Gov. Chris Christie and New Jersey Democrats strike deal to cap spending and property tax growth

Gov. Chris Christie announced today he and state Democrats had struck a deal to cap spending and property tax growth at 2 percent, a move that was met with both cheers and trepidation among local leaders.

The agreement -- it still has to be signed off by the lead Democrat in the state Assembly -- features several exemptions for certain costs, and will be followed with discussion of more spending-related bills over the summer, officials said.

Hope Township Mayor Tim McDonough, who earlier in the week had pressed for urgency in property tax reform, praised the cap as "definitely doable."

"This is real, strong hard property tax relief," McDonough said. "We knew this day was coming. ... The people of New Jersey have been looking for relief."

In Belvidere, Mayor Charles Liegel was more cautious about the cap's effects, particularly when towns must deal with fixed-cost increases like pension payments and health care costs.

"That's not a lot," Liegel said of the 2 percent limit. "I understand what the governor's doing and in effect I am for it because property taxes are out of control. But all the towns ... are tied by these costs that keep going up."

The reported agreement will exempt pension and health care costs from the cap. Enrollment spikes would allow schools to go over the cap, while towns would get a reprieve for debt payments and capital expenses like firetrucks.

Otherwise, the cap could be exceeded only by voter approval.

News of the exceptions eased Liegel's concerns somewhat, the mayor of the county seat said. But with BASF, the town's biggest taxpayer, slated to move out at the end of this year -- and seek a reduction in its taxes -- the cap could still mean cutting municipal jobs and reducing services, said Liegel, a Democrat.

"We'll see how it shakes out" at budget time next year, Liegel said.

Deadlock broken

The compromise likely ends an impasse between the Republican governor and Democrats who control the Legislature.

Assembly Speaker Sheila Oliver has not signed off on the plan. But Assembly Budget Committee Chairman Lou Greenwald says Assembly Democrats support the concepts outlined in the compromise.

Split across party lines, the state Legislature last week passed a bill that would reduce the existing cap on property tax increases from 4 to 2.9 percent.

The governor had wanted a proposed 2.5 percent cap to go before voters in November as a constitutional amendment, but in a compromise, Christie has asked the Legislature to approve a statutory cap with limited exemptions.

If the 2.5 percent cap and the governor's other reforms were implemented 10 years ago, the average property tax bills in Warren County's 22 municipalities would have decreased by a combined $35,642 in 2009, according to the governor's office.

Average tax savings among the county's municipalities last year would have ranged from $656 in Alpha to $2,993 in Franklin Township, according to the governor's office.

More work to do

arlier this week, Charles Houck, Warren County's chief financial officer, called Christie's proposed 2.5 percent cap unrealistic, because of the many costs beyond the control of local officials. Houck noted that the state is not making pension contributions, but demanding payments of local government entities.

"It's absolutely absurd," Houck sa
Express-Times File PhotoMichael Doherty
id.

However, other officials said the exceptions granted in the agreement, along with a series of bills planned to be discussed over the summer, should help ease the burden.

"If you can specify what those exemptions are, you can stick by them," said Washington Township Mayor Samir Elbassiouny, who had earlier criticized the Democrats' plan as being "Swiss cheese" due to loopholes. "Those exemptions (in Saturday's announcement) are specific and identified from the very beginning, so everybody plays by the same rules."

State Sen. Michael Doherty, R-Warren/Hunterdon, said setting the cap was the first step in a larger process. The Senate Budget and Appropriations Committee will be busy over the summer reviewing 33 bills aimed to make good on Christie's March promise to provide a "toolkit" to help local governments come in under the cap, said Doherty, a committee member.

The bills include provisions that will rework arbitration proceedings with union contracts and adjust the pension program, among other goals.

"The goal was first get the agreement on the cap," Doherty said. "Now we're going to have the impetus and the demand from the local towns to give them the tools to meet the cap."

Associated Press