Madison Officials Run Gamut on New 2 Percent Tax Cap

After months of debate and changes to the proposed tax cap, Gov. Chris Christie signed a 2 percent property tax levy increase cap into law last week.

The cap, no longer in the form of a constitutional amendment, caps tax increase separately for municipal, county and school governments at 2 percent. However, there are several exemptions written into the bill.

If a government wanted to go above 2 percent, they could hold a referendum seeking voter approval to go over the cap. The bill also includes four exemptions to the cap: rising health care costs, pension payments, debt service payments and capital expenditures, including new equipment and public works projects. This is a decrease from the 14 exemptions allowed under the current 4 percent property tax cap. Emergency situations are exempted and Boards of Education are exempt from the cap if they experience a spike in school district enrollment.

Board of Education President Lisa Ellis says the cap doesn't address the problem as a whole, especially by leaving health care and pensions out as an exemption.

"I think that it's disshonest to tax payers," Ellis said. "I think a 2 percent property tax cap is not possible if these things are placed outside of it. They put healthcare costs outside of it–we've been seeing 20 percent increases–how is that going to fly? That is going to eat up our entire cap."

Ellis is happy that the changes come as a bill and not a constitutional amendment.

"I was relieved it was done by law, because I know how easily it can be changed; administrations are administrations," Ellis said. "I worry about long term impact on teachers and public education in the state in general. Thank goodness something can be readily adjusted, but I think it sets a bad tone."

Mayor Mary-Anna Holden is less concerned about the cap in general, and is glad that Trenton is moving faster rather than waiting to set things in motion.

"I would have been more concerned if it was a hard 2 percent," Holden said. "The exclusions help us. I'm excited the senate is moving forward and the toolkit is moving forward. Some people are saying it's putting the cart before the horse. Something has to come first. We can't play chicken and egg. As long as the legislature continues to work all summer to get us to a good place starting next year, otherwise, before exceptions we're looking at a $2.5 million gap starting next year. I'm not sure what that means for our starting point."

Holden, like Ellis, sees pensions as a problem. She sees them as a large-scale issue for all citizens.

"I think the problem of pensions is not so much locally, but more globally," Holden said. "Larger pension reform needs to come into play, such as for the ability to collect from more than one pension. Part-time employees are also eligible for pension. It's almost unethical. I don't think people are deserving of it for a part-time job."

Holden said she is excited to give the new legislation a try and see what the toolkit contains. She is happy things are happening now and says she prefers that to waiting.

Ellis, who criticized Christie's elimination of state funding soon before the school budget season this year, said she is worried about what this will all mean for education in Madison.

"Obviously the concern is going to be maintaining the level of achievement we've been able to reach here," Ellis said. "I'm worried about things like class size. I just don't know. I asked if we could meet in the fall right way to get an early jump on next year's budget to see what exactly this means, dollar for dollar, where we'll be. It certainly doesn't seem like there will be any restoration of aid next year."

Both Ellis and Holden said they have some things in their corner for the first budget effected by the cap. Ellis says new business administrator Gary Lane will be very helpful in the process, saying the district is "very lucky" to have him in the fold. Holden said the borough always tries to look at the budget ahead of time, and is happy that CFO Robert Kalafut's wish for a hot summer has been granted, as that should mean increased air conditioner use and more electric revenue for the borough.