Property Tax Reform, Special Legislative Session & School Funding

8-14-06 News Clips
Property Taxes and school funding articles.

Shift more of property tax burden to the state

Op-Ed Posted by the Asbury Park Press on 08/13/06

BY LOUIS C. GOETTING

Congratulations to Gov. Corzine for his leadership in focusing the Legislature and the citizens of this state on the structural problems inherent in the property tax system. I fear, however, that the debate has already been hijacked and distracted from its mission of reducing the taxes we pay. It has become a discussion of too many towns and school districts and the undeserving taking advantage of the pension and health benefits at too high a cost.

While that may all be true, the harsh reality is they are immaterial to our outrageous property tax burden.

New Jersey must learn that raising taxes with the hope and promise of giving it back in the form of rebates, credits, deductions or as grants or aid simply does not work. There is no evidence that any of those strategies ever reduced or even held constant the growth of property taxes in this state or any state.

New Jersey is not going to significantly reduce the cost of delivering public services, the number and structure of the public agencies that deliver these public services or the total tax burden until it takes a hard look at who it expects to deliver the services and what it wants delivered.

Why are we wasting our time and money on consolidation or shared services discussions while we still have communities abandoning regional school districts, as they have over the past 10 years? There are more proposals to break up regional districts on the table today than ever, and no one is suggesting they want to create a new one.

If we want meaningful change, we need to shift the focus from these old scapegoats and deal with meaningful solutions.

History, including detailed studies of hundreds of municipalities and school districts conducted under my direction during the Whitman administration, identified millions of property tax dollars that were being saved by good local managers, millions that could be saved by change and dollars that could be saved if the state would modernize its rules.

Most of those recommendations remain true today. These studies also documented that home rule had value, with the greatest efficiencies coming when the taxes were locally raised.

What is left, if we do not want to lose the identity or personality of our communities and schools, recognize the folly of raising taxes to give tax credits, and cannot afford to distribute blank checks to every mayor and school board? We can learn from the one property tax program that has worked.

In 1995, the state court system was transferred from the property tax to the state budget. In one day, $350 million was permanently stripped from the county property tax and shifted to the state budget. From a public service perspective, nothing changed. The courthouse was still there and jury duty was in the same room. From a property tax perspective, it was a new day, with a permanent reduction in the taxes in every county.

There are many more services ripe for transfer from the back of the property tax to another funding source. Many of these can move without any disruption or change in the delivery of the services.

I suggest three changes, which could shift more than $3 billion from the property tax:

Eliminate the local collection of the property tax itself. This change could permanently remove an unnecessary cost in excess of $700 million from the property tax. If the state billed and collected the property tax and guaranteed every municipality, school, fire and county agency payment of 100 percent of the amount they billed, the $700 million reserve for uncollected taxes would be eliminated.

The state's collection could be accomplished with existing computer files and systems. The savings in staff, equipment and space in every town hall could easily push the real savings significantly higher.

Require that every public employee participate in the state employee health plan, and that the state pay the cost. Today, the state gives aid to every town and school and tells them to go buy their own policies. If they wish to participate in the state plan, they have unique rules that make the plan more expensive and less attractive. At the same time, the state pays for retired teachers in the state plan, losing any opportunity to actuarially balance the plan's enrollment.

The state system, which is actually a number of self-insured pools and HMOs, should be the only and required plan. The state would realize the real savings that would accrue as a result of the increased diverse pool and its buying power.

The value to the local property tax from a shift of this cost to the state would exceed $2 billion. In almost every community and to most employees, this change would be transparent. But the savings would be enormous. For many local employees, this change would result in premium sharing for the first time, as the sharing negotiated 10 years ago for state workers is essentially illegal for local employees today.

Eliminate the billing for the state pension system from the property tax. Today, all public employees are required to participate in one of the state pension plans and contribute toward their pension. The employer is billed its share and uses state aid to pay the bill. The elimination of the local employer share would remove more than $600 million from the property tax. We should remove this cost from the property tax and then control the rules for the pensions themselves.

If we are truly interested in reducing property taxes, then take these three steps and $3.3 billion, or 16 percent, will come off the property tax bill tomorrow. Then we can talk about how to restructure local government and improve our quality of life.

Louis C. Goetting, Point Pleasant, worked for the state Treasury Department from 1994-98, first as director of local government budget review and later as deputy state treasurer.

