New Jersey homeowners, already bearing a tremendous property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. burden, will not be happy to hear the recent prediction from Senate President Stephen Sweeney: He expects property taxes to rise by more than two percent next year.
Senate President Steve Sweeney told the New Jersey Business and Industry Association that businesses and homeowners can expect increases greater than 2 percent unless the economy improves dramatically. A stagnant economy means local governments collect less in taxes.
“If the economy turns around and you have growth in your tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. , you should be able to cover your costs,” Sweeney said. “The problem is, I don’t see growth in the economy.”
The Legislature approved and Gov. Chris Christie signed a 2 percent cap on property taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. growth this year. Pension and health care costs are exempt. Those costs have been rising at double-digit rates per year.
County, local and school officials who will be forced to create a budget within the cap or seek voter approval to exceed it will face tough choices, including layoffs and service cuts, Assembly Speaker Sheila Oliver said.
“The 2 percent property tax cap will restrain and constrain the growth of property taxes at the local level,” she said. “It will not necessarily reduce property taxes.”
In 2009, New Jersey has the highest property taxes of any state by three different measures: dollar amount paid, as a percentage of home value, and as a percentage of income.
More on property taxes:
• State Business Tax Climate Index–Property Tax Index, 2006 – 2010, October 26, 2010
• Kail Padgitt of the Tax Foundation: Sales Taxes, Property Taxes & Tax Revenue Sources, September 15, 2010