Sauce for the “Goose” Should be Sauce for the “Gander”
When Trenton is Cooking Property Tax Legislation
Shouldn’t the sauce for goose be the same sauce for gander especially when Trenton is cooking legislation to reduce property taxes? But if Trenton is truly intent upon lowering property taxes, then why does it continue to impose one set of rules for our schools while ignoring if not condoning those actions it opposes when they are performed by local and county governments? Is it because the county political bosses of both parties have undue influence over who runs for office, how campaigns are financed, and, therefore, who gets elected as well as legislation once the politicians are in office? Trenton scapegoats our schools through this hypocritical treatment. The result is disproportionately higher municipal and county property taxes.
Among the many ways the Governor and the State Legislature help to increase property taxes include ignoring municipal golden parachutes, forcing school district rather than municipal mergers, exempting local as well as county governments from S1701’s two percent surplus cap, and creating another layer of bureaucracy called the office of the Executive County Superintendent rather than eliminating county government. Through its actions, Trenton enables municipal and county property taxes to increase disproportionately by allowing these levels of government to continue unnecessary spending.
A recent example of Trenton’s apparent hypocritical treatment of our schools vis-à-vis municipal government is contained in an article written by Ms. Clark (2008) for The Jersey Journal which focuses on the payment of an $350,000 municipal golden parachute at local property taxpayers’ expense. Hoboken‘s former police chief, Mr. Carmen LaBruno, retired on July 1, 2008, and received an $350,000 golden parachute from the city. Mr. LaBruno’s golden parachute was (Clark, 2008) “in addition to his annual pension payment of $147,000” and included “terminal leave pay of five days per year for each of his 37 years with the department, and 156 days of unused vacation and compensatory time.” Taxpayers, therefore, paid Mr. LaBruno $497,000 for his first year of retirement.
However, as an Abbott district, Hoboken’s schools are funded primarily by the State of New Jersey. Hoboken is one of the 31 school districts which the New Jersey Supreme Court ruled in its Abbott v. Burke decision that could not properly provide a thorough and efficient education while funding their schools through their local property taxes. This means that the City of Hoboken’s payment of a golden parachute was essentially subsidized by taxpayers statewide.
The deafening silence with which Governor Corzine, Education Commissioner Davy, and the New Jersey State Legislature have greeted Hoboken’s granting of an $350,000 municipal golden parachute stands in stark contrast to their vociferous attacks on similar retirement packages for school officials just a few months ago. It was their combined outrage at payouts to retiring school officials such as the one given former Keansburg superintendent, Mrs. Barbara Trzeszkowski, who retired on July 1, 2008, that led Department of Education Commissioner Lucille Davy to issue new fiscal accountability regulations on July 3, 2008. These regulations severely limited payments to school officials for unused sick days and vacation time. In addition, the State Senate quickly passed bills to limit severance payments to school district officials (Hester, 2008) “to maximum of $15,000 for unused sick days and accrued vacation time.”
Through its newly created bureaucracy of the office of the Executive County Superintendent, the State of New Jersey can force the mergers of school districts but the state seems to ignore consolidating inefficient municipal governments which leads to higher property taxes. While municipal services are generic in that a city clerk’s function in one town replicates that of one in another town and as such these positions are easily consolidated, local educational programs and services are value-added which do not lend themselves to standardization or consolidation with other school districts with different value propositions. One major result of forced school district consolidations is that one or more of the districts involved usually pays disproportionately more in property taxes due to differences in one or more of the following factors:
- The tax base (i.e., total ratables) which is the dollar amount of all property that is taxable within the jurisdiction.
- The assessment practices that determine the percent of fair market value at which the property is assessed as well as the frequency of assessments. Although all 21 counties have agreed to use 100% as the assessment percentage of true value, many municipalities especially many large urban cities have not assessed properties within their jurisdiction for as much as 25 to 50 years.
- The tax levy or mill rate which is the percentage at which each property’s market value or of assessed value is taxed.
The forced consolidation of Pemberton Borough and Pemberton Township school districts by the Burlington County Executive County Superintendent (Levinsky and Zimmaro, 2008) highlights the problems resulting from school district mergers. This consolidation would force taxes to decrease for Pemberton Borough property owners but increase for Pemberton Township property owners because the township has disproportionately more ratables. As a result of the merger, township taxpayers would fund approximately 95% of the property taxes for the consolidated school district and significantly subsidize the borough taxpayers. The State of New Jersey, however, has taken no action to merge the municipal governments of Pemberton Borough and Pemberton Township.
The state law known as S1701 reflects the State of New Jersey’s actions to scapegoat our schools for property tax issues. Through S1701, Trenton placed a two percent cap on the surplus of school budgets and mandated that any amount exceeding two percent must be returned to taxpayers. But the state exempted municipal and county governments! For example, in 2007 if S1701 had applied to municipal and county governments, then the City of Summit would have had to refund approximately $5.8 million to Summit property taxpayers while it is estimated that Union County would have had to refund tens of millions of dollars. Moreover, because Summit collectively pays disproportionately more property taxes to Union County than other municipalities, the taxpayers of Summit would have enjoyed a similarly large county property tax refund.
Connecticut is only one among the many states that has eliminated county government and thereby its citizens enjoy significantly lower property taxes than those of us in New Jersey. Why doesn’t Trenton eliminate the unnecessary and expensive county freeholder layer of government as other states have done? Is it because of the strangle-grip hold with which county political bosses control Trenton? Instead the State of New Jersey added the politically appointed Executive County Superintendent with his/her own bureaucracy. Executive County Superintendents have dramatically increased not only county level authority over local school districts but also the rules and regulations for schools. But with increased rules and regulations has come greatly increased compliance costs for school districts.
If property taxes are to be significantly reduced, the State of New Jersey must eliminate not only the unnecessary costs which its legislation imposes on local school districts but also excessive municipal government spending and county government. But New Jersey’s property taxes will remain high as long as the state continues to allow inefficient municipal governments and the unnecessary layer of county freeholder government to operate. Because the State of New Jersey forces its school districts to spend much more to meet the requirements of its mandates than the districts receive in total state financial aid, school districts statewide will continue to be pressured to cut quality educational programs and services. Moreover, the state’s obsession with scapegoating our schools underscores its failure to reduce property taxes at the municipal and county levels of government.
Clark, A. S., (2008) Ex-chief LaBruno collects $350K after retiring in wake of scandal, Jersey Journal, October 13, 2008.
Hester, T., (2008) Lawmakers pass bills regulating public educators’ pay, The Star Ledger, October 23, 2008.
Levinsky, D. and Zimmaro, M., (2008) Merger in Works for Pemberton district, Burlington County Times, September 7, 2008.