AP: Property Tax Burden Up 13% Under Christie
The net household property tax burden in New Jersey rose 13 percent during Gov. Chris Christie’s first three years in office — a number that reflects both his success in reining in local government spending and his inability to restore a relief program that was gutted by his predecessor during the Great Recession, an Associated Press analysis of tax data has found.
The growth is only slightly lower than it was in the last three years of Democrat Jon Corzine’s time as governor, when the net tax bill went up 15 percent.
But it reflects a different approach: Christie, a Republican, has gone further to force local governments to keep costs down — and give them help doing it. Corzine also tried to control local government costs but did much of his work on trying to control taxes by expanding a rebate program, which he then cut.
Christie’s approach differs from what he said on the campaign trail in 2009 when he unseated Corzine. Then, he pledged to control costs and to restore some of the relief programs that Corzine scaled back. Now that he is seeking re-election, this time against Democrat Barbara Buono, Christie is emphasizing how his policies have controlled costs.
Buono says that as governor, she would raise the income tax on high earners to bring back a bigger rebate program. “It’s about what families are seeing in the bill and what they’re paying every month,” said her campaign spokesman, David Turner, “Right now, they’re paying more.”
Kevin Roberts, a spokesman for Christie, said the governor’s views in 2009 represented his vision, not necessarily what he could accomplish in four years. He also said Christie found the state budget in much worse shape than expected, requiring him to reset priorities.
If re-elected, Christie intends to keep pushing to control school and local government spending and to offer taxpayers direct relief in areas where the Democrat-controlled Legislature has not gone along. “At present, we think there is still unfinished business,” he said.
Different Campaigns, Different Interpretation
The gubernatorial campaigns have used different and simpler analyses of tax growth, each to its own advantage.
The Christie campaign has focused largely on the property tax cap without mentioning that the real cost to taxpayers has risen faster than the bills.
Buono’s campaign, on the other hand, has cited calculations that incorporate only the big tax rebate and credit program, making it appear that the average bottom-line property tax liability has risen more than it has.
The AP used records from 2006 to 2012 on statewide property tax levies and all the state’s property tax relief programs to calculate the average net property tax bill. The aid programs range from the narrowly focused, such as one that pays disabled veterans’ property taxes, to the general, including one that knocks at least $50 off the income tax bill for anyone who pays property taxes or rent. Some of the numbers used in the calculations came from estimates for 2012 provided by the state Treasury Department rather than final numbers.
While any broad-brush way of looking at taxes has its limitations, this approach attempts to show what has actually happened to tax liabilities.
Trying To Lessen The Burden
New Jersey officials have taken some steps over the years to try to lessen the tax burden, but homeowners continue to shoulder the highest property taxes in the nation, with an average assessed house value of just under $300,000.
The average property tax bill for owners of homes and apartment buildings last year was $8,100, up from $7,500 in 2009. The net cost after the relief programs was $7,600, up from $6,800.
Property taxes fund local government and New Jersey’s relatively high-performing public schools, which account for the biggest share of the bill.
An income tax was introduced in 1976 with the intent of funding schools and property tax relief programs for homeowners. Elected officials have also tinkered endlessly with those relief programs.
Corzine imposed a 4 percent cap on property tax growth, though it had several exemptions.
And during his last two years in office, as the economy was sinking fast, he scaled back property tax relief to help balance the budget.
By the time he left office, non-senior citizen, non-disabled homeowners making more than $75,000 lost their rebates. In 2008, those making $75,000 to $150,000 had received rebates averaging around $1,000. Corzine also barred households bringing in more than $250,000 from deducting property taxes from their earnings on state income-tax forms.
Christie Blats Corzine
Enter Christie, who in his campaign to unseat Corzine focused largely on taxes and blasted the incumbent for cutting the rebates as the economy faltered and people needed the money the most.
Christie promised to slow the growth of property tax bills — and he did by capping how much they could grow and passing cost-saving laws that have helped local governments comply. He also said he would restore the slashed property tax relief, though he said he might not be able to do it right away and did not promise a specific level that the rebates would be.
When Christie took office in 2010, the economy was still on the ropes and the state revenue outlook was not good — worse than he was led to believe, he often says.
A higher income tax rate on high earners had expired and Christie refused to bring it back, despite lawmakers’ efforts to do so. The federal economic stimulus money that Corzine had relied on to balance his last budget had also run out. Things were so bleak that Christie made major midyear cuts to the budget that had been adopted under Corzine.
The deductions for higher earners — worth a maximum of $897 — returned in his first budget.
He also overhauled the rebate program, replacing checks that had been sent to taxpayers with credits applied to bills. The state did not issue any of the credits in 2010 and delayed this year’s. The credits have never been returned for non-seniors with incomes over $75,000.
For senior citizens earning under $150,000 and non-seniors with incomes under $75,000, the benefit has increased gradually under Christie but still remains well under the rates in 2007, when the rebate program was at its largest.
Christie Caps Property Tax Growth
The AP’s analysis found that the average net property tax obligation in 2012 was 31 percent higher than in 2007. For those cut from the program altogether, the increase has been even greater.
The Christie administration says focusing on those numbers minimize the governor’s property tax relief accomplishments.
The governor signed a law capping property tax growth at 2 percent per year — and with fewer exceptions than Corzine’s 4 percent cap.
To ease spending pressures on towns, he also achieved a major breakthrough when he got a Democrat-run Legislature to go along with an overhaul of pension and health insurance for one of the party’s main constituencies, public-sector employees.
His administration says that action will save local governments $900 million over its first three years and will save increasing amounts each year.
The governor did agree last year to plan for an income tax reduction based on the amount of residents’ property taxes, a variation on the rebate and credit programs. But the Legislature balked, saying the state couldn’t afford it. Christie, meanwhile, has rejected Democrats’ calls to increase income taxes on high-wage earners to pay for property tax relief for people who make less.
Christie is continuing to push for a version of the tax cut and for more controls on local spending, including not letting government employees get paid for unused sick time when they leave and offering incentives for communities to share more services.
David Rousseau, a state treasurer under Corzine who now works at the liberal New Jersey Policy Perspective, said he believes Christie has focused on controlling government spending not because it’s inherently better but because tight budgets haven’t given him enough money to do more with direct relief programs.
But Charles Steindel, the chief economist at the state’s Treasury Department, said Christie has also made a philosophical choice that could potentially lower taxes for years to come. “If you want to address the problem, it’s better to deal with the ultimate driver, which is the cost side,” he said.
(Copyright 2013 The Associated Press. All Rights Reserved)