Property taxes hit new high as Murphy promises action in next budget – NJBIZ

New Jersey’s average property tax rate hit a new high in 2021, as Gov. Phil Murphy promises some type of relief for residents when outlining his forthcoming budget proposal, which is typically delivered at the end of February or in early March.

The latest figures provided by the state’s Department of Community Affairs show that homeowners on average shelled out $9,284 for property taxes last year—an increase of more than $170. A third of New Jersey counties saw average property tax bills that were above $10,000.

New Jersey has some of the highest taxes in the U.S., including the “millionaire’s tax” on income above $1 million, a top corporate tax rate of 11.5%, and some of the nation’s highest property taxes, given its proximity to the New York City and Philadelphia markets.

That comes at a time when Democrats in Washington, D.C., have been unable to whip up support to lift the Trump-era $10,000 federal cap on state and local property tax deductions.

Essex County had the highest average property tax bill last year at $12,932, while Cumberland County had the lowest at $4,636 a year. Behind Essex was Bergen County with a $12,457 tax bill, Union County with a $12,262 bill, and Morris County with a $11,062 tax bill.

The tax revenue – $31.4 billion across the state’s 565 municipalities – goes to fund municipal services like police and public workers, as well as K-12 schools and county government.

Gov. Chris Christie previously enacted a 2% cap on annual budget increases to rein in property tax increases, but there are carve-outs, such as for debt payments, and public worker pension and health benefits.

In November, Republicans enjoyed sweeping gains across the state during an unexpectedly close gubernatorial race between Murphy and GOP contender Jack Ciattarelli. Since Election Day, Democratic leaders in New Jersey – both the governor and top elected lawmakers – have gradually adopted a narrative that voters felt not enough was being done to rein in the state’s high cost of living.

During the campaign, Murphy vowed not to increase any taxes in his second term.

“I want to find some more tax relief, especially property tax relief,” the now second-term Democratic governor said during a Jan. 25 morning appearance on Fox 5 New York. “Affordability has to be and is part of that equation.”

When pressed on a timeline, Murphy indicated that he’s “submitting late next month” and that “I’d look for news around then, he said.

By law, income tax from the state goes directly to municipalities to offset tax increases on their own residents.

A recent WalletHub study showed New Jersey as the nation’s least desirable state for retirement in 2022, given its poor rating on affordability. But back in June, the personal finance publication reported that although the Garden State ranked 49th in affordability, it was ranked as the best state to live in for 2021, performing in the top 10 for public safety, quality of life, and both education and health care.

So far, Murphy has not indicated what such relief would entail, as he noted that property taxes are determined by individual municipalities.

Round 2

During his second inaugural address, the governor pointed to the more than a dozen tax rebates and other cuts for lower- and middle-income New Jerseyans enacted in his first term.

That includes tax credits for child care; a $500 rebate for families earning up to $150,000; increased eligibility for the state’s earned income tax credit; property tax deductions and income tax credits for veterans; and property tax reimbursement for seniors.

Lawmakers such as the new Senate President Nicholas Scutari, D-22nd District, and Assembly Speaker Craig Coughlin, D-19th District, said those issues need to be addressed during the next two-year legislative voting session.

“New Jersey told us that government doesn’t appreciate the line between well-off and struggling that so many families juggle with each day,” Coughlin said on Jan. 1o.

To Republican leaders – like state Sen. Steven Oroho, R-24th District – the change in rhetoric means New Jersey could finally be headed in the right direction.

“After the November election, the governor and legislative leaders of both parties said addressing affordability would be a priority,” he said on Jan. 18. “After all that talk, it’s time to show people some real action.”

Potentially fueling the high cost of living and worsening financial outlook in the near future is a record-high $46.4 billion state budget, which was made possible by over $4 billion in new debt in 2020, federal COVID-relief funding to the state, and an unexpected surge in tax collections.

The New Jersey Treasury Department cautioned earlier this month that these fortunes will begin to slow down in the spring.

A recent state Treasury bond statement cautioned that the spread of new COVID-19 variants and potential resistance to vaccines could drive up hospitalizations, triggering business restrictions and slowing down the state economy. Scutari in turn told NJ Spotlight in a recent interview that he plans to scrutinize any upcoming budget proposals, especially including the hundreds of millions of dollars in “pork spending” and “Christmas tree items” that only benefit a particular lawmaker’s legislative district.