Move to Waive NJ Property-Tax Penalties for Fed Workers if New Shutdown

John Reitmeyer | February 4, 2019 | Politics
New Jersey lawmakers have fast-tracked a measure that would allow municipalities to waive the usual interest penalty charged for late payment of quarterly property taxes

Credit: NCPA
The Lincoln Memorial in Washington, D.C. was closed during the recent government shutdown.
The shutdown of the federal government may be over for now. But, with no guarantees about the future, New Jersey lawmakers have fast-tracked legislation that would help make sure unpaid workers aren’t penalized for falling behind on their property taxes.

Both houses of the state Legislature passed a measure late last week to enable municipalities to come to the aid of federal workers during a shutdown by waiving the typical interest penalties that are charged in New Jersey when a quarterly property-tax bill isn’t paid on time.

No tax payments would be forgiven outright under the bill, but it would allow for a grace period for federal workers who are either furloughed or forced to work without pay. Contractors whose pay comes directly from the federal government could also be offered the same leeway.

The bill was modeled on a similar grace period that has been allowed at times following natural disasters in New Jersey. It was introduced by state lawmakers amid the partial government shutdown that began in December as President Donald Trump insisted on getting significant taxpayer funding for a proposed wall on the U.S.-Mexico border. On January 25, a temporary agreement ended the impasse after 35 days, but the wall was not funded in the deal and another shutdown could begin as soon as February 15 if a new agreement cannot be reached.

“As long as (Trump) occupies the White House there is a threat of another shutdown that would leave federal workers without the paychecks they need to pay their bills,” said Sen. Joe Cryan (D-Union).

“We hope that does not happen, but we should be prepared,” he said.

Estimated 5,000 NJ residents affected by shutdown

Sen. Joe Cryan (D-Union)
While the rate of growth has been slowing, New Jersey’s annual property-tax bills remain among the most expensive in the nation at an average $8,767. The average bill is also consuming an increasingly large share of the typical homeowners’ yearly salary; it now accounts for roughly 11 percent of the state’s median household income of $76,475, according to the latest U.S. Census data.

Property taxes are typically paid on a quarterly basis in New Jersey, with installments due on February 1, May 1, August 1 and November 1. Homeowners who fall behind on their quarterly payments are charged interest. The rate is typically 8 percent on the first $1,500, but it can climb above 18 percent for the most delinquent cases.

As the federal government shutdown dragged on, state lawmakers began to grow concerned that thousands of New Jersey residents who were not being paid by federal employers could be in danger of missing the February 1 property-tax payment. In all, some 20,000 New Jersey residents work for federal agencies, and an estimated 5,000 were directly impacted by the partial shutdown.

The bill allowing for the grace period was introduced on January 17, and rushed through legislative committees before being passed by the full Assembly and Senate on Friday.

If Gov. Phil Murphy signs it into law, the bill would let towns waive the interest penalties for federal workers. Language in the bill calls for the grace period to be retroactive to December 2018 but also to apply to any future government shutdowns, including those that would involve all federal agencies instead of the limited group that was impacted by the most recent funding interruption. (It would not offer the same grace period to state workers impacted by a state government shutdown.)

Offering a grace period

Towns could offer the grace period to federal workers impacted by a shutdown, as well as employees of companies that have a contract with a government agency, such as the Federal Aviation Administration. That’s an important provision since Congress ended up allowing federal workers to receive backpay they were owed after the 35-day shutdown ended, while federal contractors were not provided such relief.

As of last week, Trump’s dispute with U.S. House Speaker Nancy Pelosi and other Democrats had not been resolved, fueling concerns that a new shutdown could be looming. In fact, Trump, a Republican, told The New York Times in a recent interview that he views ongoing talks with congressional leaders “a waste of time” as he continues to press for a full $5.7 billion in U.S. taxpayer funding for the construction of a wall, which he repeatedly said during the 2016 campaign would be financed by Mexico.

Cryan, the sponsor of the New Jersey bill, had harsh criticism for the president as he continues to leave open the possibility of another shutdown.

“Donald Trump’s behavior is impulsive and unpredictable, and he obviously has no consideration for the hardship of federal workers,” Cryan said.