Taxes - Ledger - Editorial: Enable local options

Published in the Star-Ledger, Friday, Jul 20, 2007

EDITORIALS
Open up local tax options

New Jersey legislators have always been paternalistic in their dealings with mayors and town council members. To do just about anything, local leaders need the say-so of lawmakers, who often adopt a we-know- best attitude. When talk turns to curbing property taxes by raising revenue through some other local tax, the response from Trenton is almost always: Don't even think about it.

It's time for legislators to reconsider.

Only once have lawmakers offered a limited number of municipalities an option to impose a broad-based tax. The results justify doing it again.

Four years ago, legislators imposed a 5 percent tax on hotel-motel rooms and gave towns and cities the opportunity to tack on 3 percent and keep the money. So far, 146 towns have taken advantage of this opportunity, easing the property tax burden in those communities.

On average, towns collecting the new tax saw the municipal portion of the property tax rise 7.4 percent compared with 9 percent in places without the room tax. There's nothing good about a 7.4 percent tax increase -- except that it is not 9 percent.

In some towns, the relief was significant. Cape May, chockab lock with Victorian inns, saved homeowners an average $224 on their property tax bills. Morris Plains residents saved $139, Fairfield homeowners $92 and those in Clinton $87. The room tax offered a painless way -- at least as far as local residents were concerned -- for mayors and councils to keep a check on ever-rising property taxes.

But as of now, the Legislature isn't likely to expand on that successful formula. Senate President Richard Codey remains opposed to letting towns have options. His reasoning and that of other lawmakers is simple: Having enacted a "reform" that de creased property taxes by an average of 20 percent this year, they're not about to let the locals impose new taxes. To them, that simply doesn't make sense.

Their reasoning is flawed. There has been no property tax "reform," just larger re bate checks, and there is only enough money to cover those checks for this year.

What doesn't make sense is slamming the door on any discussion of other municipal tax options. No town would be forced to impose a tax. But towns should be allowed to do so as a means of reducing reli ance on the property tax as the sole way to pay for municipal and school costs.

A local wage tax or a little extra sales tax or even a tax on new developments are possibilities. Others would arise from a serious debate of the proposal.

And in each case, town residents would have to weigh the impact. Would a higher sales tax cause shoppers to go elsewhere, eventually hurting the local economy? Would a wage tax drive businesses to neighboring towns?

Of course, the Legislature could establish restrictions. One ought to be that none of the revenue could be treated as newfound money to be spent on new programs or services. Rather, it would have to be used to supplement property taxes and cover existing expenses.

The League of Municipalities likes the idea of taxing options, and Gov. Jon Corzine has talked up the plan at times but not done much to push the Legislature on it.

It's time for state legislators to treat their counterparts in town halls as equals, fully capable of making taxing decisions. And facing the consequences.

Online story here. Archived here.

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