Can cutting local budgets reduce property taxes?

Yes, but there is a limit to what can be reduced. Police salaries and benefits often represent the biggest components of municipal budgets. The salaries are often set by arbitrators, pursuant to State Law. And the post-retirement benefits are also often mandated by the State. Education costs make up the largest portion of the average property tax bill. And much of that is spent for compliance with State laws and regulations. New Jersey local officials make difficult choices to keep the lid on property taxes every year. Last year the statewide total county tax levy was $3.5 billion. The total municipal levy was $4.7 billion. The total school district levy was $10.2 billion. In 2003, the county levy was $3.1 billion. The municipal levy was $4 billion. The school levy was $8.8 billion.

Average property taxes for 2004, as calculated by the State’s Division of Local Government Services, increased by 6.33% over the 2003 average. And the average property tax rate actually decreased from 3.027 to 3.021. This restraint has been achieved despite the fact that a large percentage of municipal, school district and county spending is mandated by State law, such as these examples, much of this is largely removed from local control:

  • Binding Arbitration
  • Education Programs
  • Environmental Programs
  • Health Services
  • Prevailing Wage Requirements for Public Construction
  • Work Rules and Benefit Levels for Public Employees

The underlying demand for local public services continues to increase, and the costs continue to rise with inflation and population growth. Without commensurate increases in relief funding, increases in property taxes are inevitable.

Show All Answers

1. Why is talking about tax relief important?
2. How is the responsibility for taxing and spending divided between the State and local governments in New Jersey?
3. Why do New Jersey local governments need funding from the State?
4. Why do you call it “municipal property tax relief” and not “State aid”?
5. What about user fees?
6. That leaves property taxes and property tax relief funding from the State. What is the deal with State funding?
7. How does New Jersey’s property tax burden compare with other States?
8. Can cutting local budgets reduce property taxes?
9. Can local governments hold down the costs of public services?
10. How can the State provide needed relief to local governments and, more importantly, to property taxpayers?