Taxes & Spending

Christie Signs Property Tax Cap

New Jersey Gov. Chris Christie (R) scored another in a series of major political victories, signing a bill capping the growth of property taxes and municipal spending at 2% annually.  The bill replaces the Garden State’s previous cap, at 4%, which the governor assailed as ineffectual due to 14 exemptions that allowed local governments to virtually ignore the law. The new cap, which Christie pushed the Democratic-controlled legislature to enact, requires municipal councils to get approval from the voters before going over the lower limit.

The bill is the result of a compromise between Christie and Senate President Steve Sweeney (D-Camden).  Christie had proposed a 2.5% cap as part of a package of 33 bills, which he dubbed a “toolkit” for local government to get skyrocketing spending and property taxes under control.  Christie’s proposal would have amended the state constitution to include the 2.5% limit and mandated the approval of a supermajority of 60% of voters for a local council to exceed the cap, with debt service as the lone exception.

Sweeney and Senate Democrats favored a non-constitutional 2.9% cap.  Sweeney’s bill would have provided automatic exemptions for a broad set of items such as pension obligations, healthcare premiums, and natural disasters and other emergencies.  The bill would also have allowed local school boards to apply for a waiver for spending necessary to meet core curriculum standards, and for towns to seek waivers for items related to “public safety, health and welfare.”  Democrats in the House and Senate passed this bill and sent it to Christie for his signature.

With the stalemate lasting until the end of the legislative session on June 30, and Christie’s plan facing a mid-July deadline for legislative approval in order to get the proposed constitutional amendment on the November ballot, the governor called the legislature into special session to deal with the property tax question. 

In a speech to both houses, Christie respectfully declined to sign the Democrats’ 2.9% cap, and offered an alternative.  He agreed to sign a non-constitutional cap at 2.5% with a permanent exemption for capital expenses including debt service, and a temporary exemption for costs associated with union contracts.  But he insisted that the provision for voter approval to exceed the cap remain.

“This is less than a constitutional cap but much more than we have now.  A hard cap, at 2.5%, with just those limited exceptions and the ability for voters to determine their own tax fate in their own town—these are the principles of Cap 2.5 [the governor’s original proposal] and these are my principles,” Christie told the lawmakers.  But having made the first move toward a compromise, Christie warned Democrats that he expected the legislature to act in short order on the issue.

“So there you have it—a choice.  A constitutional cap which I have proposed.  Or the statutory cap some of you prefer,” he said.  “But here is what I will not accept. Inaction.  We will work every day until we do one or the other.  We cannot take a vacation when our citizens get no vacation from escalating property taxes.  We cannot leave this town for the summer and leave our citizens with an ever growing property tax bill to pay because we refused to act.”

Christie’s offer was the basis for three days of negotiations that led to the bill he signed this week.  The new law is a non-constitutional cap, and includes exemptions for four items:  healthcare and pension costs, debt service, and states of emergency.  Gone are the waivers for local school boards and town councils that Sweeney’s bill provided, and the exemption for union contracts that the governor offered as a means of jump-starting negotiations.

At the signing ceremony on Tuesday, Christie was jubilant.  “This is the beginning of real property tax relief for New Jerseyans,” he said.  “If…your local governing body wants to raise [property taxes] above 2%, they’ve got to come and get permission from the people who pay the bills.  If [they] get that vote, then they get the additional property tax revenue. If they don’t, they don’t. And there’s not going to be anybody in Trenton that can override that.”

Sweeney, in his remarks, challenged the perception that the compromise represents another political victory for Christie over the legislature.  “What [voters] wanted was to see action, they wanted to see change and there was some significant change,” he said.  “You know, I read…how the governor scored a victory after victory. The governor didn’t score a victory, I didn’t score a victory—the taxpayers scored a victory.”

Sweeney’s assessment, however, is not likely to hold sway with voters.  Christie has been barnstorming the state for the lower property tax cap—albeit in a different form—since the spring.  Democrats have been on record opposing a new cap, saying that the state’s former 4% cap was succeeding.  Christie countered with statistics showing that property taxes and government spending in the state had grown by 70% in the previous decade. 

Faced with the reality of a public growing ever angrier at government spending and tax increases, and a governor with majority approval in the latest Rasmussen Reports poll, Democrats could force only marginal changes to Christie’s proposal.  More than six months into his first term, Christie continues to roll up victories for his agenda while Democrats have yet to find a way to slow his momentum.


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