Two years ago, Trenton legislators patted themselves on the back for enacting the state’s much ballyhooed 2 percent “hard” cap on property taxes.
While most New Jersey residents know that property taxes should be significantly reduced, not just capped, the ceiling on annual increases was welcomed as offering some relief from ever-escalating tax bills.
There’s some evidence that the rate of growth in property taxes has been slowing. However, this year in particular, towns are finding loopholes that the law probably did not intend.
Municipalities from Boonton to the Delaware Bay have found ways to get around the cap, enacting “user fees” for municipal services like trash collection or street lighting and shifting part of their expenses to utility districts or fire commissions.
Last week, Senate President Stephen Sweeney, D-3, of West Deptford Township, censured the practice, saying he wants to put user fees under the 2 percent cap. If these fees didn’t exist before the latest cap law, that’s a good idea.
Until Trenton gets serious about state finance reform, Sweeney’s proposed bill is a step in the right direction.
Under current law, a town needs voter approval to raise the property tax levy by more than 2 percent. However, certain costs can be excluded from the cap for a laundry list of reasons, including the all-encompassing “fixed costs.”
“Fixed costs” is a clever term that allows elected officials to complain about, and therefore deny responsibility for, the rising cost of contracts to which they have previously agreed. Such “fixed” but not immutable costs include run-away premiums for employee health benefits, built-in salary increments and contracted professional services that a particular town may or may not need in any given year. All of these are expenses that could and should be controlled.
In other words, lawmakers (including Sweeney) have already larded the 2 percent law with enough exemptions that no town should have to move services off the regular taxation books.
To avoid making the tough decisions necessary to cut costs — including consolidating, regionalizing, or sharing with other entities — some towns are imposing fees to cover services. Further, a League of Municipalities survey released in December found that towns are raising revenue by imposing fees on amenities like parking and recreation.
Such end runs around the cap are a clear sign of ineffective legislation.
At some point, a 2 percent cap might be unrealistically low, but not yet. Overall inflation remains low. So, “no” to user fees enacted just to do an end run around the cap. Especially fees for services that have always been covered by municipal budgets.
Sweeney’s proposal would be a patch on the cap law, but it looks like a worthwhile one.