Increase in ‘Senior Freeze’ Earnings Cap Put on Ice Once Again by Christie, Lawmakers

Governor, Democratic Legislature keep income limit at $70,000 in program that limits property taxes for retirement-age and disabled homeowners

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The income limit for a state property tax relief program that benefits thousands of senior and disabled homeowners by “freezing” their property tax bills was supposed to rise to over $85,000 this year.

But once again the final version of the budget signed into law by Gov. Chris Christie capped the ceiling at $70,000.

It’s unclear exactly how many homeowners will be kept out of the program by that decision and how much it will save the state budget, but it’s a key detail for those still filling out applications for the Senior and Disabled Citizens’ Property Tax Freeze before an Oct. 15 filing deadline.

The program — commonly referred to as the “senior freeze” because it provides reimbursements to effectively “freeze” property tax bills for longtime New Jersey residents — was started in 1997 as a way to help seniors and the disabled deal with the state’s rising property taxes. Nearly two decades later, those bills now average a record high of $8,161 after going up last year by $173.

Under state law, the income ceiling for the senior-freeze program is supposed to rise annually with the cost of living, like Social Security benefits. The ceiling should have been $85,553 for the 2014 tax year and $84,289 for the 2013 tax year, according to the statute.

But the limit has been held flat at $70,000 for the last few years using budget language, a practice authorized by the state constitution that continued this year in the the budget Christie signed into law in late June for the fiscal year that began July 1.

And that freezing of the program’s income ceiling occurred this year even as total state spending increased by about $1 billion to $33.8 billion, with funding for public-employee pensions going up by more than $400 million and business-tax breaks expanding by $60 million.
Christie, a Republican, and the Democrats who control the state Legislature share responsibility for the decision.

A legislative analysis of Christie’s February budget proposal indicated he recommended maintaining the $70,000 limit for another fiscal year, but the appropriations bill that lawmakers sent back to the governor in late June did not go against that recommendation even though many other changes were made.

Still, nearly $220 million is set aside for the senior-freeze program in the new budget, a slight uptick from last year’s total.

The program is the third-largest item in the state’s overall $1 billion direct property tax relief budget, ranking behind the $455 million that pays for income-tax deductions for property tax bills up to $10,000, and the $341 million that’s set aside to fund Homestead property tax relief credits.
Department of Treasury officials estimate more than 171,000 homeowners will receive reimbursements averaging $1,278 this year from the senior-freeze program. The reimbursements will average $1,459 for returning enrollees and $334 for first-year beneficiaries.

[related]The program has a complicated set of qualification standards in addition to the income-eligibility rules. To qualify, homeowners must be at least 65 years old or disabled, and be at least a 10-year resident of New Jersey. They also have to be the owners of their residence for the last three years.

Because the program operates with a lag, applications filled out in 2015 apply to the 2014 tax year.

Governors and lawmakers are authorized to ignore state statutes that seem to call for specific funding for initiatives — like the senior-freeze program — under clauses in the state constitution that are designed to restrain spending.

Those clauses require a balanced budget and prohibit today’s leaders from overextending future generations with sizable obligations that have not been approved by voters. No matter what state law says, those clauses can be cited in budget language to establish temporary rules.

The original application deadline this year for the senior-freeze program was June 1, but state officials extended it a few months ago to Oct. 15. Checks are usually mailed out by the Department of Treasury in mid-July to those who have already applied for reimbursements, and then on a rolling basis as later applications are received.

More information about the program and a link to the application is available here.

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