Governor's budget would eliminate property tax deductions, rebates

[Star Ledger]

Governor's budget would eliminate property tax deductions, rebates
by Claire Heininger and John Reitmeyer/Statehouse Bureau
Tuesday March 10, 2009, 8:17 PM

New Jersey Gov. Jon Corzine presents his budget to a joint session of the N.J. Legislature in Trenton today. Gov. Jon Corzine's budget would eliminate property tax deductions on state income taxes next year, raising about $420 million to help balance the painful spending plan. But for middle-class New Jerseyans who would also lose their property tax rebates, the missing deduction could pack an extra punch.

The $29.8 billion budget unveiled today represents "tough choices to do the right thing," Corzine told lawmakers. As he promised to protect children, the elderly and the working poor, the governor asked others to sacrifice, proposing tax increases on businesses and the wealthy and demanding a wage freeze and furloughs from state workers.

While those proposals and several other budget details had leaked in advance, the lost tax write-off caught many off guard today. Corzine's proposal would remove the property tax deduction on income taxes for all but senior citizens, while also eliminating property tax rebates for non-senior households making more than $75,000 a year. Non-senior households earning between $50,000 and $75,000 would see their rebate check from last year slashed by a third. Last year's program offered staggered rebates for households making up to $150,000.

That could translate into a double whammy for non-senior homeowners earning between $75,000 and $150,000. Not only would they lose their rebate, they would also miss out on hundreds of dollars in savings from the deduction.

A homeowner earning $95,000, for example, would not only lose a $1,000-plus rebate. Scrapping the property tax deduction would take away another $350 or so, according to state figures.

"The loss of the deduction would make home ownership even harder for New Jersey residents who are struggling to make ends meet during this recession," said Senate Minority Leader Tom Kean Jr. (R-Union).

The revenue raised by eliminating the property tax deduction would help pay for the preserved rebates, Corzine said, adding that he wants to restore rebates to higher income families "as soon as the recovery of state revenues allows."

"As family members lose jobs or see their hourly wages fall, the number of taxpayers making less than $75,000 grows," Corzine said. "For these citizens, rebates count."

Top Democratic lawmakers, including Senate President Richard Codey (D-Essex) and Assembly Budget Committee Chairman Louis Greenwald (D-Camden), predicted the deduction proposal would survive despite the complaints. The budget requires legislative approval.

"It's not an elimination, it's a one-year suspension," Greenwald said. "The reality is this burden is being put on people who are earning more and are better able to get through the year. This is about getting through to the recovery."

Assembly Speaker Joseph Roberts (D-Camden) said the budget will provide "as much property tax relief as we can."

According to income tax data from 2006, the most recent available, there were 469,300 tax returns in the $80,000- to $150,000-income bracket. Those taxpayers had an average savings of $356 from the deduction. The average savings was $175 for the 258,500 tax returns in the $50,000 to $70,000 range.

The proposed budget would offer rebates averaging $900 for non-seniors earning less than $50,000 annually, and checks averaging $700 for non-seniors making between $50,000 and $75,000.

Last year, Corzine's budget included rebates averaging $665 for households earning $100,000 to $150,000. Households earning up to $100,000 received checks averaging $1,115.

Rebates for seniors -- about $1,200 on average -- would be unchanged under Corzine's proposal.

Slashing rebates could be a tough sell in an election year in a state that already has the nation's highest property taxes. All 80 seats in the Assembly are up in November. Corzine is also up for re-election.

Realtors said eliminating the deduction could slow down economic recovery by getting rid of an incentive to home ownership.

"We need to get housing back on track. This is the wrong message to send to property owners," said Jarrod Grasso, executive vice president of the New Jersey Association of Realtors.

Brokers were split on whether homebuyers would be deterred.

"I don't think it's going to be an impediment," said Joseph Gachko, a broker in Westfield. "If you want to buy a home, you're going to buy one. But I'll tell you this, it's going to impact a lot of people."

Carol Taylor, of Ward Wight Sotheby's International Realty in Sea Girt, said while the change might not repel all buyers, the lack of the deduction will hurt her business.

"People who have the money will say, 'It's one more thing I have to pay,'" she said. "Will people stop buying homes? I don't know."

http://www.nj.com/news/index.ssf/2009/03/governors_budget_would_elimina_1.html

[NJAR]

Oppose Elimination of Property Tax Deduction
Governor Jon Corzine recently announced plans to eliminate the ability for all non-senior households, regardless of income, to deduct property taxes from their state tax filings for one year. The elimination of the deduction is expected to raise $420 million in revenue, which will be used to fund a greatly scaled back property tax rebate program that only reaches a select few.


