Saying the time to act is now, Governor Jon Corzine used his first State of the State address on January 9 to prod legislators to enact comprehensive property tax reform. Corzine offered no new property tax reform proposals, but went through a long list of recommendations on which he and legislative leaders agreed in principle. Corzine also hinted that he would look at leasing State assets (such as the New Jersey Turnpike) to generate new revenues for the State.
To keep you informed about how property tax reform will affect your business, NJBIA has created a Web page, Property Tax Facts.
The crux of the proposed property tax reform program is a tax credit of up to 20 percent for homeowners earning less than $100,000 per year (those between $100,000 and $250,000 would receive 10 to 15 percent cuts). The Governor also would cap future property tax increases at 4 percent per year. The tax credits would be paid for through dedication of half of the sales tax increase, current property tax rebates funding and greater cost efficiencies in State and local governments. Corzine said he and legislative leaders agreed in principle to:
• cap the allowable annual increase in the property tax levy at 4 percent;
• revise the school aid formula and increase funding to reflect the needs of each child;
• reform healthcare and pension benefits for State employees;
• stop the “well-connected and self-serving” from exploiting benefits intended for career employees;
• institute regular and independent auditing of government spending;
• provide greater incentives for sharing services and voluntary consolidation among local governments and schools; and
• modernize New Jersey’s civil service laws that impede efforts for governmental cooperation.
NJBIA supports these policies.
To help pay for the reforms, Corzine said his administration is investigating the concept of “asset monetization”—leasing a State asset, such as a toll road, to a private entity to generate revenues.
While he did not specify any specific assets he would lease (toll roads like the Turnpike are often mentioned), Corzine said the idea offered tremendous potential to dramatically improve New Jersey’s fiscal standing. The revenues from leasing assets could be used to pay off billions of dollars in State debt, thereby reducing debt service payment and releasing billions of dollars a year in revenues the State could use to pay for other services. To do it properly, however, the State must ask for a high enough price for the asset and put conditions on its lease that sufficiently protect the public’s interest. Corzine said the Treasurer would provide a report in the months ahead.
New Jersey Business & Industry Association ( www.njbia.com ). - 1/12/2007
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