taxes – Page 6 – Hank Kalet

Paying for police– and government in general

I’m not sure how I feel about this decision, which nullified a state plan to required the 89 rural communities without police departments to pay the state for State Police coverage.

The plan, which would have cost the towns $12.6 million (a sliver of the $87 million the state says it costs to police those towns), was part of a larger effort by the state to make smaller communities understand the actual costs of continuing to function as independent municipalities. The state’s argument has been that state law enforcement has allowed these towns to receive police protection without having to pay for it — unlike towns with their own forces or those that may have contracts with neighboring communities.

The cost to the state is relatively minor, but the new cost in small towns would have meant higher property tax bills.

The problem, as I see it, is not the governor’s plan — which seems fair when you consider that residents of Rocky Hill, for instance, pay for State Police services out of their state income tax, the same as I do, but they get to use state cops as their primary law enforcement option. I have to pay additional money for local police.

At the same time, we all rely on the State Police for a lot of things, and these small towns have been operating in this way for years and years — so this is not the easiest of issues to resolve.

The issue raises some basic questions about the vast number of towns in this state and whether we should be pushing them or forcing them to band together as larger communities so that services can be provided and provided using an economy of scale.

The questions of police protection, of library spending (i.e., Jamesburg), recreation programs, school funding, etc., have to be addressed within a broader context. We can’t keep dealing with each of them in a vacuum.

Random thoughts on local taxes

I pulled out my tax bills for the last six years the other day to do get a sense of the changes that have occured in our own cost of living as we get closer to the end of our automobile lease. I figured I’d share.

First, consider the 2003/2004 bill, the one issued during the summer that year. The total tax load for 2003 was $4,760.46 — $699.99 for the county, $723.58 to the township, $62.92 for county open space, $64.49 for municipal open space, $3,105.10 for the schools and $94.38 for the Kendall Park fire district.

The most recent bill — 2008/2009: $6,222.79 total — $862 to the county, $983.13 to the township, $102.25 for county open space, $62.92 or local open space, $4,097.67 for the schools and $114.83 for fire.

During the last five years, as you can see, my tax bill — and by extension everyone’s tax bill — has gone up 30.7 percent, with the bulk of the dollar increase coming from the schools.

But that’s overly simple. The school increase, in percentage terms, is actually smaller than the increase in municipal taxes — 32 percent for the schools vs. 35.9 percent.

More significantly, the $6,222 is more than we should be paying for services in New Jersey, though not necessarily because we are spending too much. On the contrary, the state is not doing its part to pay for services, creating an unequal playing field that aids suburban towns with large corporate or commercial tax bases and leaves low-income communities in a hole.

The McCain health tax

Matthew Yglesias comments today on something that really deserves far more attention than it is getting (actually, it has gotten almost no attention…): John McCain’s plan to tax our benefits. As Yglesias points out,

at the moment compensation you receive from your employer in the form of money is subject to income tax, but compensation you receive from your employer in the form of employer contributions to health insurance premiums is not taxed. McCain proposes to change this and start subjecting those benefits to taxation.

He quotes James Kvaal, who says that

McCain’s plan “would tax workers’ health benefits, which are largely tax-free today,” thus increasing the amount of tax people need to pay, which is a tax increase in any common sense understanding of the term.

It’s not just that McCain wants to tax workers’ health benefits, which is, no matter what the McCain campaign says, a tax on middle-income people at a time that he wants to cut taxes for the rich. He’s also making healthcare less affordable for working people at a time when too many people in the United States are uninsured or underinsured.

Paying their way

It has always struck me as a bit unfair that my local taxes had to pay for police services when several dozen rural communities were able to take advantage of the State Police without chipping in to offset the cost.

Think about it. In South Brunswick, we pay somewhere in the neighborhood of $9 million to run our Police Department — about 18 percent of the total budget. If that service were passed along to the state and police spending was eliminated from the South Brunswick budget, the municipal tax rate would be slashed by as much as 20 cents — or about $380 for the owner of a house assessed at the township average of about $190,000.

The key to understanding this issue comes down to this: South Brunswick taxpayers and Monroe taxpayers and Jamesburg taxpayers and Cranbury taxpayers and the 474 other towns in the state that have their own police departments are paying for a service that rural taxpayers are getting for free.

Yes, I know that they pay state taxes, but so do I. And I know that most of us are subsidizing the big urban towns, but the big cities — thanks to a host of development policies pushed by the state and the feds — have eroding tax bases that make it nearly impossible to provide services without soaking their taxpayers.

At one time, the provision of police to small rural towns made sense. Farming towns were considered less well off, but over the years, small farming towns have seen the value of their land skyrocket. At the same time, they’ve been given a pass on paying for police services.

Paul Mulshine, in last Thursday’s Star-Ledger, comes to the small towns’ defense, calling the state’s decision to bill the towns a “war on small towns.” He quotes Republican Assemblywoman Marcia Karrow, who says that “the entire cost of rural State Police patrols, $12.5 million, could be funded with just 8 percent of the money sent by Corzine to six distressed cities. And those cities also get billions in property tax relief for their schools.”

“There is all kind of urban aid in the state,” said Karrow. “The State Police is the one small example of something we could call rural aid.”

Distressed is the key word, for me. The state has a responsibility to its citizens, especially those in distressed areas. The state’s cities certainly qualify and need help. Some smaller towns and working-class boroughs — like Manville and Jamesburg, for instance — deserve help, too.

But if towns that have the cash should pay their way.

That’s the argument that The Asbury Park Press makes today, in an editorial that criticizes a plan by state Sen. Jeff Van Drew, D-Cape May, to assess a “$40-per-summons surcharge on all motor vehicle violations to be used to underwrite State Police patrols in 89 towns that previously had received the service for free.”

The Press correctly calls the Drew plan “a wrong-headed response to the problem” of “small towns, mostly rural, being allowed to avail themselves of a service without having to pay the full cost.” Their suggestion:

(T)he towns should be given a reasonable period of time — two to three years — to either wean themselves off State Police coverage or pay 100 percent of its cost.

Options for the towns would include creating their own police force, contracting with an adjacent police department for coverage or working with other small towns to create a regional police department.

I would add that towns that can show a real financial hardship — and by that I do not mean just an increase in property taxes, but tax bills that are disproportionate to the income levels of residents — should have access to aid.

To allow the status quo to continue as it is just isn’t fair to the majority of the state’s taxpayers.

A bit of context on taxes

A little context on the tax question:

My friend Ed pays significantly more than I do for a smaller house in Long Island than I do in South Brunswick. My $6,500 is probably less than two thirds of his bill.
I paid $2.04 for a cup of Starbucks at a supermarket in Virginia yesterday — a cup that would have cost me $1.98 at home. The difference was the sales tax, which came to 19 cents, compared with the 13 cents on the cup in New Jersey.
Toll roads are the norm down here — it is difficult to find a non-tolled highway.

Take this information and do with it what you will.