It's a good time to do an update on the race for Governor. The next Governor will either be Lt. Governor Kim Guadagno or businessman Phil Murphy.
Guadagno is busy barnstorming the state touting her property tax reform plan. It is much needed. The Guadagno plan would save the average homeowner approximately $ 1,000 per-year.
Guadagno is also willing to address the "Holy Grail" of regressive taxation, the dreaded school purpose tax. No one begrudges a thorough and efficient education being provided for our children. They are our future and we need to honor the long-standing compact of taking care of each new generation with the best public education humanly possible.
However, 60 percent and higher of all local purpose taxes are school purpose tax-related. It's long been out-of-control and getting even worse. Guadagno's plan would place a 5 percent cap for homeowners regarding the total amount of school taxes. A tax credit (up to $ 3,000) would be made available for any amount above the 5 percent cap.
This would be a major game-changer. Certainly, the New Jersey Education Association and other special interests will vehemently object to this proposal. They see it as a threat to overall education funding and their own job security.
However, New Jersey is experiencing record-level wealth flight. The wealthiest are leaving for more tax-friendly states. And, many middle class residents and the poor are fleeing the state because they cannot afford to pay the highest taxes in America.
It's an unsustainable trajectory. Once again, New Jersey had the highest property taxes in the country for 2016. On top of that, New Jersey has the highest effective tax rate in America at 2.31 percent, according to a recent study published by www.RealtyTrac.com.
The effective tax rate is the average yearly property tax as a percentage of the average market value of homes. There are only nine counties in America with an average annual tax bill of more than $10,000. Four of the nine are in New Jersey; Bergen ($11,311), Essex ($11,550), Morris ($10,531) and Union ($10,821).
At the other end of the spectrum, Cumberland County has the lowest average property taxes at $4,027. The data regarding the highest and lowest property taxes is directly from the New Jersey Department of Community Affairs.
The average annual property tax bill in New Jersey is $8,549 for the last full year (2016). It steadily rises by more than $200 per-year, with no end in sight.
This is not a new phenomena. New Jersey has had a property tax problem for more than 140 years. With the exception of Rhode Island, no state is more densely populated than New Jersey.
Our average labor costs are also exorbitant. New Jersey cities payroll costs routinely average 60 to 70 percent of the entire budget.
New Jersey is also always a top 10 most expensive state in America in which to live. This undesirable ranking factors the cost of housing, utilities, food and medical expenses.
Finally, the issue of regressive property taxation as the funding source for almost everything is devastating to the middle class in particular. Most other states utilize local income taxes and additional sales taxes to fund the local government.
Murphy's solutions all appear to lead New Jersey towards new tax increases. This will chase more of New Jersey's rich, middle class and poor to states such as Delaware, South Carolina, Georgia and Florida.
Simply and sadly put, New Jersey is the most-moved-from state in America. Higher taxes and fees would only increase the flight. New Jersey has owned this awful title for the past five consecutive years. High property taxes, the gasoline tax increase and the poor condition of our roads and bridges were the major reasons stated for residents leaving. A significant number of residents also flee from New Jersey right after retirement.
The former Goldman Sachs Co-Chief Executive Officer calls any new taxes "dedicated funding sources." Murphy is proposing a "multi-hundred-million dollar proposition to get the state's operating assistance back up to par," said Murphy on May 5 (during a news conference at the Trenton train station).
Murphy is a former United States Ambassador to Germany. There's no doubt that New Jersey residents have been facing weeks of delays and other inconveniences, sometimes leaving commuters stranded for hours.
Governor Christie is correct when he places the blame squarely on Amtrak for the problems and delays. Amtrak will continue to make track repairs this Summer. New Jersey taxpayers will fork out $427 million to Amtrak this year.
The two major party candidates for Governor couldn't be more polar opposite. On Tuesday, Nov. 7, New Jersey voters will decide whether they want lower taxes (Guadagno) or higher taxes (Murphy).
Voters are fortunate that each candidate is telling you exactly what they will do as Governor. That is most often times not the case. It's up to you to decide.