As New Jersey's state economy grows from year to year, its tax collections grow too. In fact, economic growth causes state tax receipts to rise much faster than is needed to cover the rising costs of existing state programs.
State politicians typically use each year's extra new money to fund brand new state programs. The Permanent Property Tax Reduction Amendments would force state politicians to slow the growth of state government in New Jersey and send a fair share of each year's new tax dollars to public schools, municipalities and counties to lift more and more of their costs off of the backs of property taxpayers.
There would only be one string attached. To receive this extra money, public schools, municipalities and counties would be required to control the growth of their own spending so this increased state funding could be guaranteed to lower property tax rates further each year, not just pay for accelerated local spending.
Research suggests that if these state constitutional amendments had been implemented last year, property tax rates across New Jersey would already have fallen by more than 10%.
If you would like your local public schools and services to improve even as your local property tax rate falls year after year after year, then you should support these amendments.
Improve Resources for Education
Funding this increase in state aid to school districts, municipalities, and counties would NOT require any state tax increases or program cuts, but would require that state politicians slow down the pace at which they create brand new state programs.
Additionally, while these proposed controls on the pace of government spending growth would NOT impact on most school districts, municipalities and counties, they would rein in the extraordinarily fast spending growth of a few.
Putting the Power of Spending in the Hands of the Voters
Under these amendments, voter approval would be required for school districts, municipalities, counties, or the State of New Jersey to increase per capita operational spending by more than 1.3x the rate of inflation.
This rate of spending growth is fast enough to enable government not only to cover the rising costs of existing programs, but also to create some brand new programs, or otherwise improve services, each year.
School districts, municipalities and counties that keep the pace of their spending growth within this reasonable speed limit would receive Fiscal Responsibility Awards. These awards would be funded out of the state surpluses created by not allowing state politicians to spend all the new money collected each year as the size of the state economy constantly grows.
This extra aid would be on top of the "equalization aid" already being distributed to school districts to equalize the financial resources of communities to provide essential services. Accordingly, this new money would be provided to every school district, municipality, and county on an absolutely equal, pro rata basis (i.e. covering an absolutely equal percentage of each school district or local government budget).
Key Facts You Need to Know
The people support this initiative. When asked whether the State should use the new tax dollars that result from economic growth to fund new programs or to reduce property taxes, almost all New Jerseyans say the State should reduce property taxes.
Moreover, increasing state property tax relief aid to school districts and municipalities is what the income tax and most other new state revenues over the past half-century were intended to fund. They were never meant to fund a constant expansion of state government.
By prohibiting state politicians from mis-spending money that was always meant to fund property tax relief, these amendments would simply be forcing state politicians to use many state tax receipts for their originally intended purpose.
If only because state politicians should not break the promises made when the State instituted the income tax, these amendments should be adopted.
Details
School districts, municipalities, counties, and the State itself would be able to increase spending by a minimum of 3.5% each year.
These amendments would allow a cumulative 3% of unused spending authority to be "banked" by school districts, municipalities, counties or the State for use in future years. (This would discourage public officials from racing to spend every unused dollar in their budgets, and would instead incentivize them to save unused spending authority for future years when, for whatever reasons, they may have to cover especially great expenses.)
Exceptions to the proposed spending speed limits would include state property tax relief funding for school districts and municipalities, the service and principal pay down of voter approved debt, and qualified Emergency Appropriations that are approved by a two-thirds vote of the relevant legislative body.
Additional Benefits
By keeping state and local spending focused on the basics and under control, these amendments would keep the State from over-extending itself during good economic times and from then having to raise state tax rates every time the state economy slows.
By taking away the power of state politicians to spend every dollar they can get their hands on, these amendments would take away the incentive for state politicians to raid state escrow accounts such as the state's pension and unemployment insurance funds, and the state's transportation trust fund.
By restraining the growth of state contract debt (which unlike voter approved debt, would not be exempt from these amendments' limits on spending), these amendments would help the state improve its credit rating, lower its borrowing costs, and honor its commitments to retirees, the unemployed, and others.
Finally, by constantly reducing the total burden of state and local taxes in New Jersey, these amendments would spur economic growth and job creation, and would accelerate the personal income growth of New Jersey families.
