New Jersey may no longer have bragging rights to some of the cheapest gas in the nation, but we can still claim the highest property taxes. There are a number of property tax relief programs still available. Over the course of a decade, $3 billion in funding has dwindled to $1 billion. NJ Spotlight‘s Budget and Public Finance Writer John Reitmeyer is an expert on the subject. He spoke with NJTV News Anchor Mary Alice Williams.
Williams: Why have property tax relief funds been so depleted?
Reitmeyer: I think it’s a combination of a bunch of different factors. The state revenue generation really tanked during the recession, so for a while there wasn’t a lot of money for any program. As the revenues have rebounded, Gov. Chris Christie has been devoting the new revenue growth to paying off some of the pension obligation which is significant in New Jersey. So what’s happened is these really robust property tax relief programs have shrunk. I mean, $1 billion is still a lot of money, but it’s not what it once was and even in prior years the income qualifications were higher than they are now so the income qualifications have been reduced starting even before Christie took office.
Williams: The “Senior Freeze,” and I’ll go program by program, the “senior freeze” income threshold is $70,000. It was supposed to increase with inflation, of course, it’s been frozen. How much is available for that?
Reitmeyer: So that program is a couple hundred million that they make available for “Senior Freeze” and it’s interesting because as you said, the income limit was supposed to be increased every year and that’s been frozen through budget language. So the law still says it’s supposed to have these increases but every year in the actual budget language they push it down to $70,000. And that’s a unique program because it’s essentially supposed to freeze the property tax bill of long-time residents, senior citizens. You must be 65 or older or disabled to be able to qualify for that program.
Williams: What about the Homestead program? That’s the one that’s the most popular?
Reitmeyer: Yeah, the Homestead used to be the big daddy […] and there were questions about if that was sustainable at the time before the recession. Now it’s much smaller, closer to I think $300 million, and the income limits haven’t been adjusted since 2009 I believe and that’s max $75,000 for non-senior homeowners and $150,000 for seniors.
Williams: What about people who decide to declare property tax on their insurance? How do they fare?
Reitmeyer: I think you mean the deduction on your income tax returns and this is often overlooked. New Jersey has a property tax deduction that’s allowed on income tax returns and it’s up to $10,000 of your annual property tax bill if it’s that large. That’s actually become the largest of the property tax programs in terms of how much money is dedicated to funding it. So now what you’ve seen is a lot of people getting, and it’s probably a good thing, they’re getting annual income that’s over the limits of these other programs and then they’re taking the deduction which allows you again, if your property tax bill is $5,000 you can take the full $5,000. If it’s over $10,000 you can take the first $10,000 and that reduces your income tax burden.
Williams: We just hit the biggest of the property tax relief programs here, but overall is there enough money to make a dent in trying to subsidize property taxes for people?
Reitmeyer: So I mean, it’s probably the biggest problem if you were to go door to door and ask people what their concern is. I think people complain about property taxes, you know it’s ubiquitous. The challenge is, the governor has tried to address it through the 2 percent cap and address it at its source so that the bills don’t grow. But when you’re talking about the entire burden, it’s a really hard thing to throw money at and make a dent.
Williams: How do you see this playing out in the campaign trail this year? Every member of the Legislature is up for re-election and of course we’ll have a new governor.
Reitmeyer: Yeah, I think that’s going to be something really interesting to pay attention to to see if there’s a lot of pressure. It started to bubble up last year. Of course, there’s still some concern about that gas tax increase you mentioned. Will people in some ways voice real concern? The last few years the governor and the Legislature have worked together to kind of keep these programs where they are. No cuts, but no increases. This year, because of the governor’s race, we’ll get a new governor. Will promises be made to increase the size of some of these programs? I think that remains to be seen.
Williams: And if so, where does the money come from?
Reitmeyer: Absolutely.
Williams: Public worker pensions?
Reitmeyer: So that’s the give and take. All the growth we’ve had in the past few years has all gone on mostly in that area. Unless we do something to increase revenue, which is an entirely different topic.