Democrats and Corzine

Split Over Local Taxes

Sunday, October 22, 2006

BY ROBERT SCHWANEBERG AND JOE DONOHUE

Star-Ledger Staff

Less than a month before the Nov. 15 deadline for lawmakers to propose ways to lower property taxes, legislative leaders are already at odds with Gov. Jon Corzine over one big question: whether municipalities should be allowed to impose other taxes.

Corzine has proposed giving municipalities an alternative to the much-hated property tax in July, and he reiterated it last week. He supports letting towns tack a 1 percent local sales tax onto the 7 percent that goes to the state.

But in separate interviews, leaders of Corzine's Democratic Party rejected new taxing powers for municipalities.

"I think that's the last thing we need to be doing in terms of sending a message," said Senate President Richard Codey (D-Essex).

Assembly Speaker Joseph Roberts (D-Camden) said it is "unlikely" the four special legislative committees searching for ways to cut the property tax will endorse offsetting it with other local taxes.

The disagreement is one example of how the ideas floated to reduce New Jersey's soaring property taxes may conflict with political realities a year before legislative elections.

While Codey describes it as a healthy discussion, a ranking Republican predicted the special session on property taxes is heading toward a showdown reminiscent of July's budget crisis, which ended after Corzine shut down state government and closed Atlantic City casinos.

"Where it's likely to go is where Jon Corzine wants it to go," said Sen. William Gormley (R-Atlantic). "He's going to have to seize control like he did with the budget."

William Dressel, executive director of the New Jersey State League of Municipalities, gives the special committees "an A for effort. They've had a lot of meetings, taken a lot of testimony."

Combined, the four committees -- which are looking at government consolidation, public school funding reform, constitutional reform and a possible taxpayers convention, and public employee benefits -- have held 28 meetings and seven public hearings. They consulted tax experts from around the country. They posted a small library's worth of research on a state Web site and used it to receive hundreds of e-mailed suggestions -- some profane -- from the public.

But the effort has "raised more questions and issues than they've got solutions at this point," Dressel said. "I fear that given the complexities, they may not resist the temptation to recommend a simplistic, quick-fix solution which may be politically palatable but will fall short of addressing the real issues."

Leaders of the special committees insist they are not afraid to find property tax savings, even when it requires painful choices.

"This is literally like tearing the flesh off your body in quarter-inch strips," said Sen. Bob Smith (D-Middlesex), who co-chairs the committee on government consolidation. He dared to grapple with one of the state's fabled sacred cows -- home rule -- because he sees potential savings of up to $400 million.

Smith's plan would allow voters, by countywide referendum, to centralize school administrative functions and costs at the county level. A rival plan by Roberts would turn the existing county superintendents into "super-superintendents" with expanded powers to encourage school districts to share expenses and consolidate.

Codey predicted something closer to Roberts' plan will pass and vowed there will be "no forced consolidation of school districts whatsoever."

Codey also said a revised formula to determine public school funding is "a good bet," while abusive practices that have allowed some government workers to pad their pensions will be "history."

Other potential reforms have been ruled out. Lawmakers studying public employee benefits were advised by legislative lawyers that pensions for workers with five years on the job are constitutionally protected.

Gormley, who serves on that committee, promptly said it should focus on savings in health care spending. He has introduced legislation to require public employees to cover more of the cost of their medical insurance.

Another committee explored taxing commercial properties at higher rates than homes -- something the state constitution currently prohibits. Senate Majority Leader Bernard Kenny (D-Hudson) favored such a change but, Codey said, "That's not going to happen." Senate Minority Leader Leonard Lance (R-Hunterdon) said, "It would be terribly detrimental to the business climate of this state."

Looming over the property tax reform effort are next year's legislative elections -- when all 40 Senate and 80 Assembly seats are at stake.

"If there isn't radical reform proposed and put in place, I think there will be hell to pay," said Assemblyman Kevin O'Toole (R-Essex), who serves on the public employee benefits reform committee.

There is also the possibility, if the lawmakers fail at their task, of a citizens property tax constitutional convention. In a July speech to lawmakers, Corzine warned that if they fail "to achieve sustainable relief and reform by January 1st," he would push for a convention.

On Thursday, the committee on constitutional reform dusted off a 2-year-old blueprint for calling such a convention, but members described it as a last resort. The committee's co-chairman, Assemblyman John Burzichelli (D-Gloucester), said, "I see no need for a convention at this time."

Dressel disagrees.

"I think there's going to have to be a constitutional convention," he said. "I think the people -- the stakeholders -- are going to have to weigh in."

Anthony Coley, Corzine's spokesman, said the governor expects the four committees to make their recommendations Nov. 15. Codey said if that deadline is missed, it will be "by three or four days."

"I think at the end you'll see a new system that will provide some instant property tax relief and, over the long term, stability in property tax increases that you have not seen over the last two decades," Codey said.

Staff writer Dunstan McNichol contributed to this report.