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What Might Have Been
The check is in the mail. Or maybe your NJ SAVER rebate already came. So it's a good time to think about what might have been: that check could have been bigger. Were New Jersey's policymakers willing to think "outside the box" and also exhibit a smattering of political courage, property tax relief in this state could have been far more.
If you live in a city, your rebate is smaller than it could have been had the state calculated relief on your entire property tax bill. Instead it's based only on the portion of your property taxes that goes toward schools. Statewide that's an average of 50 percent, but in cities the figure is far lower because of heavier state aid. So while urban New Jerseyans still pay very high property taxes, the fact that their school percentage is below average means they get cheated. Their suburban neighbors a few miles away are getting more money back from the state.
Wherever you live, your rebate is less than it could have been because the Governor and the Legislature decided against finding a way to actually pay for the NJ SAVER program.
That's why they have to phase it in over five years and your check in 1999 is only a fifth of what you're supposed to get in 2003. But the key phrase here is "supposed to." Paying you this year is no problem. The economy is so good that tax revenues are coming in above expectations and there is a tidy surplus.
But if the economy is performing poorly in 2003 (the boom can't last forever) the state will have a hard time coming up with the cash for what, when fully phased in, is a $1 billion per year rebate program. The Governor and leaders of the Legislature say we shouldn't be worried because economic growth and finding more efficient ways to run government will get us the money. In other words, we should worry.
Had they wanted to, the creators of NJ SAVER could have based these rebates on your entire property tax bill, not just the schools portion. And they could have started paying you the full amount this year so that at the end of five years your total relief would be far more than it will be even if the promise of 2003 is kept.
This is the political courage part. They would have had to create a funding source. Which they could have done by calling on the very wealthiest New Jerseyans to pay a little more of their fair share toward the wellbeing of this state. That's right, a tax increase. But a tax increase on no more than five percent of the people who live here. And even those people would get a break because they would also get the rebate and they could write off more of their state taxes from their federal tax bill than they do now.
Politicians, do the math. A tax increase for 5 percent of the population and a far more significant tax cut for 95 percent than they will get under today's half-a-loaf property tax relief scheme.
In the meantime we get a property tax relief program that's like putting a Band-Aid on cancer in dealing with a crushing property tax burden that falls more heavily on the middle class than the rich.
Today's rebate relies on taxpayers being so grateful for a few crumbs that they won't raise a stink about what might have been.New Jersey Policy Perspective is working on a study of how property tax relief could be significantly increased.
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