What’s Wrong With This Picture? Property Taxes Rise, While Rebates Dwindle

The Homestead program, which cuts taxes for seniors, the disabled, and low-income families, is at second-lowest funding level of past decade

A proposed funding reduction for Homestead property-tax relief that’s in Gov. Chris Christie’s new spending plan would leave the popular program with its second-lowest level of funding of the past decade even as property tax bills are now at an all-time high.

If state lawmakers ultimately approve the $33.8 billion state budget Christie put forward last week for the fiscal year that begins July 1, funding for Homestead property tax relief credits would drop by $33 million to $341 million. That reduction would follow a year that saw average property tax bills increase by $173 to $8,161, a record for New Jersey.

The state budgeted nearly $2 billion for Homestead relief, the peak for the program, during the 2008 fiscal year, when the average New Jersey property tax bill was $7,045, according to state Department of Treasury budget records. The low point for the program was the $268 million budgeted for the 2011 fiscal year during the depths of the last recession, and when average New Jersey property tax bills totaled $7,759.

The Homestead funding reduction Christie is proposing for the 2016 fiscal year is not the result of lowering qualifications for the program, which provides property-tax relief credits to nearly 700,000 New Jersey seniors and low- and moderate-income homeowners.

Instead, Christie administration officials have made it clear that the funding reduction reflects only declining participation. Actual benefits, which will average $515 for seniors and $404 for other qualified homeowners in the new fiscal year, remain virtually the same as the prior year.

Income limits also will remain where they have been throughout Christie’s tenure. They are set at up to $150,000 in annual earnings for seniors and disabled homeowners, and up to $75,000 in annual earnings for other homeowners. Those ceilings were once as high as $250,000 before being lowered by former Gov. Jon Corzine.

“The pool of eligible persons shrinks every year, since the eligibility is based on age, disability, and income,” said
Treasury spokesman Christopher Santarelli.

“The FY 2016 budget does not anticipate or include any policy changes to property-tax relief programs,” he said. “Any changes year-over-year in program size reflect normal trends in eligibility and participation.”

Administration officials also note that unlike last year, when Homestead relief payments were delayed for several months to help close a budget shortfall, this year the credits are still on schedule to be paid in May, even as Christie and lawmakers are facing a court order to come up with another $1.6 billion for the state pension system before the fiscal year ends on June 30.

Yet with business-tax cuts in Christie’s proposed spending plan scheduled to grow from $616.5 million to $660 million in the new fiscal year, and overall spending set to increase by about $1 billion, many are beginning to question whether it’s also time to expand the Homestead program.

Assembly Budget Committee Chair Gary Schaer (D-Passaic) said as property tax bills rise but the Homestead relief remains flat it’s fair to consider that as a tax increase for the seniors and other homeowners who qualify for the program.

“The bottom line is the bottom line,” Schaer said. “That is the number we need to look at.”
Christie turned the Homestead program from rebate-check relief into direct credits on property-tax bills in 2010 as the state was dealing with a huge revenue loss tied to the recession. He also reduced funding to the program’s low point of $268 million to help balance the budget that year.

But funding for Homestead relief quickly bounced back in the next fiscal year budget to $458 million. Since then, however, there’s been a steady decline, from $400 million to the $374 million in the current fiscal year budget.

Meanwhile, credits paid out to homeowners who qualify for Homestead relief have remained flat the past few years.

Average credits for seniors in the current budget are $516, and they are $402 for all other qualified homeowners. The year before, the program paid average credits of $518 for seniors and $409 for other homeowners.

Yet the average property tax bill in New Jersey has steadily increased since Christie took office, meaning the relief from Trenton has not been able to keep up. The average New Jersey property tax bill was $7,576 in 2010, the first year of Christie’s tenure. Last year, the average property-tax bill was $8,161.

To be fair, Christie and Democratic legislative leaders worked together in 2010 to enact a 2 percent cap on local property-tax levy increases, and that cap has slowed the rate of growth in average New Jersey property tax bills.

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.

New Jersey used to keep track of a net property-tax bill in every community, measuring the annual increase in property taxes against the amount of relief homeowners received from Trenton through the Homestead program. Last year, however, the Christie administration stopped releasing such information and wiped away figures from several prior years as the comparison became less flattering.

A bill that would force the state Department of Community Affairs to again post the more detailed property-tax relief data on its website is on the agenda for tomorrow’s scheduled voting session in the Senate.

Schaer, the Assembly budget panel chair, stopped short yesterday of promising Democrats would be able to find more money for property-tax relief as budget hearings unfold over the next few months. But he said “certainly Democrats are committed to affordability.”

“I know that there’s been some discussion on this area,” Schaer said. “How far it will go, I don’t know.”

“Right now, things are very tight (but) this is a huge priority,” he said.