Corzine calls for cap on property tax increases
Outlines proposals for reform in address to Legislature
BY KAREN E. BOWES
Staff Writer

"Over the next four years, we can expect costs for the state health benefits program to grow by more than 70 percent to over $3.6 billion." - Gov. Jon Corzine

TRENTON - Gov. Jon Corzine compared the state's property tax system to "the Four Horsemen of the Apocalypse" Friday, saying increases for homeowners need to be capped at 4 percent per year.

Speaking before both the state Senate and Assembly, Corzine used the biblical reference while outlining his plan to lower property taxes. It's a plan, he said, that will not only lessen the burden on the middle class, but fix New Jersey's fiscal problems, namely, the $2.3 billion debt.

Instead of death, pestilence, war and famine - the four horsemen named in the book of Revelation - Corzine pointed to the state's overreliance on property taxes to run schools and government, overspending, overlapping services, and fragile financial status as the four most daunting problems facing lawmakers.

His plan? With $600 million in "pre-funding" for property tax relief already set aside, Corzine suggests adding more to the pot by using revenue created from the recently increased sales tax.

"I propose that we take $350 million of the dedicated sales tax revenue and combine it with the existing funding for rebates," Corzine said. "This will create a credit program of more than $1.6 billion to lower tax bills for senior citizens and middle class families and to potentially double the credit for tenants."

The rest of the cash created by the sales tax increase amounts to $250 million, and should be spent on "an unprecedented re-engineering fund" for the purpose of setting up a system for towns to share services such as school administration and trash collection, the governor suggested.

Not surprising, many disagree with Corzine on this particular tactic. Chairman Tom Wilson of the State Republican Committee would like to see all the revenue go toward property tax relief.

"New Jerseyans are overtaxed, they need relief now, and we shouldn't be telling them to be patient," Wilson said afterward in a released statement. "We already spend billions on municipal aid. Why not tie that funding to performance and efficiency standards and begin demanding that places like Newark and Camden stop wasting money?"

Ultimately, it will be up to the voters to decide. In November, a special question will be placed on the ballot asking citizens how the new funding should be divvied up. This was decided upon in early July, during the now infamous state shutdown, as a compromise between arguing factions.

To ensure the "re-engineering" goes smoothly, Corzine would like to create a new group, a financial control board, to oversee the shared-services initiative.

"Property taxes have been going up by an average of 6.5 percent a year for the past 20 years and at 6.9 percent since 2001," the governor said.

Government reform is necessary, he said, in the fight to lower those statistics. But while providing tax rebates is one thing, he explained, reforming the state's spendthrift bureaucracy is another.

Corzine named several areas in need of fiscal reform; funding for employee pensions, "benefit arrangements" and health insurance coverage were at the top of his list.

"Today we face an $18 billion unfunded pension liability that is one of the factors that limits our ability to provide meaningful local aid," Corzine said.

Presently, the state is also responsible for over $20 billion in unfunded health care liability, Corzine said. And that's not counting the ever-increasing cost of employee health insurance.

"Over the next four years," he added, "we can expect costs for the state health benefits program to grow by more than 70 percent to over $3.6 billion."

Employee cost sharing will be the most important aspect of reforming the health coverage system, Corzine said.

To tackle the pension problem, he proposes an increase in the retirement age of new hires, a two-tiered system in all benefits for new and recently hired employees, as well as changes to the retirement plan. Corzine said he is prepared to start the next round of negotiations with state employees as early as mid-September.

"Within three months, my administration will present an asset and liability study with recommendations on the scale, lease or monetization of assets, the use of naming, development and air rights as well as other public-private partnerships to raise capital and reduce debt payments," he said.

Again, as he has over the past year, Corzine called for the addition of a new governmental post, a state auditor or comptroller, to be elected by the public.

Overall, progress must be made by the end of this year, Corzine said.

"If we fail to take the necessary steps to achieve sustainable relief and reform by Jan. 1, then I will call and press for a citizens constitutional convention to be on the ballot in 2007," he said.