Reform Task Force Calls for Large Cut in Property Taxes
June 12th, 2013 by New Jersey Future staff
Note: This article was originally published on NJ Spotlight, and we are cross-posting it here because of the land-use and development ramifications of any change in how local schools are funded. From our website section on tax policies:
New Jersey’s fragmented system of local governance and its disproportionate reliance on property taxes for funding local services (particularly schools) combine to create incentives that have powerful, distorting effects on land-use decision-making.
Because municipalities are so often on their own to pay for local schools, every municipality has an incentive to adopt zoning that discourages any residential development that might attract new schoolchildren and hence require a hike in property tax rates. Instead, municipalities compete for the limited number of “clean ratables,” such as office parks and shopping malls, that their region can sustain. This results in the sub-optimal location of major projects and a self-reinforcing downward spiral of disinvestment for those municipalities that are unable to score these major projects, as rising tax rates continue to chase away the more prosperous residents and businesses.
New Jersey should revamp its income tax system to raise an additional $6 billion to reduce property taxes on most homes by more than a third, and if lawmakers don’t act, the state should hold a constitutional convention to get the reform enacted, the state’s municipal representatives recommended in a radical proposal unveiled yesterday.
But legislators from both parties, while recognizing the need to lower property taxes, did not endorse the income tax revision proposal of the New Jersey State League of Municipalities’ Property Tax Reform Task Force, saying it would be impossible to enact.
But Assembly Majority Leader Louis Greenwald (D-Camden) said he does support a constitutional convention.
“I’ve polled on this issue, too. You can’t sell this in focus groups,” he said during the league’s property tax reform conference at Monmouth University in West Long Branch, referring to changing the income tax structure. “People don’t trust us.”
“I think there is a need for a constitutional convention,” continued Greenwald, who has sponsored a bill (A2445) that would authorize a property tax reform convention. “The convention will be a citizens’ voice.”