Government spending is the root cause of New Jersey's highest-in-the-nation property taxes and reducing it is the only way to achieve sustainable property tax reform, NJBIA President Philip Kirschner said today, as lawmakers prepare for a special session to address the issue.
Like homeowners, New Jersey's business owners pay the highest property tax rates in the nation and need property tax relief, Kirschner pointed out. In 2005, businesses directly paid an estimated $4.9 billion in property taxes (25 percent of the total), with most others absorbing rising property tax costs through their leases and rentals.
“Rising property taxes contribute to what is already one of the highest costs of doing business in the nation,” Kirschner said. “It is a problem that is impacting our economy and our ability to create private-sector jobs. The only way to solve it is to attack this problem at the source and that means reducing government spending.”
Kirschner said shifting the tax burden onto other sources would not work because property taxes were rising too fast for any revenue source to keep up with them. Property taxes are rising at a rate of about 7 percent per year, which is two to three times the rate of general inflation.
Property tax increases are driven by increases in personnel costs, particularly in health insurance, and an overabundance of local government entities. NJBIA has offered numerous suggestions, including requiring government employees to share more of the cost of health benefits, reforming the pension system for government employees, and consolidating K-8 school districts into the existing regional school districts, in which they are already located.
NJBIA Senior Vice President Melanie Willoughby said the business community is simply asking governments to take steps to save taxpayers money.
“We're not asking government to do anything that we have not done in the private sector,” Willoughby said. “Like governments, New Jersey's private-sector employers have had to cope with skyrocketing health insurance costs. Private-sector employers have been forced to share the astronomical cost increases with their employees, yet in government, workers pay little for the State Health Benefits Plan (in which most local government workers and teachers participate). This is unfair to the taxpayers who are footing the bill.” Among the specific proposals that NJBIA has offered are:
• requiring all active employees and retirees to contribute 20 percent of the cost of the base State Health Benefits Plan, saving local governments $450 million annually;
• replacing the traditional and NJ PLUS health plans with a Preferred Provider Organization (PPO), saving local governments $66 million per year;
• basing pension on the average of five highest annual salaries for public employees (it's currently three) and three years for police and fire (it's currently one), saving local governments $100 million annually;
• raising the normal retirement age from 55 to 60, saving local governments $40 million annually; and
• consolidating all K-8 school districts into existing regional school districts, reducing redundant administration that costs taxpayers $68 million per year. |
