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Fine Print: Long-Sought Compromise Will Increase NJ Property-Tax Transparency

An investigation originally undertaken by NJ Spotlight pays off as new property tax data will be posted on state’s governmental services website

house money

What is going on: High property taxes have long been a top complaint of New Jersey homeowners, and a new law enacted by Gov. Chris Christie earlier this month following a compromise with lawmakers aims to help residents gain a better understanding of how their bills come together — and how state property-tax relief programs may help to offset them.

Thanks to the compromise, information about the state’s most popular property-tax relief program, as well as others, will be added to the comparative property-tax figures that are published each year on the website of the state Division of Local Government Services.

How we got here: The origins of the bill that was signed into law by Christie following an initial conditional veto go back to 2014, when lawmakers grew upset that Christie’s administration decided to remove a column from the DLGS website that depicted “average net-property taxes” being paid by homeowners in every town in New Jersey. The change was made as Christie, a second-term Republican, was preparing to run for president, and as he faced criticism for not doing enough to combat the property-tax burden, especially for low-income homeowners and seniors and the disabled.

Lawmakers took action after NJ Spotlight first reported on the change. Earlier reporting also tracked increases in average net-property taxes that occurred during Christie’s tenure.

The issue with average net property taxes: The state for years had calculated average net-property taxes by subtracting the average property-tax rebate provided through the state’s popular Homestead benefit program from the average property-tax bill that was paid on an annual basis by homeowners in every town. The information was released for each year on the DLGS website along with reams of other data, including detailed tax rates and property valuations broken down by county and town.

But Christie’s administration argued that the average net-property tax category was based on faulty math, since not every homeowner in every community qualifies for the Homestead benefit, which was converted from a rebate into a direct credit on property taxes shortly after Christie took office in 2010. The net property-tax bill was also determined using the average property-tax bill for all homeowners in a given town, and not using an “apples-to-apples” comparison of just the average property taxes paid by recipients of the Homestead program.

The changing Homestead program: The focus on the average net-property taxes category dates back to a time when far more New Jersey taxpayers were eligible for property-tax relief through the Homestead program. Nearly 2 million New Jersey taxpayers were once enrolled, but income limits that were at one point as high as $250,000 were lowered down to $75,000, and $150,000 for seniors or disabled homeowners, before Christie took office. Christie has also reduced funding for the Homestead credits during his tenure, with $323 million set aside in the current state budget to cover the next round. More than $2 billion was budgeted for the rebates in 2007. Now, just under 600,000 homeowners remain enrolled in the Homestead program.

Rising property tax bills: The changes to the Homestead program have occurred even as the average New Jersey property tax bill has continued to rise. In 2010, the year Christie took office, the average property-tax bill was $7, 576. Last year, the average property tax bill was $8,549, an increase of nearly $1,000. But Christie has fired back at critics of his handling of the property-tax issue by pointing to hikes that occurred at a higher rate before he took office and instituted a 2 percent cap on annual property-tax levy increases.

The compromise: Lawmakers sought to save the website’s “average Homestead rebate” and “average net property taxes” categories through legislation, only to see their efforts rejected by Christie using his gubernatorial veto authority. But Christie, a Republican, praised their goal of increasing overall transparency, and recommended in a conditional veto that in addition to providing information on the DLGS website about Homestead relief, lawmakers should also add data for other state property-tax relief programs, including senior freeze and the property-tax deduction act. The compromise reached between Christie and Democrats who control the Legislature will result in information once again being displayed on the DLGS website that will show the average Homestead credit paid in every town, as well as how many homeowners in each town received a Homestead credit. A net average-property tax bill will not be posted, but information about senior freeze, the property tax deduction act, and other state property-tax relief programs will be added to the website. A summary of municipal budget data for each community will also be displayed.

When it goes into effect: The bill calls for the change to go into effect immediately, but the data for each tax year usually isn’t posted until at least several weeks into the new year. That means, with Christie set to leave office in early 2018 as a result of term limits set in the state constitution, he will likely be out of office before the more detailed property-tax information goes online.

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