Will NJ Property Tax Rebates be cut?

This just in from Newsday:

Gov. Jon S. Corzine said Friday that he is considering suspending property tax rebates next year as New Jersey faces a multi billion dollar budget gap.

The governor said all options are on the table for his 2010 budget proposal, which he plans to present to state lawmakers on March 10. State budget makers are looking for ways to close an estimated $6 billion deficit. That figure doesn't include federal stimulus money the state expects for budgetary relief.

It was just a matter of time that the Governor would notice that the state cannot afford the homestead rebate program. Last year, he tried to take it away but only pared things back a bit:

New Jersey residents get about $1.7 billion in property tax rebates annually.

Some homeowners saw their rebate checks cut or canceled last year. Those making more than $150,000 got no rebate, and those earning $100,000 to $150,000 saw their rebates decline by an average of $295.

While he said he is considering suspending the property tax rebates for some or all homeowners, Corzine on Friday would make no promises or predictions about next year's budget.

My issue with this program starts with the entire concept. If rebates are needed because property taxes are too high, the state should actually look at why. They would find that the unfunded mandates from Trenton and the wasted suctioning of school funds from non-city school districts into the inner city has put too much of a strain on local municipalities. That in addition to the fact that the state frankly has too much government. Too much local government. Too much county government and too much state government. I have mentioned before in this blog that I have lived in several states and New Jersey extracts more money for the least services of any state that I have lived.

So the underlying motivation for the rebate is to ignore the fundamental problem and patch it by sending out checks to homeowners. This is a kick the can strategy that does nothing to solve the problem, just postpones it to another day. And if that were the only issue with the rebate it would be bad, and irresponsible of our politicians and a demonstration of sheer government incompetence, but it would at least be understandable.

There is a built in bias in the rebate system against people who actually pay taxes in our state. This program has morphed into a giveaway program designed to put out checks ahead of elections to Democratic constituencies. This program provides checks to citizens that DO NOT EVEN PAY PROPERTY TAX. And it has continued to exclude the highest property tax contributors in the state due to income. Sort of a double progressive tax (you pay more for your taxes on income and then pay more for your property tax).

Now, I have heard from people who make the case that property taxes are built into rents but most studies will tell you that the market and location determines rental prices. Frankly, if you are going to make the indirect argument, retail shoppers pay a higher premium on property taxes as local prices for goods sold in retails shops are much more sensitive to property tax costs than rental units.

But the main point is that this program is no longer affordable. My suggestion would be to look closely at the Senior citizens impact and retain the program for SENIORS WHO PAY PROPERTY TAXES. They are often impacted severely for growth in their community. For seniors who rent, no rebate.

It's time for the adults in the room to eliminate their political pay-for-vote schemes and look toward helping New Jersey come out of this fiscal situation a stronger and more vibrant state. The alternative is that we can become Michigan. And that is not a pretty sight.

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NY Rebates Checks and Bloomberg

The New York Post once again featured the war of words between the Mayor and City Council regarding rebate checks and when they will be mailed out. The debate seems to be posturing with the Mayor on one side wanting an increased property tax and the council looking to tell their constituents they provided goodies. From the NY Post:


"We're continuing to work with the City Council on the issue of the rebate and all of the other budgetary challenges created by the financial crisis," Bloomberg spokesman Marc LaVorgna said when asked whether the checks will go out this month.

Also on the table is a 7 percent property-tax increase, which would raise $1.2 billion annually. The real issue here has nothing to do with rebates(because they aren't actually rebates). In the past 5 years, municipalities and states have used "rebates" as a way to circumvent the tax system to provide election year goodies in return for the politician to return to office. The system has gotten so bizarre that in New Jersey, if you actually pay taxes, you have a much higher chance of NOT qualifying for the rebate than if you don't pay taxes (apartment dwellers ALL get the rebate but homeowners generally don't).

With the city in such dire budgetary straits, this should be a no-brainer. But it don't be. Because the council has to pay the bribe it promised. And THAT is why politics in the Northeast is such a joke. There isn't one brave politician who can do the right thing anywhere.

Read the entire thing here.

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