With only weeks left before a new state budget must be enacted, doing more to help seniors manage property-tax bills that now average close to $9,500 in New Jersey has emerged as a key issue.
Gov. Phil Murphy, a second-term Democrat, has for months said he wants to expand eligibility for the state’s existing and popular “Senior Freeze” property-tax relief program so more seniors can take advantage of it.
More recently, fellow Democrats who lead both houses of the Legislature have backed a different proposal, drafted by Assembly Speaker Craig Coughlin (D-Middlesex), that calls for creating an altogether new relief program for seniors.
The goal of that proposed program, which Coughlin has dubbed “StayNJ,” is to halve property-tax bills for many older residents, starting in 2025.
What happens over the next several weeks as a budget for the fiscal year that begins July 1 is negotiated by Murphy and the top Democrats in both houses of the Legislature remains to be seen.
All 120 legislative seats are up for grabs in November, upping the stakes for those seeking reelection amid a period of prolonged inflation that is testing the finances of many living on fixed incomes.
What’s generally agreed
But despite their seeming disagreements, there does appear to be consensus among the key players that what the state is currently providing as property-tax relief to New Jersey seniors is not cutting it, especially for those who need help the most.
When it comes to direct property-tax relief, New Jersey is currently spending roughly $3 billion annually to provide seniors and other taxpayers with state-funded help, according to budget documents.
A big share of that spending — about $2 billion — funds a relief program called “Anchor” that Murphy, Coughlin and Senate President Nicholas Scutari (D-Union) worked together to establish last year.
Under Anchor, whose formal title is Affordable New Jersey Communities for Homeowners and Renters, homeowners can receive benefits worth up to $1,500, depending on annual income, and tenants are eligible to receive benefits totaling $450, if they earn $150,000 or less annually.
Nearly 540,000 older residents and people with disabilities availed of the Anchor program in the first year it was offered, according to data collected by the state Department of Treasury.
Another more than 150,000 senior and disabled homeowners in New Jersey are also expected to collect Senior Freeze reimbursements from the state during the new fiscal year, according to budget documents.
Established in 1997, Senior Freeze provides state-funded reimbursement checks to offset, or freeze, increases in property taxes once a homeowner becomes eligible for the program in what’s known as their base year.
Reimbursements range on average from $234 for newly eligible homeowners to $1,415 for longer-term enrollees, budget documents show.
Under state law, seniors can collect both Senior Freeze reimbursements and Anchor benefits if they meet the eligibility requirements for both programs.
What Murphy proposes
A proposal Murphy unveiled in late February calls for increasing the annual income limit for Senior Freeze to $150,000 instead of the current limit that hovers below $100,000, depending on the year. A 10-year residency requirement would also be shortened to three years, under Murphy’s plan.
Murphy told AARP members during a telephone town hall in March that enacting his proposed changes would eventually make an estimated more than 50,000 senior and disabled homeowners newly eligible for Senior Freeze reimbursements.
‘For lawmakers concerned about families facing unaffordable property tax bills, there is no better solution than circuit breakers,’ according to a report by the Institute on Taxation and Economic Policy.
He also expressed a willingness to make another key change to Senior Freeze in response to concerns raised by the AARP members during the event. They want to see the program’s reimbursements applied as a direct credit on quarterly property-tax bills to save on out-of-pocket costs.
“The concept is something I like a lot,” Murphy said during the event.
What Coughlin wants
Last week, Coughlin released key details of his own relief plan, which would use direct credits on property-tax bills to provide relief to those age 65 and older.
A primary goal of Coughlin’s plan is to halve property-tax bills for many seniors if the combined benefits from Anchor and Senior Freeze don’t already do so. That would give seniors “the freedom to plan a future in New Jersey with friends and loved ones they’ve spent a lifetime making memories with,” he said.
According to legislation introduced last week, the size of the credits would be capped annually at $10,000, and the plan itself would eventually cost the state over $1 billion annually to finance. However, funding needed to run the program would initially be set aside over several years, beginning with proposed $300 million appropriations during both the 2023 and 2024 fiscal years.
New Jersey is not the only state where lawmakers have enacted policies that attempt to ease the burden for people struggling to cover rising property-tax bills, according to a recent report published by the Washington, D.C.-based Institute on Taxation and Economic Policy.
Is there an ideal policy?
The same report held up as a model policy what are known as “circuit-breaker” programs that seek to target aid to groups, including seniors, who generally must devote the largest share of their annual incomes to covering property levies.
Under such programs, aid is prioritized for those with property-tax bills that exceed a certain percentage of their annual income.
Assembly Speaker Craig Coughlin’s plan would operate without any income limits and leave out renters altogether.
“Circuit breakers are the only type of property tax cut explicitly designed to reduce the property tax load on those most affected by the tax,” according to the ITEP report.
“For lawmakers concerned about families facing unaffordable property tax bills, there is no better solution than circuit breakers,” the report said.
While not true circuit-breakers, New Jersey’s Anchor and Senior Freeze programs do have provisions, including income limits, that make them somewhat targeted.
However, Coughlin’s plan would operate without any income limits and leave out renters altogether, something Murphy and the influential New Jersey Policy Perspective think tank have already publicly faulted on the grounds that it would generate the largest benefits for the state’s wealthiest seniors.
What can NJ afford?
How the state can afford to fund Coughlin’s plan when revenue projections for the next fiscal year have just been scaled back is another concern raised by the governor’s office.
“While well-intentioned, the ‘StayNJ’ senior property tax relief program is financially unsustainable and would undo years of budget progress made by the Legislature and the Governor’s Office,” Murphy spokeswoman Jennifer Sciortino said.
There is precedent in New Jersey for offering property-tax relief without any income restrictions.
A long-standing state income-tax deduction for local property taxes allows residents, regardless of income, to deduct from their state taxable income up to $15,000 in annual property taxes paid by homeowners, and up to 18% of the annual rent paid by tenants.
This year, Republican lawmakers have been calling for increasing the amount of annual rent that can be deducted from state incomes taxes to 30%. Scutari once backed that proposal, but prior to the establishment of Anchor.
In a statement issued last week, Scutari — a key player in the fiscal year 2024 budget talks — said “affordability” is a primary concern for seniors. He promised to “explore any option that can help them stay in New Jersey and continue to enjoy our great state.”
— Graphic by Genesis Obando
