Trenton's summer forecast: Tax relief

Lawmakers plan to start a special session in July

Tuesday, June 06, 2006

BY TOM HESTER AND JOE DONOHUE

Star-Ledger Staff

A special legislative session in July will kick off a summer-long effort by lawmakers to tackle the state's property tax problem, but the earliest that taxpayers would see any type of relief is still three years away.

Senate President Richard J. Codey (D-Essex) and Assembly Speaker Joseph Roberts (D-Camden) will make the official announcement of their coordinated plan at a news conference scheduled for this morning in Trenton.

Neither would comment yesterday, but details were provided to Senate Democrats at a closed-door caucus at the Statehouse. Legislators and people familiar with the issue provided details, but asked to remain anonymous because the legislative leaders are scheduled to lay out the plans today.

Here is what the plan calls for:

As a way to appease Republican legislators who want to curb government spending, four joint committees will be formed at the special session to focus on school spending, public employee benefit and pension costs, shared public services, and the role of a tax convention.

The committees, composed of Democrats and Republicans from both houses, are expected to spend the summer holding hearings before coming up with recommendations.

Legislators would propose possible tax alternatives for a convention to consider and recommend to voters.

A referendum asking voters to approve a convention and elect delegates would appear on the November 2007 ballot. If approved, a convention would be convened the following year and voters could be asked to approve recommended changes in the way New Jersey finances local schools and government on the November 2008 ballot.

If that schedule holds true, any tax relief proposals approved by the voters would not go into effect until 2009.

Not all lawmakers are happy it will take so long.

Sen. John Adler (D-Camden), a longtime proponent of a tax convention, said he believes it will be hard to get an agreement on Gov. Jon Corzine's 2007-08 state budget on June 30, 2007, without some form of property tax relief in place.

"There are a lot of senators of both parties who understand it's the fundamental issue affecting New Jersey and we have to deal with it this calendar year," Adler said. "In my own mind, it's the critical issue that affects businesses and homeowners and the future of New Jersey. It is what we have to do to have a stronger state in the coming years."

Senate Minority Leader Leonard Lance (R-Hunterdon) said he favors a convention sooner than 2008 and one that "has the ability to discuss spending as well as revenue."

Still, the plan is seen as a step in the right direction caused, according to a Senate staff member, by the massive rejection of school budgets in April.

"That was when the light bulb went on that something has to be done," the aide said. Overall, only 53.4 percent of budgets were approved and just 15 percent of eligible voters turned out statewide.

Last month, a special Property Tax Reform Transition Policy Group formed by Corzine called for a special legislative session to begin in July.

"Fundamental property tax reform is the most pressing issue on the public's mind, and we must move expeditiously to address it," Corzine said yesterday.

Corzine is expected to address the special session when it convenes in July.

The joint committees are expected to take into consideration Roberts' proposals to curb government spending. They include creating "super" county school superintendents, appointed by the governor, who could cap the salaries of local superintendents; ending public votes on school budgets that fall within state spending caps; eliminating 23 "paper" districts that have no schools and send their students to other districts, and encouraging school districts to share services.

New Jersey residents and business owners face the highest property taxes in the nation. Property taxes account for about 45 percent of state and local tax revenues, according to William G. Dressel, director of the New Jersey State League of Municipalities. The national average is slightly above 30 percent.

New Jersey property taxes are about 5.6 percent of personal income, compared with the national average of 3.6 percent, Dressel added. New Jersey households with incomes in the lowest 20 percent pay 9.2 percent of their earnings in property taxes, while the wealthiest 20 percent pay 3.6 percent.

"They (Roberts and Codey) seem to be at cross purposes," Dressel said. "The whole idea of a convention is for it to come up with its own recommendations. If they (the Legislature) try to suggest that these study groups come forward with the solution to problems and the convention be a rubber stamp, we are going to be absolutely opposed to that. If these guys can come up with a solution to the problem, then we do not need a convention."