Property Taxes and Smart Growth
As advocates for regional cooperation for the sound use of land, members of the Regional Planning Partnership (RPP) support reducing New Jersey's over-reliance on local property taxes. The current tax system sets municipalities up in a "ratables chase" that promotes sprawl. Without reform, New Jersey will fail to preserve open space, reduce traffic congestion, provide affordable housing or revitalize our cities. In other words, in spite of our best land use plans and policies, we will continue to sprawl and fail to achieve the benefits of Smart Growth.
That New Jersey is over-reliant on the property tax seems indisputable. In this country, on average, a state receives 33 percent of tax revenues from local property taxes. In New Jersey, that figure is 45 percent. With 566 municipalities, tax bases vary widely from one municipality to another. The result has been an inequitable tax structure in New Jersey.
In spite of this compelling need for reform, RPP does not support at this time the legislative proposal to hold a Constitutional Convention on the topic of property tax reform. For a start, the proposal springs from the frustration of a few responsible legislators over the Legislature's inaction on this topic. The Legislature has had the benefit of at least four major commission reports on taxation issues in recent years, including the comprehensive 1988 State and Local Revenue and Expenditure Policy Commission Report and the most recent 1998 Whitman Property Tax Commission Report. All documented the need for reform and specified recommended action. There is no reason to set up a Constitutional Convention, of dubious constitutionality, to undertake work that has already been done or to take actions that are clearly the responsibility of the Legislature. A special legislative session would be more appropriate.
Furthermore, going through the process and expense of a referendum in November, a special election in March, an intense deliberation period and another referendum in November 2003, is an unnecessary delay in reform that is needed now. And with the proper leadership, it could be delivered now.
And finally, setting up a process that will only look at half of the equation - taxation and not expenditures - is not only weak, but unlikely to lead to reforms that will produce the outcomes that New Jersey deserves. RPP has long recognized that trying to reform the system that creates the problems of sprawl one piece at a time is doomed to fail. A comprehensive approach, with mutually supporting strategies is required.
RPP recommends that Governor McGreevey and the Legislature explore alternatives, many of which have already been proposed in the reports of previous tax commissions. But a proposal should only be considered if it will:
- reduce the over-reliance on local property taxes
- reduce development pressure on open land
- encourage affordable family housing
- level the playing field among all municipalities and school districts.
RPP recommends a comprehensive approach: to reduce infrastructure expenditures,
reform must include implementing the State Plan; to create efficiencies,
it must include restructuring government responsibilities; and to achieve
necessary revenues, it must set appropriate levels of taxation. This three-pronged
approach is needed to ensure that fiscal and land use policies work together.
RPP knows that a balanced tax structure is not only possible, but also essential
if New Jersey's open space is to be preserved, housing is to be made
affordable, congestion is to be reduced and if our cities are to be revitalized.
We should and can do it now.
The Regional Planning Partnership is a non-profit,
non-partisan planning organization committed to sound land
use planning and regional cooperation in New Jersey. With
Marie Curtis of the Environmental Lobby, RPP President
Dianne Brake co-chairs the Fiscal Policy Committee of the
Coalition for Affordable Housing and the Environment.