It seems impossible in a state with some of the highest property taxes in the country, but the way the money is divvied up could mean other programs are not getting their fair share
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Airing a concern that will certainly raise the eyebrows of the average New Jersey homeowner, budget officials in Trenton this week said they are worried that the state is starting to collect too much money that’s dedicated only to property tax relief.
The reason for their unease is rooted in the arcane functions of the state budget, but also in the way politicians in the past were able to win support for tax hikes, essentially by promising to dedicate the new revenue only to offset local property-tax bills, long a top complaint of New Jersey residents.
But now, more and more money is coming into the annual budget that can only be used on programs that are considered property-tax relief -- primarily school aid, municipal aid and direct-relief initiatives like the one that pays for Homestead credits. And that influx has come even as Gov. Chris Christie, a Republican who preaches fiscal discipline, has expanded spending in those areas very little while also refusing to make policy changes to increase revenue raised from non-dedicated tax sources.
The result is that there is increasingly less money available for other areas of spending in the budget that are not considered property tax relief, like transportation, environmental programs, and hospital aid.
“This trend is important because it may soon be limiting the state’s budget flexibility,” explained David Rosen, the budget officer for the nonpartisan Office of Legislative Services, during yesterday’s Assembly Budget Committee meeting.
Rosen’s comments came as both he and state Treasurer Andrew Sidamon-Eristoff appeared before lawmakers for the last time this budget season as they continue to evaluate Christie’s proposed $33.8 billion spending plan for the fiscal year that begins July 1.
The budget-flexibility issue, Rosen said, dates back to 1976 when New Jersey voters approved a constitutional amendment that dedicated all revenues raised by the state’s income tax to property tax relief. Voters also ordered the state to dedicate half of the extra penny that was added to the sales tax in 2006 to property tax relief.
Those dedicated funds are deposited in the state’s Property Tax Relief Fund, and for decades there were no problems because the fund did not have enough money coming in to cover all of the state’s spending needs for property tax relief. To cover the gap, money has traditionally been taken from the state’s General Fund.