state restricts how much homeowners can be charged each year to pay for services ranging from schools and recreation to parks and libraries to snowplowing and garbage collection.
"Property tax caps can have impacts beyond the straightforward reduction of one type of tax," determined a 2004 University of Maine study of tax caps in Massachusetts and California.
Massachusetts enacted a 2.5 percent cap in 1980. Like the plan being considered by New Jersey, voters there can approve exceeding the limit. California enacted a strict 1 percent cap in 1978.
The University of Maine study found Massachusetts municipalities dealt with the cap by protecting spending on police, firefighting and sanitation, but cut spending for schools, parks and libraries. It also found property tax increases in California have been quelled by the cap, but that the state had to increase other taxes to pay for services, including the sales tax and taxes on beer, wine, gasoline and cigarettes.
A 2005 study by economist M. Ray Perryman for the Texas Association of Counties found caps make it difficult to meet changing needs and emergencies, He determined caps "needlessly reduce the capacity of local governments to function effectively and efficiently."
But a 2006 study by Americans for Tax Reform noted Massachusetts had the nation's highest property taxes when it implemented its cap. New Jersey property taxes have since increased steadily and are twice the national average, at $6,000 per property owner.
Had the Garden State implemented the same tax cap as Massachusetts, New Jerseyans would be paying about $4,200 per year in property taxes, the Americans for Tax Reform study found. "By failing to control local spending, taxpayers are now paying twice the rate of Massachusetts," the study concluded.
New Jersey hasn't unveiled legislation to restrict future tax increases, but it will be combined with another plan to give most homeowners a 20 percent property tax cut. The idea is to give homeowners relief while also restricting tax growth.
Corzine said he expects the cap will allow exemptions for expenses like debt and public worker pension costs.
(© 2007 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
