Not-So-Hard Cap

May 22, 2019

To the Editor:

On July 3, 2010 Gov. Christie reached a bipartisan consensus with legislative leaders to provide long-awaited property tax relief for beleaguered New Jerseyans. They called it a hard cap of 2 percent.

Any waivers from this cap would have to be granted by a vote of the people, not the bureaucrats of a local board. An override referendum would have to be approved by a simple majority of the voters. What seemed to be the answer to New Jersey’s runaway real estate tax problem was short lived.

This year Little Egg Harbor Township has increase its proposed 2019-20 budget of 6.9 cents per $100 of assessed value to $.742, exceeding the cap by 8 percent. One would think a cap override referendum would apply to such a hike in the tax rate. Think again.

What most taxpayers do not know is that the 2 percent hard cap is not so hard because the law allows for exemptions from the cap that could be used for debt service payments, pension payments, increase in health insurance cost.

And if all those exemptions were not enough to keep any increase off the ballot, lawmakers introduced another little known loophole called “banked cap.” This little but popular wrinkle in the law makes a mockery of the hard cap. If a municipal or school budget is increased by less than 2 percent in a previous year, officials can exceed the 2 percent by that amount in a subsequent year.

Even the term “banked cap” may have been created to confuse property owners. The only thing that has been “banked” here is the ability to raise taxes above the 2 percent cap without asking voters to say “yes.”

Hard cap, soft cap or no cap, we have gone the full circle. Beware of politicians when they make campaign promises that state “with my strong work ethic my agenda would be to stabilize or lower taxes” or “my goal has been, and continues to be, consciousness of our tax rates in order to keep them stable and/or reduce them.”

Art Mooney

Little Egg Harbor


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