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3-14-10 'Christie will propose constitutional amendment to cap tax hikes in N.J. budget'
GSCS Quick Fact:The 2.5% cap proposal will, according to this article, require a constitutional amendment to pass prior to implementation. Given timelines for the statewide public vote needed to implement a constitutional amendment as well as legislative process requirements, it is unlikely that this could be implemented until 2012 at the earliest.
TRENTON/STAR LEDGER -- "Gov. Chris Christie will propose a constitutional amendment limiting annual property tax increases to 2.5 percent when he introduces a budget Tuesday that will seek fundamental changes in spending at every level of government, according to administration officials with knowledge of the plan...


"Christie will also propose converting the state’s property tax rebate checks into direct credits on homeowners’ tax bills..."

"The governor’s $29.3 billion budget will shave $2.9 billion off state spending from last year, about a 9 percent drop. The cuts include reductions in aid to municipalities and school districts...

"Unlike the current 4 percent limit, the new "hard" 2.5 percent cap on municipal, school and county property tax levies would be all-encompassing, without exceptions for such essentials as rising health insurance or debt payments. The tax could be raised higher only if local voters grant their approval in referendums. .."

Christie will propose constitutional amendment to cap tax hikes in N.J. budgetBy Star-Ledger StaffMarch 14, 2010, TRENTON -- Gov. Chris Christie will propose a constitutional amendment limiting annual property tax increases to 2.5 percent when he introduces a budget Tuesday that will seek fundamental changes in spending at every level of government, according to administration officials with knowledge of the plan. Christie will also propose converting the state’s property tax rebate checks into direct credits on homeowners’ tax bills, eliminating what was once considered an almost untouchable fixture of New Jersey government and politics because of its popularity among voters. Some homeowners may still receive a refund, but the envelope from the state treasury containing an actual check that has arrived almost every summer for 30 years would be gone.The governor’s $29.3 billion budget will shave $2.9 billion off state spending from last year, about a 9 percent drop. The cuts include reductions in aid to municipalities and school districts, said two officials, who spoke to The Star-Ledger on the condition of anonymity ahead of the speech. Unlike the current 4 percent limit, the new "hard" 2.5 percent cap on municipal, school and county property tax levies would be all-encompassing, without exceptions for such essentials as rising health insurance or debt payments. The tax could be raised higher only if local voters grant their approval in referendums. The state also would be constitutionally barred from increasing its own spending on direct state services by more than 2.5 percent per year.At the same time, the officials said, Christie will propose other reforms that could help local officials control spending, including changes to the pensions and benefits of current public employees, and collective bargaining negotiations for police, fire and teacher contracts, and the civil service system.It was not clear yesterday which residents would receive direct property tax relief through tax credits. During the campaign, the Republican vowed to restore some portion of the rebates cut last year by former governor Jon Corzine, who preserved them only for senior citizens, the disabled, and those earning less than $75,000 a year.Battles likely aheadChristie’s budget address to a joint session of the Democrat-controlled Legislature could be the signature moment of his freshman year in office, and will likely lead to months of negotiations and battles over state spending and the role of government at all levels. Christie has ruled out raising taxes to balance the budget, which must be signed into law by July 1.By making property tax reform the centerpiece of his speech, Christie is attacking a question that has bedeviled New Jersey governors for decades: How to make the state affordable when home rule has allowed local government to add to the tax burden each year.The proposed constitutional amendment — which would have to pass the Legislature and be approved by voters statewide — is modeled after Proposition 2˝, adopted by Massachusetts voters in the 1980s. But while that proposal also capped property taxes at 2.5 percent of the assessed value of a community’s property, New Jersey — where many communities already exceed that threshold — would only adopt the piece limiting annual increases to 2.5 percent.While the Massachusetts model has succeeded in holding down property taxes there, the law took a harsher toll on lower-income communities and "resulted in cuts to valued services rather than simply calling forth greater efficiency from local governments," according to a 2008 study by the Center on Budget and Policy Priorities, a left-leaning nonprofit group in Washington, D.C."Across Massachusetts, a number of communities have been forced to lay off teachers, police officers, firefighters, and other public employees; close fire stations; shut libraries, senior centers, and recreation centers or sharply reduce their hours; and scale back public school programs," the study found.The administration officials said Christie’s plan would help municipalities avoid negative consequences by giving them the "tools" of collective bargaining, civil service, and pension and benefit reforms. They would not disclose specifics of those changes in advance of the speech, other than to say the pension and benefit reforms would go further than a bipartisan package of bills pending before the Legislature. Those reforms are fiercely opposed by public worker unions but supported by towns and school boards.William Dressel, executive director of the state League of Municipalities, said towns will suffer if the state simply cuts aid without the other reforms."What I fear is we’re going to get the cuts, but we’re not going to get the tools," Dressel said. "Those tools have to be in place sooner than later. It’s a gut-wrenching experience right now for local officials."New Jersey’s 4 percent limit was imposed in 2007 by Corzine and the Legislature, which allowed temporary exemptions for scheduled pension payments and pay raises in existing contracts. Other items, such as health care, were permanently outside the limit, while towns and schools could apply for state permission to break the cap under other dire circumstances.A Star-Ledger review this month found nearly a third of the state’s 566 municipalities raised property taxes by more than 4 percent last year.Christie’s proposal would do away with that system, leaving it to local communities to decide by referendum whether to exceed the new cap.Long traditionThe governor will also propose saving on processing and short-term borrowing costs by converting the rebates into direct credits, although the administration is still exploring how to accomplish the overhaul. The checks have been sent by mail since 1977, spawning decades of argument over whether rebates are a political gimmick, meaningful property tax relief or something in between. The switch to credits has been favored for years by policymakers of both parties, but complicated by privacy concerns.A bill (A1708) up for a vote in the Assembly tomorrow would allow property tax relief credits to replace the checks as of Jan. 1, 2012."The current rebate system is clunky and expensive, and needs to be replaced with a simpler, more rational credit system that actually lowers a homeowner’s tax bill," said Assemblyman John Burzichelli (D-Gloucester), a co-sponsor. Story by staff writers Claire Heininger and Josh Margolin Staff writer Lisa Fleisher contributed to this report.