The Times, Trenton

Property Tax Relief Plan Wins Approval

The Times of Trenton — Tuesday, June 22, 2004

Staff Writer

Legislators yesterday approved Gov. James E. McGreevey's property tax relief plan that combines bigger rebate checks - paid for by higher income taxes on the wealthy - with caps on school and local government spending and a constitutional convention to revamp the funding of schools, counties and municipalities.

The centerpiece of the plan is an $830 million income tax increase for the 28,500 New Jersey households with incomes above $500,000, redistributing that money as higher rebates to 1.7 million less-affluent homeowners.

Many Republicans blasted the plan as a shell game intended to boost McGreevey's poll numbers but delaying work on the state's property tax problems. Democrats contend it fairly provides tax relief now and creates a framework for systemic change later.

"Because of the work of the common man, CEOs can have their $5 (million) or $6 million bonuses. They (the CEOs) can pay a little bit more," said Sen. Wayne Bryant, D-Lawnside, his voice booming, "so the working people struggling to buy their food can get some help, so seniors can stay in their homes.

"When (we) go to church on Sunday and say `Judge us on how we treat the least among us,' that's going to have some meaning in New Jersey."

When he finished, the Senate's acting chairwoman, Shirley Turner, D-Lawrence, said "Thank you, Rev. Bryant," to the amusement of the packed Senate chamber.

It was a rare light moment during occasionally bitter partisan debate.

"This is unfair. You are doing it because you can," said Sen. Joseph Kyrillos, R-Red Bank, alluding to recent comments by former President Clinton on why he had an affair with Monica Lewinski. "You know it's wrong, but you can get away with being unfair to a very small segment of the population."

The proposal would boost Homestead Rebates for seniors and the disabled with incomes below $70,000 from a maximum of $775 to $1,200.

NJ Saver rebates, which last year averaged $250, would increase to a maximum of $800 for homeowners earning less than $125,000, with the majority of the 1.17 million households in that group getting between $750 and $800. Renters would get $50 rebates.

The administration said 48,600 Mercer County families would see their rebates triple under the plan.It would raise the tax rate on incomes above $500,000 by more than a quarter, from 6.37 percent to 8.97 percent.

Assemblyman John Rooney, R-Northvale, said the tax increase smacked of Marxism and was intended to give McGreevey a political boost.

"The Soviet Union tried this, and they had to put a wall around the country," Rooney said. "They are redistributing income for political reasons, and it's going to lead to CEOs leaving this state for other states and taking their jobs with them."

Democrats countered, saying the same argument was made two years ago when Mcgreevey tripled the state corporate business tax, but New Jersey's economy has grown faster and created more jobs than other states in the region since.

Despite the rancor, several Republicans in both houses voted for the tax and rebate plan, including Assemblyman Joseph Malone III, R-Bordentown City.

Teachers and school officials yesterday flocked to the State House to make a last-minute push to block the imposition of spending caps on school budgets. Their lobbying effort was partly successful.

The caps proposal sparked an extended debate during the Democratic Assembly caucus meeting yesterday before party leaders offered a softer cap.

The original proposal would have limited school, county and municipal budget increases to 2.5 percent or the rate of inflation, whichever was lower.

Many Democratic lawmakers were reluctant to impose such a a stringent cap on schools, leading party leaders to offer an alternative that would allow a district's budget to increase at the higher rate of inflation or 2.5 percent.

"The change is definitely an improvement," said Jim Schroeder of the New Jersey Education Association, the state's largest teachers union. "But we are still going to see program cuts and a diminution of education quality because of these caps."

The cap as first proposed also would apply to municipal and county budgets. Assemblyman Reed Gusciora, D-Princeton Borough, said the restriction is unrealistic and expects many towns to simply ignore it.

He cited his hometown as an example. He said the salaries of two Princeton police officers are being paid by a soon-to-expire federal program.

"Next year the town will have to pay those salaries," he said. "That's a pretty big chunk of the 2.5 percent right there, then you have all the other expenses."

The measure calls for reductions in state aid to those that exceed the cap.

Republican lawmakers tried and failed to amend the law to also apply to the annual state budget. They pointed out the Democrats' budget will increase state spending by 14 percent.

"Our problem is that our spending is out of control," said Sen. Gerald Cardinale, R-Demarest. "The spending increases contained in this budget are astronomical."

That provoked an immediate rebuke from Sen. Byron Baer, D-Englewood, who reminded Cardinale of the fiscal sins committed while Republicans ruled Trenton.

"Spare us the crocodile tears and the self-serving statements,' Baer said.

Lawmakers almost voted to create a task force to draw up ground rules for a property tax constitutional convention.

The panel's report is due by the end of the year, with the expectation that the Legislature next spring would approve a convention referendum that would go before voters in November 2005. If approved, the convention would be held in 2006.

Assemblywoman Linda Greenstein, D-Plainsboro, a sponsor of the measure, said it "starts us on the road to property tax reform."

Several Republican lawmakers criticized the proposal, saying the earliest it could deliver reform would be 2008. They argued lawmakers should meet in special session to address the property tax problem or the convention should be held next year.

"If the convention is a punt, this bill is the time-out before the punt," said Assemblyman Richard Merkt, R-Mendham. "The problem is here. We are here, let's do our job."

Former Republican Sen. Bill Schluter of Pennington, a leading advocate of a constitutional convention, said organizing a convention would be no simple task. He said two law professors had prepared a 31-page memo outlining the many questions that would have to be settled in advance of a convention, the key issue being the selection of delegates.

The Associated Press contributed to this report.

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