ShapTalk: The Need For Serious Property Tax Reform
03-18-2006
As property taxes continue to skyrocket forcing senior citizens to sell their homes, barring young families from purchasing homes and squeezing the middle class who currently own homes, one thing is clear: unless we tackle New Jersey’s property tax problems, many people who currently live in, or would like to live in New Jersey will be unable to afford to do so. To reform the property tax system, our elected leaders must have the courage to examine the proclivity towards “home rule” and to require the wealthier Abbott Districts to begin to pay their fair share of property taxes. Until then, any talk of property tax reform is just that -- talk.
“Home rule” is defined as self-government in local matters by a city or county that is part of a state or national government. In New Jersey, “home rule” has come to mean that each municipality maintains all of its own services and enjoys control over them. To make “home rule” more efficient and cost effective, the answer is likely twofold. First, county government should be maintained, but expanded to include functions handled by each individual municipality; and second, services between neighboring municipalities should be combined so that one municipality might handle some services for another.
Most municipalities have their own courts. Many have their own prosecutors. A number of municipalities have their own employees for constructing and/or maintaining municipal roadways. Is there a reason why these services could not be performed by the county? How about locating police, fire and emergency services near the border of municipalities and their neighboring town, so that two towns are serviced? Municipal libraries, recreation centers and sports facilities could be dealt with in the same manner.
The Abbott Districts are the 30 special needs districts in the State of New Jersey for which the New Jersey Supreme Court ruled that the per pupil spending on education must equal the per pupil spending in New Jersey’s wealthiest districts. The funding discrepancy is met by the State through taxes on New Jersey residents. While the Abbott Districts have seen an increase in student test scores since they were formed, the burden for paying for the Abbott Districts has fallen upon the residents of the 536 or so other municipalities in the State. Several Abbott Districts are being transformed from burnt-out urban areas to thriving hot spots for wealthy residents of New Jersey, the most obvious being Hoboken. These wealthy Abbott Districts should start paying their fair share of property taxes to fund their school systems. Once an Abbott District becomes viable, it should no longer receive funding for its schools from other New Jersey taxpayers.
Tackling both home rule and requiring the wealthiest Abbott Districts to pay their fair share will be politically difficult to accomplish. Home rule is a sacred cow in New Jersey politics with every municipality (and its residents) wishing to have every service under the sun performed and controlled by that municipality. Residents in suburban areas, a key demographic in State elections, may be especially hesitant to diminish home rule, fearful that sharing services with other municipalities may affect property values and/or their school systems. Because the Abbott Districts are located in the urban core, Democratic politicians are reluctant to ask the residents of those Districts to pay more in property taxes. Meanwhile, the suburbanites, many of whom are Democrats, are beginning to revolt against the ever-increasing level of property taxes. Should the Democrats favor the Abbott Districts over the suburban areas, the suburbanites may revolt and vote Republican. Should the Democrats favor the suburbanites, the urban voters might stay home, leading to Democratic defeat. Unless our elected leaders are willing to tackle the important issues of home rule and the problems related to the Abbott Districts, property tax reform will remain a mirage.