 

COMMENTARY: To do right, they have to vote against self-interest

Posted by the Asbury Park Press on 08/13/06

BY BOB INGLE
GANNETT STATE BUREAU

TRENTON — The charade that is the effort to reduce property taxes grinds on via committees packed with legislators who have a choice: Do what's right or vote against their own special interests. When did they ever do the former?

The Joint Committee on Public Employee Benefits Reform has six members who probably expect to get a fat pension and health care for life when they retire from their part-time legislative work. In addition, three of the six members have more than one public job.

The committee looking at consolidation of New Jersey's too much government — 1,389 entities that can tax us — already is hearing the same old bull wrapped in a pretty package and tied with a bow called Home Rule — the fictitious notion locals are in control of their government and destiny.

Lynne Strickland, executive director of the Garden State Coalition of Schools, said parents "... like the notion they can walk in the door and talk to teachers up to the superintendent and have a viable hand in their kids' education."

How does Strickland explain voters can turn down a school budget with excessive spending only to have it reinstated at the local or state level? Or how about the people who go to see the superintendent's contract and are told it's none of their business?

No regrets: Sonya Comstock is a long-time reader who got fed up with high prices and never ending corruption and moved to Delaware. She still reads the Politics Patrol on the Internet and checks in from time to time to say she never looked back. And maybe brag a bit.

"I just received my property tax statement for the year," she wrote. "My total taxes are $580.83 because I was given a senior exemption of $444.63 for school and county taxes. Not too much to handle. Houses similar to mine in my community are selling for $325,000."

Her school district, she reports, is getting a second high school. One superintendent will be responsible for two high schools, an elementary school, two middle schools, an adult high school and an early learning center. He does that with just one assistant.

"His picture was in the paper and he doesn't look stressed out or overworked."

Her driver's license renewal is $2.50 a year and vehicle registration is $20 a year. "They don't charge to go on the beach, either. I tell people you have to pay to go on the beach in New Jersey. I think folks here think I am making up all this stuff ..."

That part is understandable. People who read this column across the land write with accusations of exaggeration. It does sound a lot like fiction.

For instance, the state taxation director and others, including his wife, have been indicted for being wined and dined by a vendor accused of overbilling taxpayers. They had been on paid leave for five months — a nice, long vacation.

Why isn't that bill to strip corrupt public officials of their pensions moving in the Senate? Sens. John Adler, D-Camden, and Ellen Karcher, D-Monmouth, put it in some time ago.

Tick tock: Why is the investigation of Attorney General Zulima "Protect The Guilty" Farber taking so long at $75,000 a month? All they need to talk to are Farber, her live-in boyfriend Hamlet Goore, two cops at the scene, the people who change records at MVC and that State Police lieutenant who drives Farber around. By the way, why is a lieutenant being used as a chauffeur?

Gossip under the Gold Dome has the outcome being delayed until after the November election because it could affect the campaign of U.S. Sen. Bob Menendez, one of Farber's biggest and most consistent backers.

No participants in the Farber/Goore case should be given prosecutorial immunity so they can take blame without consequences and the guilty can walk. No deals. That would be suspicious.

And why is Gov. Corzine quiet on the Board of Public Utilities audit showing mismanagement, including a secret $80 million bank account? BPU President Jeanne Fox is married to Steve DiMicco who is handling Menendez's campaign. He also ran two for Corzine and one for former Gov. McGreevey.

The University of Medicine and Dentistry of New Jersey admitted to $5 million in Medicare fraud which prompted an investigation by the feds. It has cost $5.8 million and is ongoing. School and state officials are griping. I say too bad. Let 'em complete the task whatever it costs, but make sure the guilty go to jail. Emphasis on jail.

Bob Ingle is Trenton bureau chief for Gannett New Jersey newspapers. He can be reached viae-mail at bobingle@app.com and heard on New Jersey 101.5 FM radio at 5 p.m. Fridays. Join his blog at www.app.com/gsbr.

Reality on health benefits

Friday, August 11, 2006

New Jersey's public employee unions are right in saying the state should not try to balance its budget on their backs or make them the sole scapegoats for high property taxes.

The changes being proposed for the state health benefits plan, however, are not an attempt at either of those things. The state is simply facing the reality of an expense that is growing too fast to sustain.

What New Jersey proposes is not odious. It's what most of us average Joes pay. While state employees are responsible for a $10 co-pay at the doctor's office, some municipal employees and teachers covered by the state plan pay $5. Everyone in the state plan would pay $10 if the proposed changes take effect as scheduled in January. Starting Oct. 1, the plan also would require that state employees use generic drugs and mail-order prescription services or pay more for their medications, the kind of choice most of their neighbors already face.

