New Jersey’s Incredibly Shrinking Property Tax Relief Program
A dozen years ago, New Jersey’s Homestead benefit program reached what turned out to be its zenith. It doubled in size in one year to over $2.2 billion; its more than 2.5 million recipients represented more than 80 percent of households; and it accounted for nearly $1 of every $15 spent in that year’s state budget.
“First and foremost, this is a property tax relief budget,” then-Gov. Jon Corzine said in 2007.
Since then, the program has shrunk significantly – with renters cut out first, then income qualification limits lowered, and finally waves of people losing eligibility as their incomes rose with inflation while those thresholds stayed stagnant.
It now accounts for $1 of every $135 in Gov. Phil Murphy’s budget plan.
“$283 million of a Homestead rebate – direct property tax relief,” Murphy said in a Facebook Live chat promoting his budget plan.
The number of people in the program is projected to dip under 580,000 in the coming year.
The number of senior homeowners in the program will be down 22 percent since 2007. The number of non-seniors down 85 percent.
Benefits for those still in the program are also 58 percent smaller than in 2007. Inflation in that time has been 24 percent.
During the same time, the average property tax bill is up 29 percent.
Around 63 percent of senior-owned households receive Homestead benefits, which are available to those with incomes under $150,000.
For non-seniors, the income threshold is $75,000, and around 12 percent of such households are expected to get credits next year. Non-seniors on the program will number 177,400, more than 1 million fewer than in 2007.
The median household income for owner-occupied homes in New Jersey is $101,103.
MAP IT: Compare your rebate to the average of every town. See below.
A growing burden
Asked if the direct property tax relief in the proposed budget is enough, state Sen. Declan O’Scanlon scoffed.
“There is no real property tax relief in this budget. Come on,” the Monmouth County Republican said.
But O’Scanlon doesn’t pivot to increasing Homestead benefits, which aren’t generally part of the property tax debate in Trenton. Last year, it was discussed only to the extent that Assembly Speaker Craig Coughlin, D-Middlesex, insisted that Murphy provide the funding needed to reverse a cut to the program’s funding made in then-Gov. Chris Christie’s last budget.
Spending cuts through changes in public workers benefits are the prism through which property tax savings are now generally broached, by lawmakers in both parties.
“We’ve tinkered around taxes for years, and none of that has reduced it,” said Assembly Majority Leader Louis Greenwald, D-Camden. “So I hope as I stand here today that we can begin a conversation about deeply reducing the burden of property taxpayers for our residents, not just holding it to minimum levels of increases, and doing it as we did today on pension reform, on pension concessions, health care concessions and truly funding our school funding formula.”
Murphy points to increased school aid and health-benefits changes negotiated with public-worker unions that will save money for local governments and, in turn, property taxes.
“It’s not where it needs to be or I’m happy with yet, but we’re laser-focused on taking a whole series of steps that ultimately will chop through that,” Murphy said.
Murphy’s proposed budget spends $535 million on direct property taxpayer relief programs – a handful of credits, deductions and reimbursements, all of which are seeing declining participation, just like the Homestead benefit. That’s a $22 million decline from current spending.
The budget also anticipates foregoing $710 million in tax revenues due to property tax deductions, through which taxpayers can lower their income tax bills by reducing their taxable income. Murphy’s first budget increased the amount that can be deducted from $10,000 to $15,000.
For the state budget, property tax deductions also have a hidden benefit: Tax expenditures don’t actually get appropriated and therefore don’t count toward the spending plan’s $38.6 billion bottom line.
Data source: Governor’s Detailed Budget, state Department of the Treasury. Homestead credit data is from the three most recent tax years available for that program: 2013, 2015 and 2016. Senior Freeze data is from the most recent three tax years available for that program: 2015-2017. Analysis by Michael Symons; map by Sergio Bichao.