TRENTON — Gov. Chris Christie’s proposal for a constitutional amendment to cap property tax increases at 2.5 percent a year was dealt a severe blow Saturday when the Legislature’s top Democrat announced a competing plan that could be pushed through both houses this month. Senate President Stephen Sweeney (D-Gloucester) said he wants to limit annual increases to 2.9 percent -- down from the current 4 percent -- and do it through law, not a constitutional amendment. Sweeney said his version would also provide exceptions for local governments’ pension, health care and energy costs, and possibly other variables..."

‘Sweeney wants Legislature to determine property tax cap, while Christie pushes to let voters decide’

Published: Sunday, June 20, 2010, 7:00 AM

Claire Heininger/Statehouse Bureau

TRENTON — Gov. Chris Christie’s proposal for a constitutional amendment to cap property tax increases at 2.5 percent a year was dealt a severe blow Saturday when the Legislature’s top Democrat announced a competing plan that could be pushed through both houses this month.

Senate President Stephen Sweeney (D-Gloucester) said he wants to limit annual increases to 2.9 percent -- down from the current 4 percent -- and do it through law, not a constitutional amendment. Sweeney said his version would also provide exceptions for local governments’ pension, health care and energy costs, and possibly other variables.

"As Democrats, we passed a 4 percent cap that works," Sweeney said, citing a drop in average increases to 3.3 percent last year from 7 percent earlier in the decade. "We will get below his 2.5 percent before we’re done."

Assembly Speaker Sheila Oliver (D-Essex) said she backs Sweeney’s plan and the lower house will consider it immediately. Sweeney said his goal is to pass it and send it to the governor’s desk by July 1 -- instead of submitting Christie’s plan to voters this fall.

While the governor can propose a constitutional amendment, only lawmakers can put it on the ballot. Democrats have majorities in both houses of the Legislature.

The announcement drew an immediate rebuke from Republican Christie’s office, which said a hard constitutional cap is the best way to rein in the nation’s highest property taxes.

"The professional politicians of Trenton have had decades to make statutory fixes that work, and they have failed," Christie spokesman Michael Drewniak said yesterday. "It is time that the voters, the taxpayers of New Jersey, make these decisions."

Unless Christie and the Democrats agree on a plan, a key component of the governor’s "tool kit" to help local governments cut property taxes will be killed. Lawmakers have said they might consider Christie’s plans in July.  

Sweeney said the current statute is working and forcing change through constitutional amendment could cripple local governments. He added that exceptions in some areas are needed. "Until we have a way of controlling health care costs, it’s not realistic" to have a hard cap, Sweeney said.

Sweeney’s counterproposal also comes as another leading Democrat -- Newark Mayor Cory Booker -- is set to endorse Christie’s plan, according to two officials briefed on the mayor’s thinking, who asked to remain anonymous because Booker has not yet gone public.

A spokeswoman for Booker, Esmeralda Diaz Cameron, declined comment Saturday, saying only that no formal plans or announcements have been made.

The governor has collected endorsements from more than 200 other mayors for his plan, which would put a constitutional amendment on the ballot this November. Christie’s cap is modeled on a similar policy in Massachusetts that bans local governments from hiking annual property tax collections more than 2.5 percent without getting voter permission, with very few exceptions.

The Massachusetts cap law has kept property taxes down relative to home values, but has been criticized for polarizing communities and expanding the gap between the towns that can and cannot afford to vote for higher property taxes.

"It has created very decisive boundaries between communities in Massachusetts," Oliver said. "There’s another side of the story to the 2.5 percent hard cap."

But Republicans said it is time to yank the power from the Legislature, which can and frequently does override its own spending laws. Christie’s plan would have to pass the Legislature by early August in time to get on the ballot.

"Anything we do legislatively can be manipulated any year for anybody’s purposes," said Assemblyman Joseph Malone (R-Burlington).

Malone said he was "seriously concerned" that even the governor’s proposal is not strict enough because it allows towns to go over the 2.5 percent cap to pay debt.

Sweeney’s plan would also allow local governments that keep property tax collections below the 2.9 percent increase to "bank" the difference and apply that toward any future year. Christie’s plan also allows this for local governments that come in below the cap, but only for three years at a time.

Lisa Fleisher contributed to this report.