Let Trenton know our disapproval and fill out the form found at the New Jersey Association of Realtors:

http://takeaction.realtoractioncenter.com/campaign/public2010budget

........................................

As a concerned citizen, I am writing to ask that you oppose Governor Jon Corzine's budget proposal to suspend property tax deductions on state income taxes for all non-senior households next year. The elimination of the deduction is expected to raise $420 million in revenue with funding going towards property tax rebates for a small group of residents.

Governor Corzine's plan to do away with the property tax deduction in order to fund the rebate program is misguided and amounts to a backdoor tax. The elimination of the deduction may end up costing a family $200 to $500. While some may say that is a nominal sum, all the costs placed on taxpayers add up. For New Jersey residents who are already bearing the highest tax burden in the nation, this proposal is disheartening.

Furthermore, the rebate program is a short-term fix that does not offer a long-lasting remedy to New Jersey's devastating property tax crisis. While families with incomes below $75,000 will still receive a rebate, this proposal does nothing to assist the general public. The fact is even some families who receive a rebate will be prevented from claiming this essential deduction.

New Jersey's property tax problem continues to spiral out of control with the average tax bill coming in over $7,000. The elimination of this important deduction is adding insult to injury. At a time when many families are sitting around their kitchen tables trying to find a way to afford to stay in their homes, our lawmakers should be looking to lessen New Jersey's tax burden. Right now, Trenton should be working to truly reform our failed property tax system. This more than anything would get our economy going again.

It is time to focus on jumpstarting the Garden State's economy by encouraging homeownership. I am urging you to protect homeowners and the quality of life in our state by opposing Governor Corzine's proposal to eliminate property tax deductions on state income taxes.


http://takeaction.realtoractioncenter.com/campaign/public2010budget

[Guest]

Excerpts from Gov Corzine Budget Address
March 10, 2009

There are certain parts of our government's work that we must sustain. In New Jersey, we recognize the importance of our children, they are our bright hope for the future. To that purpose, in this budget, we have increased, rather than cut, classroom funding for K-12 education. And with the federal government's help, we're giving our children a jump-start on a lifetime of learning.

This budget funds Pre-K education for 50,000 kids - an important down payment on our commitment to universal early childhood education. Our increase in classroom funding allows the state to press ahead with a new formula for school aid that is rooted in educational needs and fairness -- not zip codes. Our formula recognizes that half of all "at-risk" children live outside of Abbott districts. The state's school aid allows communities, rich and poor, urban and suburban, to hire talented educators who fire up our children's minds and imaginations, because here in New Jersey we believe that every child has a right to be inspired and challenged every day in schools that are among the world's best. School aid is just one reflection of the value we have placed on learning.

Today, I want to again congratulate the legislature for passing the $3.9 billion school construction program that is about to put 15,000 to 20,000 New Jerseyans back to work while modernizing schools for hundreds of thousands of children, Every generation of children has the right to schools that offer a clean, safe, and stimulating environment for learning.

Just as we value our kids' education, we value their health. That's why we've expanded our Family Care program to include a child mandate and enrolled many thousands more kids and their families - particularly mothers seeking pre- and post-natal care.

Providing health care for our children is a priority in this budget, just as it has been in years past. On this point, I have been clear. When the Bush administration tried to cut 10,000 kids out of New Jersey's Family Care program, we said "no." We even went to court and made it a "federal case". Throwing kids off health care is not the way we do business in New Jersey.

Now, with the help of key members of New Jersey's congressional delegation, we can be certain of advancing children's health in partnership with the federal government. And just as with education and health care, we are spending wisely to improve the lives of children who require placement outside of their homes. Our Division of Children and Families has gone from being among the most poorly-rated in the country, to among the very best. Our budget priorities make it clear kids count!

am proposing to save $400 million in personnel costs through a wage freeze and furloughs for employees. This approach calls for shared sacrifice but I believe it is far better for employees to share in these reductions and continue working than it is for savings to be achieved by the layoff of up to 7,000 workers.
It most certainly is better to keep people at work and insured, than in the unemployment lines and on the Medicaid rolls. I'm sure state workers understand the household principle, just as we do, that when a family's income drops everybody has to tighten their belts.
Following the same reasoning, my budget preserves homestead rebates for over one million moderate and middle-income families earning $75,000 or less. Protecting rebates as much as possible is consistent with one of the most basic priorities of my administration, providing direct property tax relief on a progressive basis. With this budget, my administration will have provided more direct property tax relief in four years than any other governor in New Jersey's history - nearly $7 billion put directly into the pockets of homeowners.

