A property tax cap for NJ?

From the Courier Post Online:

Lawmakers craft property tax cap plan

A proposal to limit annual property tax increases is in the works as lawmakers continue crafting ways to ease homeowners’ tax burdens.

Senate Majority Leader Bernard Kenny Jr., D-Hudson, and Assembly Speaker Joseph J. Roberts Jr., D-Camden, said lawmakers are working on the specifics of such a plan.

“If you do not have a cap on how quickly property taxes can rise, we will not be in a position to provide property tax relief lasting over time,” Roberts said.

Gov. Jon S. Corzine has called for a 4 percent cap on property tax increases.

“I imagine that there will be a cap bill, but the details are still being worked out,” Kenny said.

New Jersey property taxes have been growing by roughly 6 percent per year. Advocates for a cap worry that tax hikes at that rate could quickly outpace any benefits from reforms.

Roberts said the cap bill could be drafted as early as next week but probably won’t be voted on until early next year.

The New Jersey State League of Municipalities has raised concerns that a cap could result in government service cuts if lawmakers don’t grant enough aid to towns and address growing costs, such as employee benefits and salaries.

“If that is a major initiative as part of property tax reform, all it’s going to do is hurt services,” said William Dressel Jr., the league’s executive director.

The cap would likely be one of the most immediately tangible pieces of property tax reform, along with a planned tax credit and new school funding formula intended to offset local tax burdens and more fairly distribute state education aid.

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32 Responses to A property tax cap for NJ?

  1. chicagofinance says:

    To quote Homer Simpson [the real one not the NJ RE Report one]: “doh!”

    oh – oooooops

    Fannie’s Restatement
    Reduces Retained Earnings
    By JAMES R. HAGERTY
    December 7, 2006

    Fannie Mae took another step toward resolving its accounting fiasco by announcing a restatement of results that reduced retained earnings as of June 30, 2004, by $6.3 billion.

    But the long-awaited restatement by the government-sponsored mortgage company increased stockholders’ equity by $4.1 billion as of the same date. That is because of big increases in the value of mortgage securities held by Fannie that were reclassified as being available for sale as part of correcting past accounting errors. Those increases more than offset the reduction in retained earnings.

    The restatement comes two years after regulators found that Fannie had violated more than a dozen accounting rules, partly in an effort to make earnings growth appear smoother and to trigger maximum bonuses for executives.

    The need to correct its accounting practices and upgrade computer systems had prevented Fannie from reporting results since mid-2004. The restatement provides results through 2004, but the company still must catch up on results for 2005 and 2006. Fannie didn’t say when it will report those results.

    Fannie reported net income of $4.97 billion for 2004, down from a restated $8.08 billion in 2003.

    Trying to cheer up shareholders, Fannie increased its quarterly dividend to 40 cents a common share from 26 cents.

    The company’s losses on derivatives and mortgage-purchase commitments were less severe than earlier expected. Fannie previously estimated that correcting improper accounting would result in the recognition of $10.8 billion of such losses as of the end of 2004. But the company said the losses turned out to be $7.9 billion. The value of such derivatives and commitments fluctuates as interest rates rise and fall.

  2. Home Seller says:

    Florida (and California) already have caps in place in regards to property taxes, so this is not a new idea (google “save our homes”)

    Not sure what its effect has been on the majority of homeowners

  3. BC Bob says:

    “If that is a major initiative as part of property tax reform, all it’s going to do is hurt services,” said William Dressel Jr., the league’s executive director.”

    What he really is saying; “Pothole repair is a sophisticated endeavor. We will be doing an injustice to the drivers of our great state if we don’t use all our resources available to us tackle this endless problem. We will have to bring this up to the legislature and determine if this can be accomplished with only 5 state workers per pothole as compared to the usual 10. We will have to go back to the unions and try to receive some latitude regarding break time”

  4. Rachel says:

    The impact in Florida is when people like my parents cannot downsize to a smaller home without significantly increasing their tax burden. They bought in 1974 and pay approx $2K a year. They would pay over $8K if they bought something similiar today.

    Taxes are determined on the sale price of the home and then increased at a fixed % from that point. Two neighbors can pay drastically different property taxes for nearly identical houses. IMO, it creates a situation of people not paying their fair share of taxes, new home owners pay a premium to make up the deficit for long-term home owners.

    You can get away with tax laws that favor long-term owners in places where people want to move like California and Florida, not sure about NJ. Besides, capping something that is already out of control will take years to ever seem reasonable.

    Rachel

  5. Richard says:

    i was just reading about NJ state tax laws and came across this little tidbit. is it true that renters can write off 18% of their rent? thanks.

    Eligible homeowners and tenants who pay property taxes, either directly or through rent, on their principal residence in New Jersey are eligible for either a deduction or a refundable credit on their New Jersey resident income tax return. Homeowners and tenants may be eligible for a deduction or credit even if they are not eligible for the FAIR rebate. Qualified residents may deduct 100% of their property taxes due and paid or $10,000, whichever is less. For tenants, 18% of rent paid during the year is considered property taxes paid. The minimum benefit is a refundable credit of $50.

  6. Richard says:

    another comment on the above statement. sounds like it’s saying you can’t write off more than $10k in property tax payments. huh?

  7. RentinginNJ says:

    The New Jersey State League of Municipalities has raised concerns that a cap could result in government service cuts if lawmakers don’t grant enough aid to towns and address growing costs, such as employee benefits and salaries.

    Well, duhh…
    Thats the probem…growing salary & benefits. Maybe this will put pressure on municipalities to hold salaries and benefits in check.

    Maybe a cop making $100k writing speeding in a sleepy bedroom community will have to suffer with smaller cost of living raises for a while.

  8. Joe says:

    “Two neighbors can pay drastically different property taxes for nearly identical houses. IMO, it creates a situation of people not paying their fair share of taxes, new home owners pay a premium to make up the deficit for long-term home owners.”

    That’s a very valid point. Tax bills for two identical houses should be the same.

    As long as the new home owners pay the same rate, I’m all for the cap. My tax bill ballooned from $6000 in 2003 to $9400 in 2006. There’s no excuse for that. Cost of living didn’t go up 50% in 3 years.

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