Property Tax Convention Task Force

October 4, 2004

Sally Dudley

Project Director

I am here on behalf of the Association of New Jersey Environmental Commissions (ANJEC) to support a Property Tax constitutional convention. I also serve as the secretary-treasurer of the Coalition for the Public Good.

The Association of New Jersey Environmental (ANJEC) is a statewide non profit organization that promotes the public interest in long-term natural resource protection and sustainable development by advocating appropriate public policies, coordinating organizations interested in environmental issues, establishing and supporting environmental commissions. ANJEC’s members include environmental commissioners in 350 municipalities and all 21 counties, state and local officials and interested citizens. The Coalition for the Public Good is a non-profit organization aimed at promoting good government policies and practices in New Jersey through forums, activities and reports. Since September 2003, the Coalition’s Citizens’ Tax Assemblies have brought together more than 100 citizens and resulted in rational and creative recommendations for reforming New Jersey’s property tax system.

NJ’s disproportionate reliance on property taxes for our government revenues has important negative impacts on the overall health of our economy, educational system and environment. Our current system results in

- The constant municipal ratables chase, which is the major cause of the dumb growth that is sprawling across the state and endangering the health of important natural resources like drinking water sources.

- Inequity for our low and middle-income residents who are often priced out their homes. Constant increases in property taxes often result in these citizens having to pay 25 percent of their income for their local property taxes.

- Constant crisis in the financing of our public education system. Without good solid schools for all our residents, we are facing major risks for our future economy.

Most municipalities are constantly seeking new development on the premise that changing open lands to residential or commercial uses will bring in additional tax revenues. While this may be true for a few years after the development is completed, over the long term, developed land costs municipalities more than open land. Studies of the costs of community services by the American Farmland Trust show that on the average, residences cost $1.15 for every $1 they pay in property taxes. Studies of five NJ municipalities show that residences cost from $1.14 to $1.51 for every $1 raised in property taxes. Most of this additional money is needed to support the school and transportation systems for the people who are living in the new houses.

While commercial and industrial development initially pay more in property taxes than they cost, over time they also contribute to property tax increases. Their employees usually want to live closer to the facility. So the commercial development generates more residential development. And commercial facilities work hard to attract as many customers as possible. All this results in additional local property tax costs for transportation, police, fire and first aid services and education.

A Property Tax constitutional convention would be the best way to deal with these issues. The Citizens’ Tax Assemblies over the last year have shown that citizens are interested and capable of addressing the wide range of property tax reform issues. It is crucial to involve these people in the constitutional convention.

The convention should focus a constitutional amendment that would address property tax reform and maintain our thorough and efficient education requirement. At the Citizens’ Tax Assemblies, we have operated on the basis of developing property tax reform that will result in the same overall level of revenue (from property, income, sales and other taxes) for the state as our current system produces. This guiding principle seems like a worthwhile, practical approach,

The conclusions of last June’s Citizens’ Tax Assembly make sense for the organization of the constitutional convention.

- To achieve geographical representation, convention delegates should be elected from legislative districts.

- Most delegates should be elected, some appointed.

- 80-100 delegates would be a manageable group.

- Delegates should be registered voters from their districts.

- Members of the Legislature should not be permitted to seek election as delegates.

- Ways should be found to limit the role of political parties, contributions and campaign expenditures to minimize the role of interest groups and keep the process nonpartisan.

- Voters should be provided with objective concise information on candidates and convention meetings.

- The convention should be supported by a well-qualified staff.

It makes sense to hold the election of convention delegates in March. This would probably result in more public involvement in property tax reform than a November delegate election. And public involvement in the set up of the constitutional convention will ultimately make it work better for the public good.