State lawmakers are moving ahead with a series of “affordability bills” – the first of their kind in the new session – meant to curtail New Jersey’s notoriously high property taxes and cost of living.
One bill approved in a committee vote on Jan. 27 shifts funds under the Energy Tax Receipts – originally collected by municipalities, but now by the state – so that the money goes back to local towns and cities rather than to plug holes in the state budget. A second boosts the tax deduction that tenants could claim on their income taxes for their rent costs from 18% to 30%.
“Many of us who saw the outcome of the most recent election understand quite honestly the pain that many of our fellow residents are facing with affordability in the state,” state Sen. Troy Singleton, D-7th District – who chairs the Senate Community and Urban Affairs Committee where the bills were heard – said in his opening remarks Thursday morning.
The topic of affordability has been hotly discussed since the November’s elections by Trenton’s top leaders – including Gov. Phil Murphy and Democratic leadership in the state Assembly and Senate – who contend voters gave Republicans sweeping victories because they felt those issues were not being addressed.
Senate Bill 330 would restore $331 million a year for five years following more than a decade of cuts to property tax relief that municipalities should have gotten under the Energy Tax Receipts.
Local governments initially collected those fees paid by utilities, but it was later handled by the state. Starting in 2008, under then-Gov. Jon Corzine, the state siphoned away billions of dollars that should have gone to local governments in order to plug holes in its general budget.
“When municipalities have cut or eliminate services, raised fees, raised property taxes” to address that shortfall, “the time has come to restore to local budgets the millions of property tax relief that have been annually divested to meet the state needs,” testified Lori Buckelew, government affairs director for the New Jersey League of Municipalities, which had lobbied for the change for years.
A second measure approved was Senate Bill 343, which expands the income tax deduction that a tenant could claim when filing their taxes from 18% to 30%, capped at $15,000 in deductions a year.
The Senate Democrats Office estimated that this would yield $180 million of tax cuts for families, and essentially $180 million the state would be on the hook for.
Figures released earlier this week by the state Department of Community Affairs showed that the average property tax bill in 2021 hit an all-time high of $9,284 – an increase of more than $170 from 2020. Meanwhile, a third of New Jersey counties saw average property tax bills that were above $10,000, which 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.
New Jersey also 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.
Murphy has promised not to increase taxes in his second term, but hasn’t specified if and how he could lower them. To date, he’s touted over a dozen tax rebates and other deductions that benefit specific segments of the population, such as veterans and seniors.
“Affordability is small business affordability, corporate affordability and competing-with-other-states affordability,” Chris Emigholz, vice president of government affairs at the New Jersey Business & Industry Association, told lawmakers on Thursday.