Kim Guadagno today announced her plan to deliver immediate property tax relief for middle class families and outlined long-term reforms to lower property taxes for all New Jerseyans, including fixing the school funding formula and ending sick pay abuse.
At its core, Guadagno’s plan would impose a property tax ‘circuit breaker’ by capping a homeowner’s property tax bill to a percentage of their household income.
“We need to make New Jersey more affordable for everyday, hardworking New Jerseyans, and we need to do it now,” said Lieutenant Governor Kim Guadagno. “Instead of study commissions and hollow campaign promises, my plan will deliver immediate property tax relief targeted to the middle class families who need it most while we pursue long-term, structural reforms to lower property taxes for all homeowners.”
According to the Tax Foundation, New Jersey has the highest property tax burden in the country. Last year despite a 2% cap, property taxes increased by $700 million and the average property tax bill on a single family home in New Jersey increased to $8,549 compared to $3,296 nationally. More needs to be done to actually reduce the burden of high property taxes, which are particularly harmful to the middle class, seniors on fixed incomes and young families who are deterred from buying a home.
Guadagno added, “After decades of attempts by Trenton politicians that have fallen short of real relief, some people believe actually lowering property taxes is impossible. I disagree. We can and must take action before more of our friends, neighbors and loved ones flee New Jersey for lower taxes in Pennsylvania, Texas and North Carolina.”
Like a circuit breaker for electricity, which automatically stops the flow of electricity after exceeding a safe capacity, the property tax ‘circuit breaker’ kicks in if the school portion of a homeowner’s property tax liability exceeds 5% of their yearly household income. The homeowner will receive a direct credit on their tax bill for any amount exceeding the 5% threshold. Depending on the school district, average savings under this plan would be $1,000 annually.
The school district will receive increased state educational aid to cover the cost of the credits, so no schools will lose any funding under the Guadagno plan. The way the program is designed, middle class families – not millionaires – will be the greatest beneficiaries, but all property tax payers win because of the certainty they will have from the cap.
“By ensuring that homeowners aren’t forced to pay school taxes in excess of 5% of their household income,” explained Guadagno, “New Jersey families won’t have to leave the state due to untenable property taxes. Families, seniors and the middle class will finally have certainty they’ll be able to afford to live in New Jersey.”
This program will be open to all New Jersey households, but will apply to primary residences only and the benefit to the taxpayer will be capped at $3,000. Savings would depend on a homeowner’s household income and school district. The senior freeze and Homestead programs will remain in place, but homeowners will choose the program that is best for them.
Click here to download a fact sheet on the Guadagno plan.
With a circuit breaker threshold set at 5% of household income, this plan will cost the state approximately $1.5 billion. Guadagno proposes paying for this plan by using savings from a statewide government audit, excess adjustment aid from overfunded school districts and additional revenue growth to the state.
To view the full plan, click here.