Cap 2.0 Would Put Even Tighter Lid on Property Tax Hikes

Statehouse surprise could prove a tough hit for battered school budgets

Credit: (Governor's Office/Tim Larsen)
Senate President Stephen Sweeney (left) and Gov. Chris Christie announce a surprise 2 percent cap on property tax increases.
This weekend’s blockbuster Statehouse accord for a 2 percent cap on property tax increases appears on the surface to be a tough hit for New Jersey’s public schools.

After all, four out of five districts this spring proposed budgets for next year that raised property tax levies by levels that would exceed the proposed cap.

Even after municipal councils took another $140 million out of defeated budgets, the average levy increase will still land about 3.7 percent, according to the state’s data. That’s close to $200 million more than a 2 percent cap could allow.

But it’s not quite that simple, and news this weekend of the sudden deal between Gov. Chris Christie and Senate leaders to lower the existing 4 percent limit to a new 2 percent cap brought a mixed reaction from local and state education leaders.

Many worried about the obvious impact on schools that are already reeling financially. But others said the real impact going forward depends on a host of factors that are still unresolved in a political landscape that appears to change by the day–holiday weekends included.

Making Up the Difference

The biggest issue facing districts is whether state aid will take another hit as it did this year, when Christie cut aid to schools by $1.1 billion and left many districts making up the difference from their local taxpayers.

Piscataway was among the minority that was under 2 percent in the budget it put forward for next year, proposing a 1.9 percent increase. But its superintendent, Robert Copeland, said his district can not keep up its balancing act if state aid keeps dropping precipitously.

School Budget Vote 2010

“We can’t go on like this,” he said yesterday. “If we have to keep making up for state aid cuts, after a while, we’ll have no people left.”

More immediate are questions surrounding the emerging details of the agreement struck Saturday, and still some confusion to what would fall inside the 2 percent cap and what would fall outside of it.

The agreement is still far from being law, since the Assembly leaders have yet to weigh in formally, and even some Senators said deliberations would continue this week.

Closed-Door Sessions

But as announced on Saturday following a flurry of closed-door meeting between Christie and legislative leaders, the new cap would exclude debt service, healthcare benefits and pension costs. It also includes a new provision to exclude “expenses incurred in connection with a state of emergency as determined by regulations to be defined.”

Even with that broad provision, the list is a lot shorter than the current adjustments or exemptions available through waivers, which include extraordinary special education costs, increases for new schools and even inflation as it relates to energy and supplies.

So far, the New Jersey Education Association has been most critical of the lack of flexibility in the new agreement, calling it a “backroom deal” that will “devastate” schools.

“As school budgets, which have already been slashed this year, are stretched tighter, deeper cuts in staff and even larger class sizes are inevitable,” said Barbara Keshishian, the NJEA president. “This is a dark day for democracy and public education in New Jersey.”

Others were a more tempered but worried that so many issues remain unresolved.

“We’ve been talking about this for a long time, but it’s still kind of shocking and concerning that it happened with this kind of lightening speed without any real public input to speak of,” said Lynne Strickland, the long-time lobbyist for suburban districts who had left town for the July 4th weekend.

“That’s always going to be a concern when making a major policy move like this, that there’s a lot of information out there that hasn’t had a chance to get a hearing,” she said.

The next steps could come with equal speed, as Senate President Stephen Sweeney (D-Gloucester) said Saturday that his members could vote on the new measure as soon as Thursday. The Senate Budget Committee is slated to meet that morning.

But the Wednesday morning meeting of the Assembly’s budget committee may be the first time that Assembly leaders speak publicly on the deal.