This substantial commitment recognizes the heavy burden property taxes place on New Jersey families. It also recognizes the power and traditions of home rule. Obviously, no governor can single-handedly fix New Jersey's local property tax problem. Our state's 566 towns and 616 school districts need to rationalize their cost structures and hold spending under the cap. They need to share and consolidate services. Until these actions broadly take hold, the underlying problem will remain.

Simply put, New Jersey has too many layers of government. To the credit of many, the process of restructuring is gaining momentum across the state, and we will continue to promote consolidation and shared services wherever and whenever they make sense. There are incentive dollars in this budget that do just that.
In the meantime, however, rebates remain the primary tool by which the state can ease the property tax burden on individual citizens. That is why we should restore the rebates for higher income families as soon as the recovery of state revenues allows. Make no mistake -- a $1,000 rebate check is more than meaningful for families who are working out their finances around the kitchen table.

We know that's absolutely true for fixed-income seniors, many of whom could receive as much as $2,500 -- combining both their senior freeze and homestead rebates. And, as family members lose jobs or see their hourly wages fall, the number of taxpayers making less than $75,000 grows. For those citizens, rebates count.

To help pay for the rebates, we have proposed eliminating the property tax deduction next year on state income taxes for everyone but seniors. Now, as I commented, New Jersey faces difficult challenges, but from a better position than many states.

Now, I'd like to close by citing President Obama, who reminded us two weeks ago in his address to Congress that we are in the eye of an economic storm, the likes of which we haven't seen since the breadline days of the 1930's.

That said -- with a strong national recovery program, and with a true partner for New Jersey in the White House, we will come through this storm. While today's crisis is challenging and often painful, we will pull together as a community and a nation and build for a more prosperous tomorrow. History is clear - the economy will turn.

With the talent, the work ethic, and the strong character of our people, New Jersey will lead the way. I believe in our common desire to do what is right. I hope and expect to see that spirit reflected in the final budget, a budget that values children, seniors, and the most vulnerable, and asks a little more from the rest of us.

Thank you.
May God bless each of you, and God bless New Jersey.

http://www.state.nj.us/governor/home/budget10/index.html

[NJ.com]

'Rich' towns get 5 percent cut in state aid under new Corzine formula
by Mary Fuchs/Statehouse Bureau
Friday March 13, 2009, 6:24 PM

Gov. Jon Corzine delivered more bad news to the state's towns and cities today, telling them they will lose more than $32 million in municipal aid next year.

The aid -- $1.58 billion in all -- was distributed "in a manner that's consistent with need" based on a formula "that is reflective of the property tax burdens and the wealth" of towns, Corzine said.

Gov. Jon Corzine talks about rebalancing the state's budget in February 2009.
In determining how much an individual town received, the administration created a sliding scale based on the average income residents earn and the taxes they pay. That means towns whose residents make less money but pay more in taxes will not lose any aid. Likewise, those towns with higher incomes but lower taxes will get 5 percent less than last year.

Go to the state's website to view the town by town breakdown of aid. (Editor's note: The file will download in a Microsoft Excel spreadsheet.)

For example, in 2008, wealthy Bernards Township in Somerset County received $2.4 million. This year, it will receive $2.2 million. Elizabeth, on the other hand, got $34.1 last year and will receive the same this year.

William Dressel, executive director of the state League of Municipalities, said he has never seen the state distribute aid this way.

"This is new ground. I don't recall there being municipal funding that was based on that kind of formula," he said.

Assemblyman Joseph Malone (R-Burlington) noted that Corzine cut municipal aid by $162 million last year and said he and many others anticipated this year's cut would be just as bad, or worse. But Malone said towns will not be tricked into thinking it's a small respite in a budget year already filled with lots of pain.

''If it was just the municipal aid issue, we can look at this and say this is great. But that's taking one of about 10 items that are pressing in on people and say that only one is not hurting people. This budget is death by 1,000 cuts," Malone said.

Dressel said he understands why the governor has to cut so much, but he's not sure that need-based funding will be a boost to towns that face their own unique budget issues. To him, it would be hard for Corzine to make those kinds of decisions, so far removed from the ground level.

