As part of today's budget votes, the New Jersey Legislature will be considering a proposal by Senate President Steve Sweeney to "cap" property tax growth at 2.9 percent annually. This proposal is similar to former Gov. Jon Corzine's ineffective "cap" passed in 2007 for a number of reasons:

• It exempts the real drivers of government growth from the cap: state pensions and health costs.
• It is statutory in nature, making it easy to tamper with, further weaken, or eliminate altogether.
• It will do nothing to tamp down property tax growth.

The reason Sen. Sweeney is pushing this bill, which was supposed to be considered in a special legislative session this summer, is because of the political momentum mounting behind Gov. Chris Christie's real reform: a constitutional amendment to cap annual property tax growth at 2.5 percent. The governor's plan eschews the massive exemptions of the Corzine-Sweeney model and focuses on meaningful reform. The Manhattan Institute and the Commonsense Institute of New Jersey recently put out a report examining the success of a similiar measure in Massachusetts, Proposition 2.5. The findings include:

• Prop 2.5 held property tax growth way below the national average. Property taxes increased only 22 percent in real terms from Prop 2.5's passage in 1980 to 2007. The national average was 68 percent, while New Jersey's property tax burden grew a staggering 102 percent, or more than double.
• Massachusetts' overall tax burden grew below the national average as well: a 58 percent increase over the same time period, as opposed to 70 percent nationally and 108 percent in the Garden State.

Rather than a politically-driven plan with loopholes large enough to drive a truck through, New Jersey legislators should embrace the Christie plan, just as a bipartisan group of over 200 mayors has, including Newark Mayor Cory Booker (D).

To read ATR's letter in support of the Christie plan, see below. For a PDF copy, click here.

June 28, 2010

Dear Legislator:

As you debate a number of bills today related to the New Jersey state budget, I urge you to separate bad politics from sound policy with respect to an important cap on property tax growth. Gov. Chris Christie’s proposed constitutional amendment to cap property tax growth at 2.5 percent is a strong step toward real property tax reform. Sen. Steve Sweeney’s competing proposal is politics at its worst: a weak statute aimed at derailing the governor’s promising plan. I urge you to ignore Sen. Sweeney’s distraction and fully embrace Gov. Christie’s true reform proposal.

Sen. Sweeney’s 2.9 percent cap exempts the major drivers of state budget growth - pensions and health costs.Because it is statutory rather than a constitutional amendment, it can be easily tampered with and further weakened. Should it become law, it will be nothing more than a continuation of the ineffective 2007 Corzine tax “cap” of 4 percent, which too was rife with exemptions.

Sen. Sweeney’s proposal was rushed to a vote to counter the political momentum of the governor’s plan, which has received bipartisan support from more than 200 New Jersey mayors. In a state with the highest per capita property taxes in the nation, this is not the time to put political bickering over sound policy. New Jersey needs a new direction to combat spiraling property taxes.

The governor’s 2.5 percent cap provides real reform.It is modeled after a similar measure, Proposition 2.5, in Massachusetts that has been successful in limiting local tax burdens. According to the Manhattan Institute and the Commonsense Institute of New Jersey, from the adoption of Proposition 2.5 in 1980 until 2007, property taxes grew just 22 percent, compared to 68 percent nationwide and 102 percent in New Jersey. Overall state and local taxes grew at a slower rate in Massachusetts during the same time period: 58 percent, compared to 70 percent nationally and 108 percent in New Jersey.

Now is not the time for political infighting. New Jersey’s oppressive tax burden and culture of overspending is devastating the state’s economy. I urge you to eschew Sen. Sweeney’s artificial tax cap in favor of Gov. Christie’s tried-and-true reform.

Onward,

Grover Norquist

CC: Gov. Chris Christie

Posted by Joshua Culling on Monday, June 28, 2010 11:20 AM EDT

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