New school funding plan could add $1 billion in aid Increase among property tax reform proposals Saturday, November 11, 2006 BY DUNSTAN McNICHOL AND JOHN MOONEYNew Jersey lawmakers next week plan to unveil the framework for a revamped school funding formula that would boost state aid by as much as $1 billion, officials familiar with the ongoing talks said yesterday. The new school funding formula outline will be part of a wide range of reform proposals by four committees that spent the summer reviewing ways to cut the nation's highest property taxes. The plans are expected to be released Tuesday or Wednesday. Lawmakers and staff members familiar with the property tax relief efforts said they hope to boost overall school aid by anywhere from $600 million to $1 billion a year. The current budget appropriated $10.3 billion to local school districts. During a speech to the New Jersey Education Association yesterday in Atlantic City, Gov. Jon Corzine did not mention any dollar amount but said state officials are working on a revised formula that "gets away from what has essentially been a five-year freeze" for all but the state's poorest districts. The governor said the new funding would go beyond the 31 poor districts identified in the state Supreme Court's Abbott vs. Burke school funding decisions. Virtually all of the added state aid to schools has gone to these districts in the past five years. "I will be working very hard to see that we move from flat funding to growing funding," said Corzine. "It won't be just the Abbott districts." "We have to broaden it out and make sure our low- and middle-income districts have the resources to provide the kind of quality education we've been trying to do at the two extreme ends of the state," Corzine said, referring to the poorest and richest districts. Without commenting on specifics, Sen. John Adler (D-Camden), chairman of the committee devising the new school formula, predicted it will be approved by the Senate before the end of the year. "I'd be astonished if we didn't have things passed in the Senate by Christmas," he said. "It has to be in effect for next year." With a Wednesday deadline looming for study panel recommendations, Senate President Richard Codey (D-Essex) and Assembly Speaker Joseph Roberts (D-Camden) have already announced they will include a plan for the state to cover 20 percent of next year's property tax bills for at least half of New Jersey homeowners. That program will offer a sliding scale of tax relief, starting at 20 percent for the least affluent homeowners and dropping in stages as a homeowner's wealth increases, officials working on the plan said. The specifics of the formula remain in flux as lawmakers await word from Corzine's office on how much the state can spend on the program. Officials said they estimate the new tax credit program would cost slightly more than $2 billion. In the first year, the cost would be offset three ways. The state would use an estimated $700 million in sales tax receipts from the current budget year, generated by raising the tax from 6 percent to 7 percent in July. That's about how much voters agreed this week to constitutionally dedicate to property tax relief. Because the property tax relief would not begin until 2007, the state would also use next budget year's $700 million in dedicated sales tax dollars. That $1.4 billion would be coupled with about $900 million now being used for rebates. But after that, the state will no longer have that extra year's worth of sales tax dollars, which would immediately create a $700 million hole. So Codey and Roberts already are talking about possible alternate funding sources after 2007, including selling assets like the state Lottery or the New Jersey Turnpike, to help make up the difference. Corzine yesterday said he doubts the state could afford tax credits larger than 20 percent, and said more lasting reforms, such as a possible annual 4 percent cap on property tax bills, must receive serious consideration. "Everybody wants the relief because it is easiest to address, but the other ones are thornier," he said. One study panel is slated to recommend cost-saving changes in pension and health costs to public employees. Asked about potential changes, Corzine yesterday told teachers these are valid concerns. "I will tell you there does need to be change in the status quo. People live longer lives today, which is good, but it also comes with increased costs," he said. He called for a quick end to pension abuses. "There is no room for padding, boosting and double-dipping that we read about," he said. But in an obvious signal to lawmakers, Corzine said more sweeping changes like a higher retirement age should be handled at "the collective bargaining table." With state salary contracts expiring June 30, his administration last month began salary talks with state worker unions. Robert Master, legislative and political director for District 1 of the Communications Workers of America, applauded Corzine's comment. "If there are going to be changes as the Legislature has so loudly demanded, they have to be done in the context of give and take, and mutual compromises that can only take place in collective bargaining," he said. The property tax committee reviewing pensions and benefits has considered recommendations to raise the standard retirement age from 55 to 60 for public workers, and ban anyone from earning retirement credits for more than one job at a time. Committee members are scheduled to meet in private Monday morning to discuss what recommendations they want to include in their final report. Two Republicans members of that committee said yesterday they are angry Democrats apparently do not plan to vote separately on each committee recommendation. Assemblyman Kevin O'Toole (R-Essex) and Sen. William Gormley (R-Atlantic) said they will press for a public meeting Monday or Tuesday to vote up or down on more than three dozen specific proposals. "It's a charade if we're not going to make meaningful recommendations," said O'Toole. Added Gormley: "This process is a joke. Let's take votes on proposals. Every single one of them." Members of another committee, considering options for mergers and shared services among school districts and local governments, convened by teleconference for about 2 1/2 hours yesterday. It is scheduled to meet again Monday to decide what will be in its final report. Among the 18 areas under discussion, committee member Assembly Joseph Malone (R-Burlington) said there was general agreement on a plan to set up a special commission to recommend which towns or schools should be merged. "We really have to have independent eyes looking at these issues," said Malone. Sen. Joseph Kyrillos (R-Monmouth), sponsor of a bill creating such a commission, agreed. "I'm pushing it very hard." Staff writer Joe Donohue contributed to this report