Tax Rebates on the Chopping Block—Again
Posted February 27, 2009

This week, Governor Jon Corzine signed into law A3649/S2506, which extends the transmittal date of the governor's 2009-2010 budget message to the state legislature from February 24, 2009 to March 12, 2009. Corzine announced his desire to delay the message in December of last year, noting his wish to take time to evaluate the state's revenue and take into consideration any potential stimulus aid coming from Washington.

Delaying the budget message is far from unusual, and since 1990 the legislature has approved extensions at least seven times. Far more important than the message's delivery date, however, is its content, and already at least one potential component of that is cause for concern.

Last week, Governor Corzine stated that among the items being considered for the fiscal chopping block in order to balance the state budget is New Jersey's property tax rebate program. If you'll recall, property tax rebates were already cut and/or eliminated for many in last year's budget. In our June 27, 2008 Trenton Musings, we noted:

As the Atlantic City Press reports, under the new budget, property owners with incomes less than $100,000 will still receive a rebate of approximately $1,115. But homeowners with incomes of between $100,000 and $150,000 will see their rebates drop by 40 percent - from about $1,115 to $665. And if you make over $150,000, you're out of luck. Your rebate will be nonexistent. (This is a change from last year, when rebates extended to homeowners earning up to $250,000.)

Now, to quote Yogi Berra, "It's like déjà vu all over again."

According to the Star Ledger:

The rebate checks to homeowners and tenants, which cost the state about $1.7 billion last year, represent one of the largest remaining nonessential spending items in the budget Corzine will present to the Legislature on March 10..

Among the scenarios under consideration are plans that could allow rebates to be maintained for the elderly and disabled, as well as other residents who have suffered the most economic distress.

The governor has repeatedly said all options, including rebates, are on the chopping block as he tries to balance New Jersey's finances, though he has so far declined to discuss rebates specifically. But behind the scenes, discussions on how to trim the rebates are occurring daily, the sources said, because there are very few budget areas left to cut that could save hundreds of millions of dollars.

To their credit, legislators on both sides of the aisle have stated their opposition to cutting rebates for property taxpayers. For example, Assemblyman Lou Greenwald (D-Camden), Chairman of the Assembly Budget Committee, vowed to "fight to the death" to keep the rebate program intact. Unfortunately, such sentiment is not universal.

Perhaps seeking to lessen the political impact of the rebate cut, Governor Corzine is couching it in more palatable terms, stating that a "suspension of the property tax rebates would be a better way to talk about it" and noting, "Property taxes are a heavy burden. It's not a gimmick program. It's meaningful. We're not anxious about making these decisions."

Yet, as Monmouth University Polling Institute Director Patrick Murray noted, New Jerseyans aren't easily duped. "Voters aren't stupid here in New Jersey," Murray said. "They've always understood the property-tax rebate to be a bit of a ploy. It's not true property-tax reform, which is what they really want, but considering how high the costs are, they'll take the check."

Now, it seems voters may not be able to do even that much if, indeed, property tax rebates become a casualty of the budgetary chopping block.

The fact is that until true property tax reform is enacted, rebates will, in reality, be a "gimmick" subject to the whim of the legislature.

We urge Governor Corzine and the state legislature not to raise taxes on New Jersey's already over-taxed families and once and for all to enact authentic and lasting property tax reform.

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