New Jersey Gov. Chris Christie announced an alternative, statutory property-tax cap initiative Thursday that would not amend the state’s constitution, opening the door for a potential bipartisan agreement on the divisive issue.
The governor spoke before a special joint session of the Legislature. Christie, a Republican, called the two chambers into special session to work on his constitutional amendment limiting property tax hikes to 2.5% annually, called “Cap 2.5.”
Instead of urging the Democratic-controlled Legislature — which has already passed its own bill capping statutory property-tax increases at 2.9% — to accept his proposal, Christie offered a compromise plan. While he continues to stand behind a 2.5% limit that’s folded into the constitution, the governor said he would consider a statutory 2.5% ceiling that offers a permanent exemption only for debt service and infrastructure costs.
Statutory laws are easier to change and alter than constitutional amendments, which require voter approval.
Christie is also willing to accept a temporary exclusion for communities that might need to raise property taxes more than 2.5% to meet existing contractual labor obligations. Municipalities could raise property taxes above the 2.5% ceiling if 60% of voters approve such a tax hike through a local referendum, he said.
“I would be able to support a statutory cap at 2.5%, a cap that would have only one permanent exception, an exception for capital expenditures including debt service,” Christie said during his 15-minute speech. “I would be able to support that cap if it also included a temporary exception for increases in costs in excess of 2.5% for existing collectively bargained contracts. But once those contracts reach their end date, this exception must disappear.”
He said all subsequent contracts must conform to the hard new 2.5% cap.
“I would be able to support that cap if it includes a vote of the people as the only way to override the 2.5% cap,” Christie said.
The Democrats’ 2.9% initiative allows for additional exceptions such as costs related to blizzards and floods. It would not require local voter approval to override a cap.
New Jersey’s current property tax cap is 4%. Local governments can get around that limitation if the state’s Local Finance Board approves boosting their property taxes above 4%.
Christie’s announcement offers hope that the administration and the Legislature might forge a bipartisan property-tax reform initiative. New Jersey has some of the highest property taxes in the U.S.
“Some of you came into this chamber today expecting that I would offer you a take-it-or-leave-it proposition,” Christie told the Legislature. “Put Cap 2.5 on the ballot or else. It’s my way or the highway.
“I don’t know why any of you would think that about me,” Christie said, drawing laughter from the lawmakers.
While both Senate President Stephen Sweeney, D-Salem, and House Speaker Shelia Oliver, D-Essex, said they were pleased to hear the governor accept a statutory plan, it is unlikely the Legislature will pass a property-tax cap bill before the July 4 holiday, or even this summer.
“I have instructed 12 members of this House to study nearly three dozen property-tax reform ideas in preparation for legislative action in the fall,” Oliver said in a prepared statement. “The governor has made clear he doesn’t like this approach. But this will be an extensive effort over the summer to properly analyze reforms put forth by Democrats and Republicans and develop a real plan of action to bring relief to taxpayers.”
Along with a property tax ceiling, the governor in May released a “toolkit” that aims to help local governments stay within the 2.5% limit. That initiative includes mandating arbitrators to design contract awards that would not push a local government’s property tax increases beyond the cap.
Other potential reforms include restricting sick leave and carry-forward vacation days, allowing local governments to implement furloughs, and civil service reform.
Critics of the governor’s “hard” 2.5% cap say lawmakers must approve the toolkit reforms before implementing a set ceiling on property tax hikes.