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State’s Property Tax Relief Program Operates According to Its Own Calendar

Due to Christie administration’s budget juggling, credits scheduled to be applied to tax bills in May 2016 are for taxes homeowners paid way back in 2013

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The calendar may say it’s 2015, but the year that matters most right now is still 2013 – at least when it comes to one of the state’s most popular property tax relief programs.

That’s because Gov. Chris Christie, faced with budget shortfalls in recent years, has delayed paying out Homestead property tax relief credits several times, each time pushing back for several months the state’s distribution schedule for the credits.

That means applications that went out this year to more than a million homeowners who potentially qualify for the program’s tax credits are linked not to their 2015 property tax bills or even those from last year, but to property tax bills that were paid in 2013.

And the state’s current payment schedule, barring any new delays, calls for the property tax relief that homeowners are applying for this year to go out from the state in May 2016.
Officials from the state Department of Treasury, which administers the Homestead program, recently granted a two-month extension for those still filling out applications for their 2013 Homestead credits, which show up now as a direct credit on local property tax bills instead of the rebate checks of years past.

Treasury’s new application deadline is Dec. 31, 2015.

“By extending the application deadline to Dec. 31, we will give those who might have missed out the chance to apply and receive their benefit in 2016,” acting state Treasurer Robert Romano said.

New Jersey homeowners making up to $75,000 annually qualify for the Homestead credits; the income limit is higher for seniors and disabled residents, who can make up to $150,000. To be eligible, they must also be New Jersey residents who owned their home as a principal residence on Oct. 1, 2013, and they must have paid property taxes on the home during the 2013 calendar year.

Treasury officials expect the credits to be worth $515 on average for seniors and $404 on average for other eligible homeowners when paid out in May 2016.

Christie last delayed the Homestead payment schedule in 2014 as the state was trying to close a $1 billion budget shortfall, pushing back Homestead benefits that were due to go out in August that year until May 2015. That followed a decision in 2013 to delay payments from May to August, another move that allowed the state close its fiscal year with a balanced budget, something that’s required by the state constitution.

The result of the delays has been a long lag between the year homeowners pay their property tax bills and the paying out by the state of the property tax relief credits linked to those bills. For example, the Homestead benefits that were paid out by the state earlier this year in May were linked to property tax bills homeowners paid in 2012.

While the long delays can cause confusion when applications go out to homeowners, there are other serious consequences for those struggling to keep up with New Jersey’s record-high property tax bills. For example, no homeowners received Homestead property tax relief at all in 2014 as a consequence of the delays.

The size of the credits has also remained essentially flat in recent years even as New Jersey property tax bills have continued to rise, leaving many Homestead recipients with a higher net property tax bill.

For example, in 2012 the average New Jersey property tax bill totaled $7,885, while the Homestead credit paid out by the state linked to those bills averaged an estimated $516 for seniors and disabled homeowners and $402 for all others who qualified for the benefit, according to Treasury estimates.

The average New Jersey property tax bill rose to $7,988 in 2013, but the Homestead credit that will be paid out to help offset those bills in May 2016 will be $515 for seniors and $404 for all other qualified homeowners, according to Treasury’s estimates.

And last year the average property tax bill rose to $8,161, putting it $276 higher than the average bills from 2012.

The size of the credits for the 2014 calendar year have yet to be announced.

To be fair, Christie and Democratic legislative leaders have helped slow the rate of growth in average property tax bills after working together in 2010 to enact a 2 percent cap on local property-tax levy increases. Annual growth rates 10 years ago were as high as 7 percent, much lower than the 2.16 percent increase in average bills measured from 2013 to 2014.

Treasury officials say the state is still on schedule to pay out the 2013 Homestead credits in May 2016. Relaxing the application deadline from Oct. 30 to Dec. 31 has “no bearing” on the state’s payment schedule, Treasury spokesman Joseph Perone said.

But keeping to that schedule will likely depend on whether the current state budget stays on track or faces the type of shortfalls that have derailed prior state budgets during Christie’s tenure, which began in early 2010.

Tax collections during the first quarter of the 2016 fiscal year, which began July 1, were up 4.7 percent compared to last year through the end of September. That put revenues for the fiscal year ahead of a 3.4 percent projected growth rate.

But that rate was inflated by a quirk in this year’s calendar that gave September 2015 one extra pay period compared to September 2014.

Adjusting for that difference leaves the growth rate at slightly over 2 percent, according to a report prepared by legislative analysts.

And it’s not clear exactly how far ahead or behind tax collections are in dollars compared to revenue projections at this point in the fiscal year because Christie’s administration, under a policy begun last year, no longer releases such detailed information in monthly tax-collection reports.

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