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PROPERTY TAX REFORM
SETTING THE STAGE FOR INFORMED, OBJECTIVE DELIBERATION ON PROPERTY TAX REFORM
For decades, many in New Jersey have recognized that the state’s combination
of startlingly disparate local property tax capacity and unduly heavy reliance
on property tax revenues was a prescription for disaster. Indeed, the case of
Robinson v. Cahill, the predecessor to Abbott v. Burke, was brought to redress
taxpayer and student inequalities that resulted from New Jersey’s flawed
system for funding the public schools. The judicial response to these cases,
and especially Abbott, has been to mandate dramatically increased state
funding of poor school districts without requiring that the flawed system for
raising education funds, heavily dependent on property tax revenues for most
other districts, be reformed.
Despite authority to deal with this problem directly, the legislature
has not done so. Instead, in 2004 it created a Property Tax Convention
Task Force to make recommendations regarding a constitutional convention
to address tax reform. The Task Force issued its report in December
2004, in which it indeed recommended such a convention. Although it
recommended that the convention be “strictly limited” to considering
reform of the state’s current system of revenue-raising, rather than
revenue-spending, some task force members and some prominent Republican
legislators have argued that a constitutional convention should deal not
only with reforming property taxes on the revenue-raising side, but also
with the way in which state as well as local revenues are spent. This,
in turn, caused some to express concern that the convention might be
used as a vehicle to roll back education reforms instituted pursuant to
the judicial mandate of Abbott v. Burke.
Such sharply divergent views about the role of a constitutional
convention reflect just how complex and controversial the underlying
issues are. That divergence in views also might impede any serious
effort to address property tax reform in New Jersey’s and make it less
likely that needed reform will occur, whether through a constitutional
convention or otherwise.
A constitutional convention should not be a vehicle to reverse the
state’s commitment to its urban public school students. Yet, it is
clear that many other school districts in New Jersey -- rural, urban and
suburban -- are struggling to raise the resources necessary to provide
their students with a “thorough and efficient” education and to do so in
an equitable and politically viable manner. It is equally clear that
the state’s heavy reliance on local property tax revenues and starkly
disparate property wealth is an impediment. In that sense, a meaningful
discussion of property tax reform can only occur in the context of what
we know to be a suspect school funding and state aid system.
IELP is helping to navigate these difficult waters with Setting the
Stage for Informed, Objective Deliberation on Property Tax Reform. With
this project, IELP will provide policymakers and the public with an
objective analysis of the complex legal, fiscal, educational and social
policy questions, and an informed, objective basis for serious
deliberation warranted by the undeniable importance of this issue.
Through objective, multidisciplinary research and analysis as well as
high-level discussion among experts in the fields of school finance,
education reform and state taxation, the Institute will examine New
Jersey’s system of school finance and its property tax ramifications,
compare the New Jersey’s system with those employed by states with
ambitious education reform programs, such as Kentucky, and states that
have devoted considerable attention to property tax reform, such as
California and Michigan; and, based on this examination and comparison,
recommend measures that could provide property tax relief, or at least a
more equitable tax burden, while maintaining the state’s historic effort
to improve education for its neediest students. Then, it will use this
research to promote informed public discussion of the issues.
The project is modeled after the Institute’s school choice project, not
coincidentally entitled Setting the Stage for Informed, Objective
Deliberation on School Choice, which also has featured
an invitational meeting, a study of legal and policy issues and best
practice models, and a report issued with an outreach effort designed to
inform public discussion.
Background Paper. The project began with an invitational meeting June
3-4, 2005, where experts from New Jersey and across the country
discussed the legal, fiscal and policy issues and recommended specific
areas of inquiry. IELP distributed a background paper for the meeting,
What We Know, and What We Need to Know, About Education Funding and
Taxes.
Study and Report. A systematic study of the issues is currently
underway. Upon its completion, IELP will disseminate the results with a
report, which will analyze all the issues and describe selected models
worthy of further consideration. The report will be distributed to the
public in print and electronic form.
As the study proceeds, the question of whether a constitutional
convention is to be convened is being answered by the State Legislature.
If a referendum authorizing a convention is to be placed on the ballot,
IELP’s report will be written to inform voters; if there is no
referendum and therefore no convention – next year, at least – the study
will be geared toward legislators and the state’s new governor, who will
take office in January 2006 and then will need to address these issues
by some means other constitutional reform. (A convention now appears
unlikely, as the legislative session has ended without passage of a bill
authorizing the required referendum on the convention.)
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