A Public Forum On New Jersey Property Tax

New Jersey Governor's 1998 Property Tax Commission

"to study the property tax problem in New Jersey"

Commission's Assignment:
"Recommend ways to help county, school, and municipal officials ease the heavy burden of property taxes on New Jersey residents."

Commissions Report:
Property Tax Commission Final Report of Recommendations
To Governor Christine Todd Whitman
Chairwoman Mayor Barbara Cannon, Sept. 1998

One essential element, public dialog, is stressed by the Commission chairwoman, Barbara L. Cannon, Mayor Of Old Bridge, NJ. She stated in her closing comments in her forwarding letter to Governor Whitman:

"I and all the Commission members hope that our work provides some measure of property tax relief. As I maintained throughout my tenure as the Commission’s chairwoman and reiterated upon the release of the Commission’s discussion papers (included as appendices in this report), we also hope to inspire an informed public conversation about the complicated issues and tradeoffs surrounding New Jersey’s property tax structure."

A Overview of Commissions Findings:
The process is recognized to be complex and real progress will be precluded until the local control of budgets and spending is released to a central or State level. The following is quoted from Chapter 1 Tax Restructing:

"The Commission stresses that establishing a fixed percentage of State contribution toward public education - whether that fixed amount is 50 percent or 100 percent of total public education expenditures -- would necessitate radically changing statewide school funding policy. In order to guarantee that the State provide a fixed percentage, a total spending level would need to be established and districts would need to be prohibited from spending over that level. (The State cannot guarantee that State aid represents even 50 percent of total spending, for example, without applying strict controls on the total amount that is spent statewide.) Without such controls in place, the State would have to constantly dedicate more money to education based on local funding increases determined each year by hundreds of New Jersey school districts."

  • It is of primary importance to strive for efficiency to lower cost of services.
  • Cooperation between community activities to seek these efficienies is paramount.
  • Re-evaluation of the benefits and cost of full home rule is needed.
  • Alternative to fund the cost of services, via Sales, Income, and Property Tax.
  • Public forums are needed to discuss the alternatives. The following is quoted from Governor’s Property Tax Commission report page 97 Appendix "Michigan’s Proposal-"A Discussion Paper":

    • "New Jersey not only spends more money per pupil than Michigan, but also more than any other state in the nation and more than any nation in the world. It is, therefore, plausible that New Jersey has an education expenditure problem rather than simply an over-reliance on the property tax."

    The Commission presented a series of extreme tax restructuring concepts, to examine the concepts of shifting the Property Tax to the Sales Tax or to the Income Tax.

    In one case, with the entire Property Tax shifted to Sales Tax, the commission concluded:

    "To raise the additional $7 billion required to replace the local school tax solely through the sales tax, which generated $4.75 billion in Fiscal Year 1998, the State would have to increase the tax from 6 cents per dollar to more than 14.5 cents per dollar – more than double the current sales tax rate."

    In another case, with the entire Property Tax shifted to Income Tax, the commission concluded:

    "The state income tax generated $5.59 billion in Fiscal Year 1998. As indicated above, the income tax would have to yield an additional $7 billion per year to compensate fully for the elimination of the local school tax. To reach this increase, the State would have to generate 221 percent of the current amount raised by the income tax. If the rate schedules were simply increased proportionally, the lowest rate would increase from 1.4 percent to 3.09 percent, while the top rate would increase from 6.37 percent to 14.08 percent."

    These evaluations were helpful and suggest that more moderate methods will likely be more reasonable. The PFoPT Committee has extended these evaluations to intermediate cases.

    From Commission Report Chapter II Local Government Shared Services and Consolidation:

    "New Jersey has too much local government, and too much of it is small. There are 566 municipalities, 611 school districts, over 400 local authorities and fire districts, and 21 counties. A third of our municipalities have 5,000 or fewer residents. Twenty percent have 2,500 people or fewer. We have four communities with fewer than 100 people. For school districts there are similar numbers: two-thirds of the districts are classified as "small," 64 districts have fewer than 400 students, and 24 districts do not even operate schools, but still support a board of education."

    The Commission in Chapter VI paragraph 6.1 recognizes the intergenerational issue in tax policy, the following is an extract:

    CIRCUIT BREAKERS

    "While the Commission recognizes the value of and need for property tax relief programs targeted exclusively at senior citizens, it remains concerned about the equity of such programs for low-income and young homeowners struggling to pay their property tax bills.

    In order to ensure that State property tax relief money is most equitably and effectively distributed, the Commission recommends that the State fund an independent statewide analysis of the benefits and equity of all existing age-based “circuit breakers.” This study should also seek to examine potential new programs that could increase benefits for seniors and other segments of the population in an equitable way.

    Until such a study has been completed and reviewed, the Commission recommends that the State not implement any new or expanded relief programs based on the criteria of age."

    The link below will connect you to the New Jersey's web site so that you may view the entire Commission Report. The report contains several hundred pages of insightful material to assist in the understanding of the issues surrounding the New Jersey Property Tax.
    (Remember: When you are ready to return to this web page, use the "Back" key on your Browser!)
    Attention: Web Master for State Library reported on 3/1/2002, the 1998 Property Tax Commission Report Site in HTML format has be removed from the server, but is now in a PDF file format for download at site http://www.njstatelib.org/cyberdesk/digidox/proptax98.pdf"

    Until the HTML format is made available, you will not be able to merely browse this report, but if it is feasible in your case, you can download the complete report, provided you have an Acrobat Reader on you computer! We are sorry for this inconvience.

    Former HTML Format 1998 Property Tax Commission Report Site

    For a quick look and the recommendations:
    Commissions Report Outline and Recommendations.

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