Two Proposals to Ease the Property Tax Burden Through the NJ Legislature

Some New Jersey lawmakers are presenting two proposals to address the state’s high property taxes, after many promised to make affordability their top priority in the new legislative session.

The New Jersey Senate Community and Urban Affairs Committee recently approved legislation that several lawmakers believe will provide significant property tax relief statewide.

President of the Senate Nicolas Scutari (D-22) and Senator Troy Singleton (D-7) introduced a Invoice they say it would ensure that more money from the Property Tax Relief Fund on energy tax receipts goes to municipalities.

Revenue from the fund, which comes from state taxes on utility companies, is supposed to flow back to municipalities and help them avoid having to raise property taxes. However, since 2008, approximately $14 billion has been diverted to the state’s general fund by Republican and Democratic administrations to pay for other priorities.

As a result, some cities have raised property taxes or cut utilities, according to the New Jersey League of Municipalities.

Under the bill, the fund is expected to send $331 million to municipalities over four years, starting in fiscal year 2023.

Micah Rasmussen, a political analyst at the Rebovich Center for New Jersey Politics, said this bill could provide significant relief because municipalities would be required to use the money to reduce property taxes, instead of increasing their budgets.

“There are a lot of ambitious policies,” Rasmussen said. “If these laws are enacted, what you see is what you get.”

However, similar efforts have failed in previous legislative sessions.

Deputy Jay Webber (R-26) in January sponsored an identical bill in the General Assembly.

“He just got bogged down in the Senate” in the last legislative session, Webber said.

“It could really make a difference to the local property tax burden statewide,” he said. “And, just as important, set…a precedent for how we should provide property tax relief…ending the practice of simply sending money to lower levels of government and assuming that it provides property tax relief, when we all know that money is being spent at another level of government.

Affordability, an ongoing issue for New Jersey residents, has recently become a political buzzword. After a close gubernatorial election in November, and after the Democrats lost several seats in the Legislative Assembly, including Longtime Senate Speaker Stephen Sweeneyelected officials said they heard the message that people want the government to focus on kitchen table issues like affordability.

Webber said it was a chance to deliver on his promises to make the state more affordable and expressed hope that the measure will succeed this time.

“I’m really happy to see that Senator Singleton is now following the concept,” he said. “I encourage my colleagues in the Assembly to do the same on our side and maintain the momentum.

The Senate Community and Urban Affairs Committee also approved a bill that would increase the amount renters can deduct from taxable income. The measure would increase from 18% to 30% the deduction for rents considered as property taxes.

Rasmussen said the average New Jersey renter paying $1,500 a month ($18,000 a year) in rent could deduct $2,100 more than they would under current law.

The deductible would increase from about $3,240 to $5,400 for the average renter, Rasmussen said.

During a public hearing on the bill last Thursday, Sheila Reynertson, a policy analyst at New Jersey Policy Perspective, argued in favor of the measure on behalf of the think tank and suggested amendments that she said would benefit low-income workers.

Reynertson suggested the deduction be converted into a tax credit for renters earning “less than a certain amount, taking into account the size of the household”. Reynertson also suggested that the tax itself be refundable.

New Jersey Policy Perspective also requested a tax memo with data on which tenants would benefit the most and which tenants would not benefit from the proposed tax relief.

Both bills were referred to the Senate Budget and Appropriations Committee. The Assembly has yet to make a decision on its version of either bill during the current legislative session.

Governor Phil Murphy announced his goal is to do what can be done at the state level to reduce local property taxes, though it’s unclear if he supports either measure.

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