New Jersey Gov. Chris Christie today will discuss his proposed constitutional amendment to place a 2.5% cap on property tax increases.

The Garden State has the highest property taxes in the U.S. The initiative requires voter approval.

The plan would lower the current 4% property tax cap to 2.5% per year. If approved, debt service costs would be exempt from the cap. The governor will tout the initiative today in a speech before the Manhattan Institute in New York City.

Christie’s plan also includes incentives to lower costs at the local level by restricting arbitrators from making contract awards, including salary and benefit provisions for local employees, that would push property tax increases beyond the 2.5% cap.

The plan could ease burdens for homeowners without harming its public education system, according to a report released yesterday from the Manhattan Institute.

The Manhattan Institute’s mission is to develop ideas that foster “greater economic choice and individual responsibility,” according to its website.

The report examines Massachusetts’ Proposition 2.5, a similar plan to New Jersey’s Cap 2.5.

The Bay State implemented Proposition 2.5 in 1980 as a way to lower property taxes by limiting such growth by 2.5% annually.

Massachusetts now ranks 23rd among states for local tax burdens as a share of income, down from the second-place seat the state held in 1980, according to the Tax Foundation. In addition, from 1980 to 2007, property taxes per capita increased 22% in Massachusetts, compared to a 102% increase in New Jersey and a 62% hike in the U.S., according to the Manhattan Institute report.

“In real terms, New Jersey residents are paying just slightly more than twice as much property tax as they were in 1980,” said Josh Barro, senior fellow at the institute and author of the report, during a conference call yesterday with reporters.

The Common Sense Institute of New Jersey cosponsored the report with the Manhattan Institute.

Common Sense is a group that promotes public policy alternatives to foster individual liberty, personal responsibility, and economic opportunity, according to its website.

Massachusetts spends less money per pupil than New Jersey, while at the same time the commonwealth’s overall National Assessment of Educational Progress test scores tie or surpass the Garden State, according to the report. In 2007, Massachusetts public schools spent $12,857 per student in K-12, less than the $16,163 New Jersey allocated for each pupil, according to the report.

“It’s certainly true that the states do have different demographics, but we can look at the exam scores within demographic groups and we still find that within most groups, Massachusetts has a score advantage over New Jersey,” Barro said.

In a May 23 opinion article in the Newark Star-Ledger, Iris J. Lav, senior adviser at the Center on Budget and Policy Priorities in Washington D.C., said Massachusetts’ Proposition 2.5 coincided with large increases in state aid. In addition, the commonwealth’s public school enrollment dropped by 20% in the decade following Proposition 2.5. New Jersey enrollment is expected to decrease by 2.4%, she said.

Conversely, the Manhattan Institute report indicates that while Massachusetts municipalities receive greater state aid than New Jersey cities and towns,

“New Jersey property taxes could fall substantially before reaching a point where municipalities receive less revenue than those in Massachusetts, even at current aid levels,” the report reads.

Bill Dressel, executive director of the New Jersey League of Municipalities, said that the league is in favor of lowering property taxes, but has concerns with Christie’s proposal. One issue is how the state can help local municipalities with rising fuel, utility, and health insurance costs in light of a 2.5% cap.

“Fitting such increases under an arbitrary and artificial 2.5% cap will force reductions in other areas,” Dressel wrote in a May 19 letter to all New Jersey mayors.

“Unless the proposal accounts for the impact of such factors beyond the control of any local officials, a tight, hard cap will cause severe cutbacks to the quality of life programs and services.”

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