"When you're dealing with 566 municipalities it's like doing budgeting at 1,000 feet. The concepts sound reasonable but how they play out may not be reflective of the local financial situation," Dressel said.

Mayors whose towns will receive less aid said they will have to consider all options.

"We will do more with less," said Edison Mayor Jun Choi, whose township will get $19.5 million or $500,000 less than last year. "We lost about $1 million last year as well. We will do this with better management, newer efficiencies."

Streamlining services has meant laying off workers for some towns.

Woodbridge Mayor John McCormac said his town has a "one man" garbage collection system with a "claw that picks up cans" that will save the town "$3 to 4 million when fully implemented." He has already reduced the payroll by "40 positions" and hopes "to do more within this year."

"Salaries are the biggest piece of everyone's budget. If we want to save, it will have to be with less bodies," McCormac said.

The Corzine administration has tried in the past to encourage towns to share services in an effort to lower property taxes.

Dressel said the state could be doing more to save towns and residents in a recession like eliminating of or temporarily suspending the rules the state follows to hire union workers such as police and fire personnel. Those "state imposed mandates," as Dressel calls them, keep towns from being flexible in how they manage their budget, including their payroll.

But some mayors, like the governor, have had a difficult time pushing drastic budget moves past rising political divisions. Corzine's pension deferral plan was stalled in the legislature and he has said he is willing to go to court in order to furlough state workers.

Linden Mayor Richard Gerbounka said he has to layoff and furlough workers in order to stave off a triple-digit tax increase. He said its a decision left up to city council and "they don't have the political backbone to do it." Linden will receive $22.8 million this year an decrease of $585,000. ¶

In the meantime, many towns are waiting for relief in the form of the pension deferral plan.

A compromise bill before lawmakers would let towns defer their pension payments for one year, if it is approved by a local finance board. The Corzine administration has promoted the option as a way for towns to spend less money this year -- while the state cuts municipal aid.

Many towns would save millions if they paid half as much into the pension system. For example, Newark would spend $21 million less.

Dressel said there are as many towns that need the money as there are those who are willing to make the payments and cut their budgets in other ways.

"But it is so important to those that need it that we have come out in support of the proposal because without it they will be looking at draconian cuts in services," he said.

http://www.nj.com/news/index.ssf/2009/03/rich_towns_get_5_percent_cut_i.html

[Frugality in Cranbury]

[Frugality in Cranbury]

[townwide]

Where do u residents think all the money comes from? When we won't allow new businesses to open in town, we restrict building, restrict homes being built...we buy farm land which generates nothing. Our town pays out for everything, it has for years. Plainsboro keeps every dollar collected from police fines. Great idea by the town, yet lets cry about not having money and paying salaries. The master plan was a good idea, but its impractical in today's times.

[Guest]

Commercial I agree with. However, restricting homes is a good idea as I don't want this to be like Monroe and market rate unresrictd housing lends itself to more kids which means a bigger burden. Housing developments rarely break even and usually cause an increase in taxes. You'll also notice Plainsboro is a different type of town and WW property taxes are out of control because of housing. In fact, every town WW, Robbinsville, Cranbury in the 70's and 80's, that goes through a housing project fins the taxes increasing from the burden with school additions, teachers, or new schools.

[Guest]

In terms of the fines, there is no choice. When the town had our own court we lost mony. The only place ofr it was in town hall. We had drug offenders and other undesirables coming to town hall on the same nights as school activities. The reason being tickets issued on the turnpike and 130 showed up here in our court. Plainsboro is now doing our court work and keepig the fines as payment. We don;t makemoney off of the fines, but we don't lose money and we don't have our kids in a dangerous position.

[Star Ledger]

GOP gubernatorial candidate Christie rails against proposed Corzine budget
by Claire Heininger/Statehouse Bureau
Monday March 16, 2009, 2:38 PM

Chris Christie campaigns in Bergen County on January 13, 2009. Republican gubernatorial candidate Christopher Christie today denounced Gov. Jon Corzine's proposed budget as dishonest and urged lawmakers to reject two of Corzine's property tax plans.

Christie said the Legislature should act to restore property tax rebates for all New Jerseyans who received them last year, and reinstate the property tax deduction on state income taxes. Corzine's $29.8 billion budget would save more than $500 million by eliminating rebates for non-senior homeowners making more than $75,000 a year and cutting them by a third for non-seniors earning between $50,000 and $75,000.

