Forrester's Plan For Property Tax Reduction

Doug Forrester has unveiled a plan that would provide homeowners with a 30 percent reduction in their property tax bills up to a maximum of $5,000. Forrester's proposal is similar to a tax relief plan described last week by Republicans in the state’s assembly. Both plans call for a constitutional amendment that would require the state to refund a proscribed percent of every homeowner’s property tax bill.

Forrester said his plan would be phased in over three years and would be paid for though a combination of spending cuts, including the lay off of state employees and savings achieved from slashing fraud and government excesses.

We applaud Forrester’s call for cuts in state spending - obviously fraud and government excesses should be eliminated. The Democrats have not been good stewards of our money. As the majority party, they have spent the state to the brink of bankruptcy, all the while ignoring the property tax crisis.

We are also encouraged to see another candidate for Governor has laid out a plan for property tax reduction. Pushing the problem off to a state constitutional convention is merely kicking the problem down the road, with relief well beyond the horizon. It’s a way to pretend action will be taken, when in reality it’s a hope the problem will just go away or circumstances will allow a lucky Governor to leave the mess for the next office holder.

If the Democrats can’t solve the problem when they control both state houses and the Governor’s seat, we can safely say that the incumbents lack the willingness or the skill to get the job done. The property tax crisis requires sound policy and leadership, not business as usual and abrogation of responsibility.

Candidates for Governor without a property tax reduction plan should not seriously be considered for the position. “I’ll unveil my plan later” means either the candidate has no plan or believes his plan can not withstand the scrutiny of voters. We’ve heard about secret plans before and we would suggest voters not fall for the campaign tactic again.

Having said all that, are we pleased with Forrester’s plan? Frankly, no. We had hoped Forrester would propose a plan to limit the growth in government spending – the real cause of high taxes. Forrester’s plan does not address this fundamental problem.

Property taxes are high in New Jersey for one reason – spending on public schools that has increased dramatically over the past several years. New Jersey already spends more per pupil than any other state and still, it is never enough.

Think about it, is there some magic spending number out there that would satisfy New Jersey’s educators? The United States spends more money on education per child than any country in the world. New Jersey spends more per student than any other state, making us the greatest education spenders on earth.

Can someone please tell us the spending target against which our commitment to school children is being measured? It’s very discouraging, all that money spent on public schools and in return the state’s education system produces average results.

To hear people talk you’d think New Jersey’s spending on public education was an embarrassment. The “more money for education” mantra has been drilled into everyone’s head to the point that most people actually believe we’re not spending enough. Let’s cut to the chase, we want greater results from our state’s education system, not greater tax bills. The two should not be confused.

Clearly, something is wrong with the system and spending more money isn’t going to fix the problem. In reality we have been rewarding mediocre school performance with the biggest compensation package in the world. There is no incentive for the state’s education system to change, the money rolls in no matter the results. Actually, the worse the school’s performance, the more money demanded from taxpayers.

This is what makes Forrester’s property tax plan so disheartening. His plan does nothing to rein in the growth of public school spending at the local level and it may even exacerbate the problem. How could a property tax refund potentially make the situation worse? Well, as we noted yesterday, when voters reject school budgets, school boards can appeal the voter’s decision to the state Department of Education. The department will be able to cite the “huge” property tax relief voter’s receive from the state and decide increases to school budgets are warranted because the” taxpayers can afford it”.

The state Board of Education goes against the wishes of the voters in most cases today, just think of the increases the state will be willing to approve under this new plan. The state will paint the property tax refunds as some sort of gift from Trenton, not unlike the property taxes rebates of today. The refunds may be enshrined in the state’s constitution, but will be treated as some sort of manna from the state, to be exploited for additional public school spending.

Another complicating factor is New Jersey state aid for public school funding. State revenue budgeted for education is not distributed to local districts in an equitable manner, such as through a per pupil calculation. Some districts receive a lot, some a little and some receive no state aid at all. Obviously, the school districts that receive little to no state aid rely more heavily on property taxes to fund schools.

We believe this is the problem Forrester’s plan is attempting to fix. The plan is an effort to distribute state education aid back to the taxpayer, rather than directly to the local school district. As we noted earlier, taxpayer refunds will end up in the public school budgets unless school spending is brought under control. Unfortunately, there’s nothing in the Forrester plan to put the breaks on the ever increasing state budget for education or for any other category of state spending for that matter.

Even under the assumption that during the first few years, the Governor and legislature can cut spending to fund the property tax refunds, what’s to stop out of control spending by Trenton in the future? Deficits never stood in the way of double digit increases to state spending in the past and there is nothing to suggest the future will be any different.

So after all the fraud and waste has been cut out of the budget, how will the new constitutionally mandated property tax refunds be “paid” for by the state in the future? Trenton will revert to the same method used last year to fund the property tax rebates – new and/ or higher income, sales and a myriad of taxes and fees imposed by the state.

Even if by some miracle, local property taxes don’t gobble up your state refund, you’ll be paying Trenton the identical amount in additional state taxes. Why add to the cost of government and make a project out of returning money you had in the beginning? It’s like taking money out of one pocket and putting it into the other, only extremely slowly, inefficiently and with a surcharge for the transfer.

While a step in the right direction, the Forrester/Republican assembly plan needs work. Bret Schundler has a plan that calls for a constitutional amendment to cap the growth in state spending coupled with property tax reduction.

We’ll take a proven long term tax solution over a quick, short term fix – we’ve been down the rebate/refund road before and we have nothing to show for the effort but substantially larger tax bills. If we’re going to amend the constitution, let’s solve the real problem, growth in government spending.