Is Property Tax Credit Plan Legal? (NJ)

The Assembly has passed a property tax reform measure that would provide property tax cuts in the form of credits. Under the bill almost 2 million homeowners would get help. A 20 percent tax cut would go to households earning up to $100,000, there would be a 15 percent cut for those earning up to $150,000 and a 10 percent cut for those earning up to $250,000. Renters who have received $75 rebates would see relief doubled.

Democratic leaders are hailing the legislation as landmark but, some Republicans are questioning the constitutionality of the bill and they've got history to back them up. At the turn of the last century (1903) the legislature voted to give a bigger property tax break to firemen but the State Supreme Court ruled that it could not happen without residents voting to amend the constitution. That's because of the Uniformity Clause which says all property must be taxed at the same rate, it cannot be based on a landowner's income, it must be based on the value of the property.

Assemblyman Steve Corodemus says, "The proposed credit plan is the same thing as giving blue eyed taxpayers a break as opposed to brown eyed taxpayers." That may be breaking the issue down to the least possible denominator but, Corodemus says, "Property is property. There could be two identical townhouses next to one another and one owner gets a 20% property tax cut and his next door neighbor gets 10% simply because one guy makes $95,000 and the other makes $151,000."

"If you want to treat people differently based on their personal characteristics," says Assemblyman Rick Merkt, "it requires a constitutional amendment."

In 1976, the legislature approved a measure to give seniors a bigger homestead rebate. Then-Attorney General Bill Hyland said that move violated the uniformity clause. The voters were asked to amend the constitution to allow the senior rebate expansion and it passed. In 1979, the legislature approved a plan to increase rebates for the disabled. John Degnan was the AG at the time and, citing the uniformity clause, he ruled the move unconstitutional. Voters then approved changing the constitution to allow it.

Merkt says, "We're not against the property tax relief credit program, we just think everybody should get the same amount of relief and if we can't provide that, the voters should decide." If it comes down to a ballot question it could be two years before the property tax credit plan would be implemented.

Is this all partisan sniping or is there some merit to the Republicans argument? Bob Williams, Professor of Law at Rutgers-Camden says, "If somebody wanted to bring a challenge to this, it would be, I think, taken seriously by the courts." He's not saying the challenge would be successful, "it's unclear….the arguments would be that yes, it does violate (the uniformity clause) because it ends up not to have a uniform tax rate because people are paying different amounts based on their income but the counter argument is that the uniformity clause is being honored because people are all paying the same basic tax rate at the local level, the change comes out of money from the state coffers that's being returned to people at different levels."

"Even though this is money being returned from the state to people," says Williams, "it actually operates in the real world to have people paying different tax rates at the end of the day."

In the final year of the Jim McGreevey administration, the entire tenure of Dick Codey's administration and for the first year of the Corzine administration, property tax rebates have been capped based upon the income of the applicant. Williams doesn't buy the argument that because it has been happening, it must be okay. He says, "Nobody has challenged it, if a case were to be brought up, it would be unusual of the court to make anything of the fact that it's been going on for awhile, the court would address it for the first time and rule on it as it is occurring now."

http://www.nj1015.com/absolutenm/templates/?a=5592&z=1
Assembly Passes More Property Tax Reform Bills

After roughly five hours of bitter and contentious debate, the Assembly gives overwhelming support (71-8) to legislation Assembly Speaker Joe Roberts, Assemblymen John McKeon and John Burzichelli sponsor to provide a 20 percent average property tax reduction to a majority of New Jersey households and establish a new system of 4% caps to hold down spending by municipalities and school districts.

McKeon says, "Property taxes are issue number one, two, and three for the residents of this state…the people made it clear they wanted action, and today the Assembly delivered." He adds, "The caps on local property taxes will ensure the sustainability of the new credits….the overwhelming majority of local spending will now fall under the cap, with common sense pressure valves that recognize some cost drivers simply cannot be controlled."

"This is a comprehensive plan for providing relief and curbing property tax increases," says Burzichelli, "It's an approach that deserves swift bipartisan support in the Senate and to be signed into law by Governor Corzine." He explains, "The tandem of caps and credits will ensure that our efforts to provide maximum relief for property taxpayers and renters today will not disappear tomorrow."

Republicans claim too many exemptions are allowed under the proposed cap structure, 20% is not enough relief and the plan can't be sustained over time. Assemblyman Kevin O'Toole, R-Bergen, says many "sense that this is an election-year gimmick." Assemblyman Mike Doherty says, as currently crafted the bill is a "ticking time bomb" and it is not fair to wealthier homeowners. He thinks it was rushed into law without proper review. The bill was made public at 8pm Friday night.

Under the cap, local governments could claim exemptions for cost increases in the following areas: debt service, health care cost obligations exceeding 4 percent, some pension contributions, offsetting state aid reductions from a previous year, uncollected taxes exceeding 4 percent, and lease payments to county improvement authorities. School districts could claim exemption for increases in the following areas: debt service payments; health care cost obligations exceeding 4 percent; and adjustment due to rising enrollments. Municipalities and school districts also would be permitted to seek discretionary cap waivers for extraordinary expenses; municipalities would apply to the state Local Finance Board and school boards would apply to the Department of Education. The cap also could be exceeded if approved by a 60 percent supermajority vote of the electorate.

Governor Jon Corzine says public worker contracts will first need to expire and pension costs kept in check before the full weight of the caps takes effect, "In the first year I don't think it will be a great break, from the 6 to 7% (the average rate of property tax increases) but, it should be moving down each year.

The Assembly also passed bills to control property taxes by creating a comptroller to investigate government spending and a commission to ask voters to merge towns. The lower house also voted to strip taxpayer-paid pensions and require jail time for corrupt public workers, and to impose new rules on school administrator contracts. Those measures passed the State Senate last week.

By: Kevin McArdle

http://www.nj1015.com/absolutenm/templates/?a=5605&z=1
Republicans And Democrats Fight Bitterly Over Approved Property Tax Relief Legislation
Wednesday, January 31, 2007 - Millennium Radio New Jersey

On Monday night, the Jersey Assembly passed a property tax measure that will give residents relief - in the form of credits - based on how much they earn.

Several prominent State Constitutional experts agree the legislation might be challenged in court - and not coincidently, republicans are now calling on democratic leaders to make sure the measure passes constitutional muster.

During a Statehouse news conference, Assembly GOP leader Alex DeCroce said his democratic counterparts should ask the State Attorney General and the Office of Legislative Services to review the legislation "to stop this train wreck before it happens."

Republican Assemblyman Richard Merkt said "If we don't get this fixed now, I guarantee you somebody is going to file a lawsuit, and this whole thing is going to go down…we need to do something to change this- if we don't, the promised property tax relief is once again going to prove to be a fraud, it's going to prove to be a phony."

GOP Assemblywoman Marcia Karrow said unfortunately, when it comes to property tax relief, "there is no relief in sight, this is not one of the situations where we're going to have relief- because they are incompetent…they've screwed this up and we're here to fix it."

Democratic Leaders quickly responded with two written statements dismissing the republican accusations and concerns. Assemblyman John McKeon insisted "this is nothing short of a desperate attempt by the Republican fringe to deny the delivery of property tax relief…they are making a bogus case for political show."

His release also accused the Jersey GOP of mounting a desperate scorched-earth publicity stunt.

Assemblyman John Burzichelli said in his statement "if the republicans and their lawyers want to continue along this path, they do so at their own risk because the State Constitution and the residents of New Jersey are in our corner."

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