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N.J. Assembly passes property tax cap

TRENTON - The New Jersey Assembly gave final legislative approval Monday to legislation to cap property tax increases at 2 percent annually, a compromise version of the centerpiece of Gov. Christie's plan to tackle property taxes.

The vote came just nine days after Christie and Senate President Stephen Sweeney (D., Gloucester) announced they had reached a compromise on the bill and about two weeks after the Legislature approved a $29.4 billion budget almost identical to the one proposed by Christie in March.

The governor is expected to sign the bill into law on Tuesday.

Assembly Speaker Sheila Oliver (D., Essex), who previously said she was "blindsided" by the news of the compromise, said she would not stand in the way of its passage in the lower house.

On Monday, Oliver called the property tax legislation "imperfect."

"Without question, we will have to take legislative measures to perfect this bill," Oliver said. "There are certain holes in the bill, but I think what you heard was the consensus that people in New Jersey are confronted with property taxes that are amongst the highest in the nation in the middle of a recession and at least people can now have some predictability."

Democrats in the Assembly expressed concerns that certain factors that towns and schools cannot control, such as special education costs and cuts to state aid, were not included among the exemptions to the cap.

Oliver said Christie "has expressed to me that his mind is open, he will give all due consideration" to requests to tweak the law.

Republicans praised the bipartisan support for the bill and Assemblyman Jon Bramnick (R., Union) said it was "clearly a historic day."

"It sends a message that the legislators are finally doing what we were sent here to do," Bramnick said.

The Assembly approved the bill 73-4 after about 40 minutes of speeches.

The bill is an attempt to control New Jersey's rising property taxes – which are the highest in the nation, averaging $7,300 a household.

Current law caps property tax increases at 4 percent, with several exemptions. Christie has ridiculed the current cap as riddled with so many holes it is like "Swiss cheese," although Democrats argue it has cut property tax increases from 7 percent in 2006 to 3.3 percent.

Christie, a Republican, originally proposed a constitutional amendment, which would require voter approval, to cap property taxes at 2.5 percent, with an exemption for debt service. Under his original plan, voters could override the cap with a 60 percent majority.

Sweeney countered with a statutory cap - which can be much more easily changed by the Legislature - at 2.9 percent, with several more exemptions, but no voter override provision. The bill was approved by both houses of the Legislature.

The compromise, which was returned to the Legislature by the governor in the form of a conditional veto of Sweeney's bill, includes a statutory property tax cap of 2 percent with exemptions including health care and pension costs, debt service, and emergencies. Voters in any town can override the cap with a simple majority in a referendum.

"Thanks to the quick action taken last week by the Senate and today by the Assembly, New Jersey families can finally look forward to the kind of real, long-term property tax relief that Trenton has failed to deliver for decades," Christie said Monday. "A hard cap of 2 percent with limited exceptions that puts final authority to exceed the cap in the hands of the people is the substantial and sustainable reform New Jersey needs."

The property tax cap is part of a 33-bill legislative "tool kit" proposed by the governor to address property taxes. The Legislature has committed to meeting over the summer, when it normally breaks, to continue work on those bills, which include proposals to reform the civil service system and the arbitration process that determines compensation for some public employees.

New Jersey State League of Municipalities Executive Director Bill Dressel said caps do not address the real cost drivers that local leaders are confronted with and urged lawmakers to approve the rest of the tool kit.

"A hard 2.0 cap is, as the governor said, 'unworkable,' without the tool kit," Dressel said. "No one can declare the cap a victory for reform, until the tool kit reforms are passed. Now that the proverbial cart has been placed before the horse, the Legislature and Administration must immediately prioritize and pass the tool kit reforms."

Christie has said that he modeled his property tax cap after a version adopted in Massachusetts.

Supporters of the Massachusetts cap say property taxes are indisputably lower today than they would have been without the cap.

But critics have warned that Massachusetts adopted the cap at a time when the economy was booming and student enrollment plummeting, which helped to buffer many communities from the impacts of the cap. Many Democrats in New Jersey have also argued that many Massachusetts residents now pay separate fees for services that used to be covered by their property taxes, including school athletics programs.