Christie's 2% cap on property taxes... (school districts, property tax rates, exemptions)

[AnesthesiaMD]

I read in the Star Ledger today that it passed. But Christie had to make a few compromises on exemptions. Of course, the democrats want MORE exemptions, but that is another thread. When I read the accepted exemptions towns could use to the 2% cap, one of them said:

"To pay down debt. Both current AND future debt."

My question is, cant towns just use this exemption as a shell game for just about ANYTHING?

For example, if a town wants to build a new police station, what is stopping them from borrowing the money in any given year, and then raising property taxes in following years as an exemption to the 2% property tax cap for "paying down debt"???

To me, this sounds like a GIANT loophole that any town can use to get around the cap at any time, for anything they want.

I'm no lawyer, so maybe I am missing something.

I hope to God I AM missing something.

Will someone who knows more about this stuff than I do, please tell me that I am missing something.

[elflord1973]

Originally Posted by AnesthesiaMD

I read in the Star Ledger today that it passed. But Christie had to make a few compromises on exemptions. Of course, the democrats want MORE exemptions, but that is another thread. When I read the accepted exemptions towns could use to the 2% cap, one of them said:

"To pay down debt. Both current AND future debt."

My question is, cant towns just use this exemption as a shell game for just about ANYTHING?

For example, if a town wants to build a new police station, what is stopping them from borrowing the money in any given year, and then raising property taxes in following years as an exemption to the 2% property tax cap for "paying down debt"???

To me, this sounds like a GIANT loophole that any town can use to get around the cap at any time, for anything they want.

I'm no lawyer, so maybe I am missing something.

I hope to God I AM missing something.

Will someone who knows more about this stuff than I do, please tell me that I am missing something.

The reporting on this has been horribly vague. For example, many articles said that there used to be 14 exemptions, but none that I could find listed those 14.

The impression I had, however, was that the exemption was for interest payments. That would still make it a kind of loophole (they could kick the can down the road) but it wouldn't get them completely off the hook.

[AnesthesiaMD]

Originally Posted by elflord1973

The reporting on this has been horribly vague. For example, many articles said that there used to be 14 exemptions, but none that I could find listed those 14.

The impression I had, however, was that the exemption was for interest payments. That would still make it a kind of loophole (they could kick the can down the road) but it wouldn't get them completely off the hook.

Interest? If that is true, then I did miss something. Actually, I didn't miss anything, the Star Ledger did. Nowhere in the article did it say that only interest is exempt. If that is true, then it is OK, but I'd like to get some confirmation that it is, in fact, true.

[elflord1973]

Originally Posted by AnesthesiaMD

Interest? If that is true, then I did miss something. Actually, I didn't miss anything, the Star Ledger did. Nowhere in the article did it say that only interest is exempt. If that is true, then it is OK, but I'd like to get some confirmation that it is, in fact, true.

I take that back -- I thought debt service (mentioned in most of the articles I read) referred to interest payments but it apparently also refers to redemption of principal.

Exemptions of almost any kind have the potential to be gamed (the "money is fungible" principle). Having a lower cap in conjunction to removing exemptions is a step in the right direction, but there are holes in it.

Though your example might be correct, it's not representative of what's ruining towns right now. I think it would probably be harder for towns to legally use bond issues to pay their employees, for example.

[AnesthesiaMD]

Originally Posted by elflord1973

Though your example might be correct, it's not representative of what's ruining towns right now. I think it would probably be harder for towns to legally use bond issues to pay their employees, for example.

It's not representative of what is ruining towns right now because there are plenty of other loopholes they can use without resorting to debt. If debt is the only way around it, that may likely be the next way town officials ruin the towns.

As to it being harder to legally use bond issues, I was thinking the same thing, but that is just a guess. I'd like to know how it is harder.

In my opinion, these exemptions are simply ways for our crooked politicians to weasel out of the cap. Why else would they want them? The only good reason I can think of for an exemption is a state of emergency.

[TheGambler]

Meh. I'm numb to the whole thing. The bottom line is that municipal taxes make up only a small portion of a tax bill in New Jersey - usually around 15 percent. Until we get the school funding formula equalized, none of this really matters. Additionally, the taxes are ALREADY high - we need them reduced, not just future increases capped.

It's a step in the right direction but it will NOT result in lower property tax rates whatsoever. As long as school boards keep doling out raises to teachers and administrators year after year, and as long as the state blows its entire budget on 31 school districts and leaves the other 500-some-odd districts to fend for themselves, nothing will change.

[blackandproud]

Originally Posted by TheGambler

Meh. I'm numb to the whole thing. The bottom line is that municipal taxes make up only a small portion of a tax bill in New Jersey - usually around 15 percent. Until we get the school funding formula equalized, none of this really matters. Additionally, the taxes are ALREADY high - we need them reduced, not just future increases capped.

It's a step in the right direction but it will NOT result in lower property tax rates whatsoever. As long as school boards keep doling out raises to teachers and administrators year after year, and as long as the state blows its entire budget on 31 school districts and leaves the other 500-some-odd districts to fend for themselves, nothing will change.

I so agree. I guess before owning a home, I've been completely nieve to the entire discussion on the whole discussion on school budget. Well I learned really quick wih the receipt of my first property tax bill. My property taxes just went up 13% just for the school budget alone.