Legislation sponsored by Assemblyman John Burzichelli, D-Thorofare, would eliminate property tax rebate checks mailed to homeowners and renters each fall. His bill would replace rebate checks with a property tax credit system that would automatically credit property tax bills for the amount the resident is entitled to receive.
"This is essential relief that unfortunately is provided in a gimmicky way," said Assembly Speaker Joseph Roberts Jr., D-Brooklawn. "The real value in this legislation is in providing this relief in a smart way."
New Jersey's average property taxes now top $7,000, the highest in the nation. Rebates, based on income, have been part of New Jersey's political fabric since at least 1976.
Rebates were created to provide assistance to senior citizens, disabled homeowners and wage-earners least able to pay. But when delivered as checks instead of credits, Burzichelli said rebates often go unrecognized as property tax assistance.
"There's a major disconnect between the check that arrives at the house and the tax bill," said Burzichelli, "because the tax bill stays high."
In his budget proposal for the fiscal year that starts July 1, Gov. Jon S. Corzine has proposed eliminating rebates for New Jerseyans earning more than $75,000 a year. That would save the state $500 million and still allow rebates for senior citizens and the disabled. About a million homeowners and renters still would qualify. The budget also proposes eliminating the tax deduction for property taxes for people earning more than $150,000.
The idea of replacing rebate checks with tax credits has been around for years. Corzine encouraged the change during a 2006 speech before a joint session of the Legislature on tax reform, but it hasn't advanced. Political resistance, technical challenges and concerns over private income information being available on public tax bills stalled the change.
Some politicians have been reluctant to stop sending checks to constituents less than 60 days before a general election.
Questions have also been raised about whether the state's dated computer system can handle the change, though Burzichelli said his bill builds in time - the credits would start in 2011 - to allow for the switchover.
"It's a matter of deciding we want to do it, and this bill says we want to do it," said Burzichelli. "It's deciding we're going to do it, and we have to figure out how."
The bill classifies tax bills as nonpublic documents. This prevents one resident from being able to ascertain another's earnings by looking at the income-based credit listed on their tax bill.
"That's the way it should have been done all along," Jerry Cantrell, president of the New Jersey Taxpayers' Association, said of tax credits. "It doesn't make any sense to send money to Trenton and for them to cut a check and send it back."
The state would save more than $10 million in processing and postage by not cutting a million or more rebate checks.
Senate President Richard Codey, D-West Orange, said he favors tax credits over rebates - except for senior citizens.
"They look forward to getting that check," said Codey. "It's cash in their pocket, and they'd be very upset if they didn't get it."
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