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Don't Get Caught in the Cap Trap

Date : Wed, 30 Jun 2010 14:55:50 -0400

For Immediate Release
June 30, 2010 Contact Jeff Tittel, 609-558-9100

Don't Get Caught in the Cap Trap

The State of New Jersey has the highest property taxes in the nation. Now Governor Christie and the legislature, which have helped caused this mess are rushing to come up with a way to try to deal with it. The Sierra Club is concerned that some of the concepts that are being pushed will have negative consequences for the people of New Jersey.

The governor has proposed an extremely strict 2.5% cap on property taxes. The only exception to the cap will be for debt service.

"We're concerned that this is going to lead to overdevelopment as towns try to grow their revenues through the ratables chase that in the long term will mean higher taxes and more sprawl," said Jeff Tittel, New Jersey Sierra Club Director.

This cap could have a tremendous impact on open space. Approximately half the towns in New Jersey have open space funds. The Sierra Club is concerned that instead of this money being used to purchase open space, it will become a permanent source of funding for town budgets. If towns have to decide whether to lay off police officers or take money from open space, they are going to grab open space money.

The Sierra Club is also concerned about the impact of the debt-service exemption. Instead of buying open space pay-as-you-go, towns will bond increasing debt and take dedicated money for the budget. Many towns will become short-sighted and opt into the ratables chase. This will offer short-term financial gains that lead to long-term problems. The ratables chase is one of the reasons the state is in this mess and will lead to longer-term problems.

The cap will encourage all kinds of development - residential, commercial and industrial. With new tax dollars comes an influx of new construction. Towns will need new roads, sewers and schools. The debt-service exemption will allow this to be done through borrowing which will lead to more costs down the road.

The Sierra Club is concerned that towns will be looking for ways to get around caps by charging separate billing for services like garbage, libraries and road departments. Towns could also set up authorities for water and sewer and use these to get around the cap as well as public scrutiny. Instead of a town buying a new water truck, it will have the water department buy a new truck. Instead of hiring new sewer staff, it will have the sewer authority hire staff. As seen with Passaic Valley Sewage Authority, authorities become a dumping ground for patronage. There is little, if any, public oversight. This cap will encourage more of these runaway authorities.

To raise revenue the City of Trenton tried to sell its water to a private company. The City of Newark is trying to take its water department and create a new utility authority. The result is that rates will go up and services will go down as will water quality.

The other concern is that this cap will lead to is privatization as towns try to sell off assets to meet their budgets. Towns could attempt to privatize their police forces or fire departments. They may try to sell parks or open space for development to gain revenue. This will lead to higher costs long term and worse services for the people.

"One of the concerns we have is that privatization and independent authorities will lead to higher costs, worse services and more environmental degradation," said Tittel.

The state needs to develop a comprehensive plan to deal with property taxes by encouraging regional planning and good land use:

* Development in the right places with existing infrastructure and transportation

* Better regionalization and duplication of services between communities and levels of government

* Try to get towns to merge and consolidate through incentives

The state should also look at other sources of funding for schools aside from property tax revenues.

"Only through comprehensive reform can we help the people of New Jersey deal with the burdensome property tax that is crushing everyone in the state," Tittel said.

Christine Guhl Program Assistant New Jersey Sierra Club

145 W. Hanover Street Trenton, NJ 08618 Tel: (609) 656-7612 Fax: (609) 656-7618

Received on 2010-06-30 11:55:50

New Jersey Sierra Club, 145 West Hanover St., Trenton, NJ 08618, USA
tel: 609 656 7612, fax 609 656 7618
or email Nicole Dallara, Outreach Coordinator, at

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