Assembly hears pleas against property-tax cap

TRENTON - To impose a 2 percent cap on property-tax increases without addressing what drives up government spending is "the tail wagging the dog," Cherry Hill Mayor Bernie Platt told an Assembly panel on Wednesday.

Collingswood Mayor Jim Maley concurred, warning lawmakers, "The order we're doing this in is not the best way."

The Assembly Budget Committee heard testimony from representatives of towns, schools, and public employees who repeatedly questioned the effectiveness of the 2 percent cap agreement reached Saturday by Gov. Christie and legislative leaders.

The Senate appears poised to approve the revised tax and spending cap bill Thursday. The proposal - which would halve the current 4 percent tax cap and allow far fewer exemptions - is among 33 in a "tool kit" introduced by Christie in May to cut government spending. The Legislature is working to enact some form of the package by fall.

The latest compromise allows for exceptions to the cap on taxes set by towns, counties, and school districts in cases involving increases in student enrollment, health-care expenses, pension costs, and capital expenditures and costs associated with states of emergency.

Yet those who spoke at the Assembly hearing painted a more complicated picture of what drives up government spending, noting that New Jersey towns would face layoffs and service reductions if increases in state-mandated costs were not addressed.

Collingswood's pension bill was $1.2 million this year, up from $150,000 in 2005, Maley said. Between employee health-care costs and pensions, expenditures over which the town has no control, "we will be bankrupt, we will be closing the doors," he said. He called on lawmakers to give towns the option of granting new hires 401(k) pension plans instead.

School representatives and lawmakers also expressed concern over how districts would be impacted if the rising cost of educating special-needs students was eliminated as criteria for a tax-cap exemption.

Jennifer Keyes-Maloney of the New Jersey Principals and Supervisors Association said districts had requested waivers to cover special education costs more than any other reason. Not allowing it, she said, would have a "devastating impact."

Consider Cherry Hill. State records show that the average tax bill in the township jumped 72 percent - to $7,443 - since 2000, despite minimal increases in Cherry Hill's student enrollment and population.

Part of the increase was driven by the public schools' growing proportion of special-needs students: Enrollment in the category has increased to 17 percent of the student population, up from 9.4 percent, according to documents provided by the district.

Cherry Hill's two high schools are recognized as among the best in the nation, Platt told lawmakers. The district's "mission will be compromised" if the tax cap does not take into account rising special-education costs.

A representative of the state teachers' union questioned why the cap didn't allow for exemptions permitted under the current system for energy costs and reductions in state aid. The state budget signed into law last week cut $446 million in aid to towns and $819 million to schools.

The mandated expenses cited in arguments against details of the tax cap illustrated the challenges faced by state and local officials as they struggle to keep a lid on property taxes that already are the nation's highest.

Christie originally proposed a 2.5 percent "hard" cap, with an exception only for debt service. Senate President Stephen Sweeney (D., Gloucester) pitched a slightly higher cap with many more exemptions, including health insurance - a cost many local governments say increases annually by double-digit percentages.

"We're all laying off people left and right, and it's going to just increase unless we will be able to have the ability to control costs," Maley said.

"We need to have a cap, but the cap alone is not going to produce property-tax reform," said Bill Dressel, executive director of the New Jersey League of Municipalities.

The Assembly will consider the bill after it is approved by the Senate.

Assembly Speaker Sheila Oliver (D., Essex) expressed support for the 2 percent cap in a statement, but she said Wednesday that Assembly members could offer changes to the legislation as "we continually look to ensure the cap remains sensible," especially in regard to needed exemptions.