by Matthew D. Jessup on October 21, 2010
The New Jersey Legislature recently enacted P.L. 2010, c.44, better known as the 2 Percent Property Tax Levy Cap Law, or the 2 Percent Cap. The law is Governor Chris Christie’s attempt to bring property tax relief to the long-overtaxed residents of New Jersey.
The 2 Percent Cap prevents New Jersey municipalities from raising property taxes by more than 2 percent every year. The law does provide five exceptions to the 2 Percent Cap: (1) amounts required to be raised by taxation for capital expenditures, including debt service, (2) increases in pension contributions in excess of 2 percent, (3) increases in health care costs in excess of 2 percent (but no higher than the increase of the State Health Benefits Program), (4) extraordinary costs resulting from a declared emergency and (5) amounts approved by simple majority of voters voting at a special election.
The 2 Percent Cap will have a severe impact on municipal budgets in 2011. Whether Governor Christie’s 33-bill “toolkit” is approved by the Legislature and provides the assistance that municipalities desperately need in order to comply with the 2 Percent Cap remains to be seen. One thing is for sure: in the coming weeks and months, there will be countless questions asked regarding what expenses will be limited by, or “inside”, the 2 Percent Cap and what expenses will qualify as exclusions, or be “outside” the 2 Percent Cap.
As these questions are raised, debated and answered, we will keep you updated here.
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