Massive property tax increases could return to New Jersey

💲 A 2% property tax cap keeps annual increases in check

💲 A NJ lawmaker is suggesting the cap be waived for some school districts

💲 Voters would no longer have to approve big property tax increases

Since 2010, taxpayers in New Jersey have been shielded from massive property tax increases by a 2% cap signed into law by then-Governor Chris Christie.

There were loopholes and exceptions, such as debt service, pension and health care costs and costs related to a declared emergency, but generally the cap has worked to force towns and school districts to live within their means and not overburden taxpayers with huge annual increases.

Towns have a general option of going over that 2% cap but must ask for voter approval to do it.

Now, a Democratic state senator wants to get rid of that cap, potentially leading to a return of double-digit property tax increases in many towns.

What is causing this?

It all has to do with the amount of state aid districts are getting.

New Jersey's school funding formula has always been a mess. The subject of multiple lawsuits, court decisions and legislative tinkering created wild imbalances that often had the state sending an amount of school aid that did not correspond with the actual number of students in a district.

In 2018, a new formula was adopted to create a more equitable distribution of state aid.

As a result, many districts began losing millions of dollars in aid they grew accustomed to receiving.

The rebalancing continues, and many of those same districts will see another aid reduction this year.

Eliminate the cap?

State lawmakers and the governor have attempted to soften the aid blow with supplement aid, but school districts say it isn't enough.

Sen. Andrew Zwicker (D-Somerset) is proposing the get rid of the 2% entirely for any district that loses state aid.

That would allow districts to increase property taxes beyond the 2% cap without voter approval.

Under Zwicker's bill, they could not raise more in property taxes than what was cut from their state aid, but in districts where the cuts are significant, property tax increases could easily reach double digits.

Many of those districts are in Cape May, Monmouth, Ocean and Sussex counties. Superintendents in the effected districts have warned of catastrophic cuts unless their aid is restored.

School officials, faced with cutting programs, services and jobs to make up for the loss of aid, are applauding the possible elimination of the cap, but acknowledge the impact to residents.

The superintendent of the Kittatinny Regional School District in Sussex County is Craig Hutcheson. He told NorthJersey.com, "I think the bill is the wrong way to do it, because it puts the burden upon our taxpayers." At the same time, however, Hutcheson said he supports any measure that helps prevent cuts to the school budget.

What happens next?

Zwicker's bill to eliminate the 2% cap has advanced out of the Senate Education Committee, but it's future in the full senate is not clear.

There also does not appear to be a companion bill in the Assembly.

Both houses would have to approve eliminating the cap and Gov. Phil Murphy would have to sign it into law to take effect.

Murphy has said he prioritizes school funding but has not commented on this bill.

Some lawmakers may also be waiting to see what Murphy's latest budget proposal calls for in terms of education funding and whether there is money set aside to help districts who lose aid under the current formula.

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