New Jersey’s legendary property taxes have hit the record books again. While 79 percent of American homeowners pay less than $1,750 in taxes, ours have climbed another 2.2 percent to an all time high average of $8,161 per family. In Hudson County, the average tax bill climbed 7.6 percent. Essex, Bergen and Union counties’ taxes soared too. A Monmouth University poll cited property taxes as the main reason 50 percent of people want to move out of state. Property Valuation Committee of the State Bar Association Co-Chair David Wolfe told NJTV News Anchor Mary Alice Williams that New Jersey has a 2 percent cap rate on property taxes, but they still continue to increase.
“Well, New Jersey has a theoretical cap of 2 percent on our property tax rates every year, but it’s very hard for municipalities to live within that rate,” said Wolfe. “And the reality is, we have a spending problem in New Jersey. And we fund our spending through the property taxes and as long as we have a spending problem, we’re going to continue to see property taxes increasing by 2 percent or more every year.”
Wolfe said that New Jersey is fortunate to have a tremendous school system and that the state also has good infrastructure, which contribute to the high cost of taxes. According to Wolfe, the state chooses to have excellent schools and that funding comes primarily from local property taxes. If primary funding for schools continues to come from property taxes, Wolfe said that property taxes will continue to increase.
In order to find ways to save money, Wolfe said that the state would need eliminate any services that are duplicated. He also said that there have to be other efficiencies and ways that state government can provide more aid to local government.
“We have a 2 percent cap on spending for local municipalities and no cap in Trenton and that doesn’t seem right,” he said.
The economy of scale principal is that the more people there are to pay into a system, the less each individual pays, but Wolfe said that it doesn’t apply to New Jersey because every year a municipality needs to set its budget, and the budget keeps increasing. Since budgets keep increasing, property taxes will continue to increase because they serve as a primary source of revenue. He said that until officials pass spending plans that reduce the overall budget or find another source of revenue, taxes will continue to increase, even above the 2 percent rate.
Increased property taxes have been devastating to businesses, said Wolfe. He said that businesses and corporations have to evaluate their profits because a portion of their revenue has to go toward property taxes. He said many have to consider whether it makes sense to stay in the state.
Wolfe also said that it is hard to explain to someone that about $15,000 to $20,000 — depending on which county one lives — goes toward property taxes, which many can’t afford.
“We want New Jersey to be a place where all people of all means can afford to live here and can afford to prosper here. And currently that is simply not the system that we are living in,” said Wolfe.
Wolfe said that there is the Homestead Tax Credit, but that it is currently not in effect. He hopes that the credits will be available again in May. He also said that both political parties are making promises to lower property taxes, but it’s an issue that needs more action.
“It’s time. New Jersey really needs a reduction in property taxes,” Wolfe said.