Seniors, the disabled and those making less than $50,000 a year would keep their entire rebate from last year. The Democratic governor has also proposed eliminating the property tax deduction on state income taxes next year to save an estimated $420 million for state coffers.

Christie said those steps would hurt the "middle class," which he said includes incomes of around $75,000.

"We will not have tax increases like this in a Christie administration," Christie said on a conference call with reporters. "You don't raise taxes during a recession. The way to fix the budget is to bring jobs back to New Jersey by lowering taxes."

Asked how he would close an estimated $7 billion budget shortfall, Christie disputed that number and did not name specific programs he would cut.

Christie said he, as governor, would adopt a new budget strategy that puts "all spending programs on the table" from the beginning of the process. Christie said he would try to lower employee overtime costs, eliminate political patronage jobs, include "sunset provisions" on all new programs, elect a state auditor and aggressively use the line-item veto. Layoffs of state workers would also be possible, Christie said.

Christie said the budget is "not intellectually honest" because Corzine is using $2 billion in federal stimulus money but not counting it against his $29.8 billion bottom line.

Administration officials have said that is consistent with federal aid in past budgets, and demanded detailed alternatives from Republican critics.

Corzine said Friday that he would have preferred not to cut rebates for anyone, but the national recession forced him to make difficult decisions. He said the middle class "is a broad range" in New Jersey but argued that funneling state aid to schools and towns would help lower property tax bills for all residents.

"When you maintain funding for education, actually increase it for public education, when you provide support for our municipal aid and our hospitals and keep them open, you're helping the middle class," Corzine said Friday. "We think we've made the right choices."

http://www.nj.com/news/index.ssf/2009/03/gop_candidate_christie_rails_a.html

[Star Ledger]

Corzine reconsiders eliminating state property-tax deduction
by Claire Heininger/Statehouse Bureau
Tuesday March 17, 2009, 4:40 PM

Gov. Jon Corzine pauses during a speech at a Feb. 17 press conference at the Department of Labor, where he announced state tax revenues have fallen below projections and below the level of when he took office.

Gov. Jon Corzine today said that he is considering scaling back or even axing a budget proposal that would eliminate the property tax deduction on state income taxes next year.

Corzine, who proposed saving $420 million by eliminating the deduction for all but seniors in his budget address last week, said he has been surprised by the amount of worry he has heard from the public over the plan. The governor said he is considering allowing homeowners with incomes up to $150,000 a year to keep the deduction next year, but added that no final decision has been made about the income threshold.

Corzine made his comments today after visiting an Eatontown home to discuss his budget.

"I'm hearing a lot of push back on this," Corzine told about a dozen Eatontown residents gathered in the home. "We'll have to structure some things that recognize the ability to pay."

Corzine said he has not decided where to make up the $420 million in savings if the proposal is ultimately eliminated.

The proposal was targeted by state Republicans immediately following the Democratic governor's budget speech last week, claiming homeowners who would also lose their property tax rebate under the budget would suffer a double whammy.

Seniors, the disabled and those making less than $50,000 a year would keep their entire rebate from last year, under the proposed budget. Households earning between $50,000 and $75,000 would get two-thirds of the rebate, while households earning more would lose their rebate entirely.

http://www.nj.com/news/index.ssf/2009/03/corzine_rethinking_elimination.html

[publius]

Did ya see this school in Fl. which wants to sell naming rights to companies for it's classrooms??????
Is this the NEW capitalism at work?
Let me see.............how about McDonald's library, Fruit Roll Ups science lab, Koo-Koo for Cocoa puffs playing fields?
The possibilities are endless!
Maybe, Cranbury should look into this sort of financing scheme.
Could we get some spare change to pay for that new ballfield?
Where are the bleachers and the "press" box?
Maybe, we can sponsor our own semi-pro babseball team there?

The Cranbury Colonials!!!!!!!!
Can I get an AMEN?

[publius]

Sorry, but I spelled baseball incorrectly.
I think that I may have aixelsyd.

[Guest]

I heard on the NPR radio this morning that eliminating the property tax deductions won't happen this year.

Even if the state eliminates the property tax deductions, I can still take the deductions on federal, right?

[tax answer]

It would not be retroactive so it would affect the 2009 tax year, so if you are doing your 2008 taxes now it would be a non-issue. It also would not affect the Federal deduction. It would be like medical insurance where it's a pre-tax deduction on the Federal level, but we have to count the money we pay for premiums on our NJ wages.