Placing a cap on sanity

Property tax caps do not work. Ask the people in Colorado Springs who are doing without street lights. Hell, ask the people right here in New Jersey what happens when a cap is imposed, even when it is a rather loose 4 percent.

The Center on Budget and Policy Priorities, a liberal Washington think tank, sums up the problem pretty straightforwardly: Caps. CBPP says, “may hold down property taxes,” but “they are likely to impair local governments’ ability to provide education, public safety, and other services residents demand and need. They also are likely to make the local revenue system more regressive.”

Property tax caps do nothing to change the main drivers behind higher property taxes. They cannot slow the increase in the cost of health care or fuel, for example, which reflects forces outside of the control of local officials. Nor do they change the demand for local public services, such as quality K-12 education, public safety, and good roads.

There are ways of mitigating these problems — replacing property taxes with state funding, giving citizens a right to override caps at the ballot box, shifting revenue from property taxes to other sources — but they rarely are invoked and when they are tend to exacerbate the impact of the cap. (Richer communities can afford to override, while lower-income communities cannot; sales tax and use fees tend to hit lower-income residents hardest.)

Academic studies have found that in most cases, property tax limits have led not to a shrinkage in the public sector but instead to a shift to other revenue sources, such as state aid and fees. In places where the caps have had an effect, however, the outcome has been negative.

And yet, Gov. Chris Christie is still pushing this dubious notion, telling New Jersey mayors to expect his proposed 2.5 percent tax levy cap to gain passage (it has to be approved by the state Legislature and then by voters in November).

Christie said he will propose legislation next week to put a constitutional amendment instituting the cap on the November ballot. If legislators pass the ballot question and it’s approved by voters, municipalities will have to hold their property tax growth 2.5 percent a year unless voters overrule it by referendum. Under Christie’s proposal, if a town raises property taxes less than the capped level one year, it will be able to bank those savings and exceed the cap in future years if necessary.

New Jersey residents already have dysfunctional government, including too many different government entities and too great a reliance on property taxes. But there remains some flexibility in the system, unlike the travesty that California and Colorado governments have become. Do we really want to fix our problems by making them worse?

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Author: hankkalet

Hank Kalet is a poet and freelance journalist. He is the economic needs reporter for NJ Spotlight, teaches journalism at Rutgers University and writing at Middlesex County College and Brookdale Community College. He writes a semi-monthly column for the Progressive Populist. He is a lifelong fan of the New York Mets and New York Knicks, drinks too much coffee and attends as many Bruce Springsteen concerts as his meager finances will allow. He lives in South Brunswick with his wife Annie. View all posts by hankkalet