State and local governments could save $74 million with the proposed adjustments. Yet New Jersey's health benefit package will still be more generous than those offered by most other states and more generous by many degrees than what most private employers offer.

The New Jersey package will still cost nearly $4 billion this year, with $2.1 billion paid by the state and the balance by municipalities. The state share alone will be $3.6 billion by 2010 if no changes are made. That's the evidence that changes must be made.

The Treasury Department says it can make the adjustments as rule changes under current labor agreements. The unions say it should be done at the bargaining table. One way or the other, these are changes that should be made. Whatever contracts local entities have with their employees, they will have to adjust to any new rules to stay in the state plan. The unions should not press for adjustments that pass the cost on to local taxpayers.

New Jersey is only inching toward the type of changes other public and private health plans have already embraced.

Hard times and wisdom call for cautiously applying the fiscal brakes to one of the most inflationary items in the budget. That's the reality, and it is time that everyone, including public employees, faces it.

Don't forget premiums

Editorial Posted by the Asbury Park Press on 08/13/06

A Corzine administration proposal to raise copays for teachers and local government workers for doctors' visits from $5 to $10 and to hike copays for drugs to $3 for generics and $10 to $15 for brand-name medicines has union leaders in a lather.

Hey, we're not too thrilled with the idea either. It doesn't go nearly far enough. If that's all Gov. Corzine has in mind to reduce public employee health care costs, our worst fears about his undying allegiance to public employee unions may have come to pass.

At an editorial board meeting with the Press just 10 days ago, Corzine said he believed public employees who are now contributing nothing toward their health insurance premiums should be contributing something. Asked how much, he said 10 percent. That's about 15 percent less than we'd like to see. But at least it's a serious money-saver.

The copays, relatively speaking, are penny-ante stuff. We hope he will up the stakes as the benefits reform process advances.

NJEA response to 'Runaway pay'  a Bergen Record series
Sunday, July 30, 2006

Special report: Runaway Pay

The Record recently ran a series of articles dubbed "Runaway pay." The series asks: "Can New Jersey afford the rising cost of teachers and cops?" Sadly, this series does a grave disservice to those who serve New Jersey's communities.

While it is true that the salaries of public school teachers in Bergen County have risen greatly over the last 20 years, so has the cost of living, especially in North Jersey. Shouldn't teachers be able to live in the communities in which they work? Studies have shown that students benefit when their teachers live in the same communities as they do. Keep in mind that teachers pay property taxes, too.

Research shows that students perform best when they are taught by highly educated, experienced teachers. The current system of paying teachers through a salary guide reflects this emphasis on advanced education and experience. In Bergen County, it takes the average teacher 16 years and at least a master's degree to reach the higher salaries. Fortunately for the children of Bergen County, their teachers have an average of over 10 years experience and at least half possess a master's degree or its equivalent.

The series gripes about the rising costs of health insurance and the fact that New Jersey's public school teachers have fair, negotiated health benefit packages. The NJEA is always willing to work with boards of education to seek cost-saving measures when negotiating health benefits.

The series also echoes a common misconception about teacher tenure. Tenure merely protects a teacher's right to due process, which means the employer must provide a legal reason for dismissal, back it up with facts and show that the teacher has been given a fair chance to improve before losing his or her job. If an administrator properly documents a teacher's lack of performance, there is nothing tenure, or the NJEA for that matter, can do to save his or her job.

What are the real issues here? First, the rising cost of property taxes is due to the inefficient and unfair way New Jersey funds its public schools. The truth is that our schools rely too heavily on the property tax as their funding source, thereby pitting taxpayers against public schools. We need a fairer structure of funding our public schools and assessing property taxes.

Second, our health care system is in crisis. No one should have to contribute half his or her paycheck to an insurance company. Instead of criticizing those who have managed to hang on to decent medical benefit packages, we should be directing our energy to making health care affordable for everyone.

New Jersey's public schools are among the very best, with the highest high school graduation rate in the nation and some of the highest student test scores. Bergen County has one of the highest graduation rates in New Jersey. Nine out of 10 students plan to continue their education after graduation. That doesn't happen by accident. It takes highly-qualified, well-educated teachers, involved and caring parents, and motivated students to make that happen. We can't expect to maintain this tradition of excellence if we can't continue to offer these teachers a professional salary.

Joyce Powell

July 27

The writer is president of the New Jersey Education Association.

 

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