What cap?

From the Record:

Property tax cap growing weaker across North Jersey; more towns than ever exceed 2% limit

Reforms enacted in 2011 to keep the nation’s highest property taxes in check are showing signs of weakening as a growing number of New Jersey towns fail to stay within the 2 percent cap on increases that formed the cornerstone of the effort.

Recently released tax data show that, four years after Governor Christie and the Legislature reached the landmark bipartisan deal imposing the cap, 60 percent of the state’s municipalities exceeded it in 2015, an analysis by The Record has found. The actual number — 334 of the state’s 565 municipalities — is higher than it has been at any point since the reforms were passed, as communities use exemptions in the law to surpass the limit, the analysis found.

While most tax increases across the state are nowhere near those seen in the years before the accord, last year’s count of towns surpassing the cap was up from 225 in 2012 and marked the third year in a row that the number grew, a sign of the mounting struggles localities face in containing rising costs.

Municipalities managing to stay within the limit last year included only 21 of the 70 in Bergen and four of the 16 in Passaic. Those numbers also are at or tied for their lowest points since the ceiling was imposed, according to the analysis.

To be sure, from a long-term perspective, there is little indication that towns are reverting in large numbers to the time before the cap was set, when tax levies commonly rose 5 percent or more. But the total amount of tax levied to pay for town and county services, as well as public schools, rose by at least 3 percent in a third of the municipalities across North Jersey and statewide in 2015.

Topping last year’s tax increase list in Bergen and Passaic, with hikes of more than 5 percent, were Edgewater, Englewood Cliffs, Rochelle Park, Haledon, Prospect Park, Totowa and Woodland Park. The broader trend boosted the average residential property tax above $10,000 in 49 municipalities in Bergen and Passaic counties, up from 33 in 2010.
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Among the exemptions are increases from rising employee health insurance premiums, borrowing for major construction projects, increased school enrollments and emergencies such as hurricanes or major snowstorms. A town also can exceed the cap in a given year if it stayed under the cap in the prior three years, according to the Community Affairs Department.

Representatives of local governments say the need to use the exemptions to boost taxes will continue as costs subject to the cap — mainly salaries and maintenance of public buildings — keep rising, giving officials less and less wiggle room to keep levy increases to 2 percent.

“I would say it’s likely to continue. Absent favorable events elsewhere, more towns will be forced to use the exceptions and go over the 2 percent cap,” said Jon Moran, senior legislative analyst of the New Jersey League of Municipalities. “I wouldn’t guess at a percent, but I think it will increase.”

Adding further to the fiscal pressure are changes in the way annual health-insurance premium increases — which often top 5 percent — are shared between local governments and their employees. After a period in which higher employee contributions were phased in, upcoming increases are likely to be borne more by towns, counties and school systems.