Newspaper article The Record (Bergen County, NJ)

Outdated Formula Cuts into Tax Relief

Newspaper article The Record (Bergen County, NJ)

Outdated Formula Cuts into Tax Relief

Article excerpt

More than a million New Jersey homeowners will get up to $114 less in property tax relief this year because the state is using an outdated formula.

A seldom-read and rarely discussed section of the state budget has kept the baseline year for calculating Homestead property tax relief benefits set at 2006 -- when property taxes were much lower than they are now.

That means the credits set to go out in August will be a percentage not of today's property taxes, but of bills from seven years ago, when the average New Jersey homeowner paid more than $1,400 less a year.

As a result, the 1.65 million homeowners who qualify for Homestead benefits will get between $90 and $114 less, according to a Record analysis. This year's credits would be 22 percent bigger if calculated using the actual rate of growth in property tax bills from 2006 to 2012, according to the analysis.

"Unfortunately, it's taking money from property taxpayers' pockets," said Senate Budget and Appropriations Committee Chairman Paul Sarlo, D-Wood-Ridge.

The policy of keeping 2006 property tax bills as the baseline for calculating Homestead relief -- which used to come as a rebate check but now shows up as a direct tax credit -- was started by Democrats as a cost-cutting measure in 2008, but has continued under Governor Christie, a Republican, for the last three years.

Christie has proposed a $32.9 billion budget for the fiscal year that begins July 1 that is on track to continue the practice even as he's also pitching new tax relief.

A spokesman for Christie's Department of Treasury confirmed the administration has no plans to change the Homestead formula this year, but declined to comment further.

Though they may not know about the automatic markdown of their property tax relief, New Jersey voters are keenly aware of the state's heavy property tax burden. The latest poll from Quinnipiac University found 73 percent of New Jersey voters identify property taxes as a "very important" factor this year.

Property taxes have already emerged as a campaign issue as Christie seeks a second term in 2013. Last week, a key official of Christie's Cabinet declared that the governor's property tax policies are "a resounding success." On the same day, Democratic gubernatorial candidate Barbara Buono, a longtime state lawmaker from Middlesex County, launched a website that lets voters calculate how much higher their property tax burden is as a result of cuts Christie made to the Homestead program.

Buono's calculator does not factor how much larger the remaining relief would be if the state was using an updated formula for the Homestead credits.

With all 120 legislative seats also on the November ballot in 2013, Sarlo said he plans to pitch an updating of the Homestead funding formula as a part of this year's budget negotiations with the Christie administration.

"Clearly, it's an outdated formula," Sarlo said. "I'm going to recommend that we recalculate it."

The precedent for using the outdated tax bills as a baseline for the Homestead program began in 2008 under then-Democratic Gov. Jon Corzine as a way to help counter a steep decline in revenues brought on by recession at the time.

Corzine and Democratic legislative leaders had just the year before boosted funding for Homestead property tax rebates to a record $2. …

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