Special Report: Did N.J. property tax reform help most taxpayers?

TRENTON — New Jersey homeowners paid an average of 2.4 percent more for property taxes in 2011, the smallest increase in nearly two decades, showing Gov. Chris Christie’s push to restrain local levies might be working.

A Star-Ledger analysis of taxes in all 566 New Jersey towns shows the average property tax bill was $7,758 last year, an increase of about $182 from 2010.

Although more than 82 percent of the towns saw some increase in their average property tax bills last year, the 2.4 percent increase was a significantly slower rate of growth, the newspaper found. In 2010, property taxes rose 4.1 percent and year-over-year increases topped 7 percent for three consecutive years in the middle of the past decade.
 

The last time property taxes rose by such a small rate was 1992, when they went up 1.9 percent, according to state figures.

Christie has made reining in New Jersey’s highest-in-the-nation property taxes a big goal of his administration. Along with the Democrat-controlled Legislature, he limited property tax collections for towns, schools and counties at 2 percent, starting last January.
 

"Am I satisfied? Of course not. Unless you told me it was 2 percent, I wouldn’t be satisfied," Christie said in an interview. "But we’re making great progress. When you think that in the 10 years before I became governor, property taxes went up 70 percent in 10 years and now people are talking about 2-and-change increase, that’s great progress and progress that nobody else before we got here created in this state."
 

While the new law forced local officials to toe the line on property taxes, for some towns, complying with the cap came at a cost: Laying off employees, imposing furloughs, slashing services.

"It’s totally misleading in my opinion to say, ‘Oh, this 2 percent cap has done a great job for the towns.’ It has not," said South Brunswick Mayor Frank Gambatese, who laid off more than 20 employees in 2011 to stay within the limit.
The Star-Ledger collected tax data on all New Jersey municipalities. Average property values for residential homes and farmsteads were calculated for every municipality and used in combination with data on tax levies to determine the average property tax bill for each municipality. The analysis found:

• In total, towns, counties and schools collected about $25.6 billion from taxpayers in 2011, a 2.5 percent increase from 2010.
 

• Loch Arbour Village in Monmouth County had the highest average property tax bill at $22,715. Tiny Tavistock Borough, Camden County, came in second with $22,297, followed by Millburn, where the average property taxpayer coughed up $19,989.
 

• The least expensive place to live in New Jersey was Walpack in Sussex County, where the average taxpayer paid about $514.
 

• Bergen, Morris and Union counties had the highest average property taxes in 2011. The average Bergen County taxpayer paid $10,317, a 2.6 percent jump from 2010. Morris County’s average bill was $9,644, while Union County overtook Essex for third place, at $9,493.
 

• The lowest county average was in Cumberland, where the average tax bill was about $3,419 in 2011, down 1 percent.
 

• Together, the three taxing authorities (towns, schools and counties) exceeded a 2 percent increase in collections in 312 towns, while 165 stayed within 2 percent and 89 saw the levy stay the same or decrease. In 2010, 529 towns saw an increase in their total tax levy, 425 of which went over 2 percent.
 

• Counties were more successful than towns and schools in keeping their tax levy below the cap.
"I always said that it was going to be a process to get to the 2 percent," Christie said. "I didn’t expect the towns to be able, all of them, all 566 of them to come in under cap the first year."

In fact, 27 municipalities, including many cities, were spared from the cap for part of 2011 because their budget years start in July or are switching their budget calendars. They will be subject to the 2 percent limit for this year’s budget.
State officials said they have not completed analyzing the same data, but said the numbers for property taxes could be lower after figuring in a tax credit that homeowners can apply for that replaced the long-standing 

Homestead Rebate checks.
 

Senate President Stephen Sweeney (D-Gloucester) said the reason property taxes were kept in check is "not hard to figure out — we put a cap on. Caps do work. And this is stuff that I’ve been talking about since 2006. The positive is Democrats and Republicans alike driving taxes down."

In addition to the limit, Christie spearheaded a massive overhaul of the pension and health benefits system for public workers in June. He said increased payments for health benefits by employees will be phased in, which will help towns over the next few years.
 

But for some residents, slower increases in property taxes are barely noticed in a state where they have doubled since 1996.
Maria Pedersen, 62, of North Brunswick, said she’s become used to property taxes "always going up, up, up."

If the rate of increase declined last year, Pedersen said, she didn’t notice: "What I know is that my escrow is always shorter every year because home insurance and taxes always go up."
 

Dave Eisma, 47, of South Brunswick, said property taxes are still on an unsustainable path.
 

"It seems like the average person is getting squeezed out," he said. "The biggest issue is that every year you get a 2 percent or 3 percent raise — if you’re lucky. Even with the caps, your income can’t keep up.Anybody that’s retiring, they’re out of here."

The law allows local officials to go over the property tax limit to cover expenses related to a state of emergency, debt service costs and employee pensions and health benefits payments. Officials in towns battered by Tropical Storm Irene and the fluke October snowstorm warn they have to exceed the 2 percent limit.
 

Mount Arlington Mayor Art Ondish, who is president of the state League of Municipalities, said his town has cut back on capital improvements to stay within the cap.
 

"Costs keep going up," he said. "It’s not like everything is put on hold just because we have a cap."
Mike Yaple, spokesman for the New Jersey School Boards Association, said the cap makes "it difficult to bring about changes," like full-day kindergarten or a longer school day. "There’s really not much wiggle room."
 

Raphael Caprio, a professor of public administration at Rutgers University, said costs for towns will eventually spiral out of control, and local officials will be forced to make deep cuts in services. Now, he said, towns are making moderate cuts or using one-time fixes instead of axing whole departments or enacting long-term systemic changes.
 

"The 2 percent cap has worked," he said. "But at what point does it become a limitation to the quality of services that a town can provide?"
But Chris Rogers, president of the New Jersey Taxpayers Association, said the limits aren’t tough enough. 

"The overspending, the unaccountability is still there," he said. "I don’t think the solution is for municipalities and school boards to take away services. I think the solution is for school boards and towns to come together to share duplicate services."
 

Towns and schools can ask voters for permission to exceed the 2 percent limit by holding a referendum. In 2011, 14 towns asked voters for permission to exceed the cap. Voters rejected the increase in all but two of the towns, Lambertville and Brick.

By Star-Ledger Staff