New Jersey’s Republican governor has signed legislation capping local spending and property tax growth at 2 percent a year, after steering the compromise bill swiftly through a Legislature controlled by Democrats, The Associated Press reports.
The new law was designed to slow the rate of property tax increases in a state where the average household is assessed nearly $7,300 a year, the highest in the country.
It is the second major fiscal initiative in as many weeks for Gov. Chris Christie, who signed a $29.4 billion state budget June 29, hours after Democrats provided the votes necessary for the Legislature to pass it.
“The last few weeks has been the most stark evidence that the citizens of New Jersey can ever ask for that we can work together and get things done,” Christie said after signing the tax cap legislation at a firehouse in Hamilton. “Capping property taxes and making it more affordable to live here is not only good for the people who are already here but good for the people we want to attract here, to build their businesses here.”
The new cap keeps towns, school districts and counties from increasing spending and taxes more than 2 percent, but permits exceptions for certain costs local officials don’t control such as employee pensions and health care. Emergencies and debt payments also are exempt from the cap restriction. The new law applies the next time local governments and school districts draw up their budgets.
The law allows voters to override the limit, prompting concerns from some Democrats that a schism could develop between affluent towns whose voters would be more willing to override the cap and blue-collar towns whose voters would be more fiscally prudent.
Democrats in the Assembly also wanted additional exemptions for costs that towns, schools and counties can’t control such as employee contracts that have already been negotiated, cuts in state aid and spikes in special education costs. On Tuesday, Christie said he was unlikely to agree to additional exceptions before seeing how the new cap works out.
Because of the exemptions and overrides, the law won’t keep property tax growth to 2 percent a year statewide. Rates of increase will vary from town to town. In Massachusetts, where a similar cap law has been in effect for years, property taxes rose 5.1 percent last year, compared with a 3.3 percent rise in New Jersey, where a 4 percent cap had been in place.
