Studies conflict on whether N.J. tax cap will benefit residents

TRENTON — A 2.5 percent property tax cap is either a great way to control taxes and government spending — or a terrible idea that will widen the gap between the rich and the poor while tethering towns to state aid, depending on which studies you consult. The latest analysis, released Monday by the right-leaning Manhattan Institute for Policy...

Joe Epstein/The Star-LedgerGov. Chris Christie answers questions posed to him by members of the audience on the 2.5 percent tax cap at the Hoboken Catholic Academy.
TRENTON — A 2.5 percent property tax cap is either a great way to control taxes and government spending — or a terrible idea that will widen the gap between the rich and the poor while tethering towns to state aid, depending on which studies you consult.

The latest analysis, released Monday by the right-leaning Manhattan Institute for Policy Research, said a tax cap will not harm student learning, despite the claims by educators that strangling property tax growth will lead to layoffs and less qualified teachers.

The institute said students in Massachusetts — Gov. Chris Christie’s model for his proposed constitutional cap on local property tax increases — score the same as or better than New Jersey students on U.S. Department of Education’s National Assessment of Educational Progress even as Bay State schools spend about $3,300, or 20 percent, less per pupil. The trend continued across several demographics and age levels, the study said.

"It’s really been a sea change in terms of tax burden for Massachusetts," said Josh Barro, the author of the study. "Massachusetts, even though it is spending significantly less per pupil in education than New Jersey, is managing to achieve clearly the country’s best educational outcomes."

As New Jersey struggles to climb out of the recovery, Christie wants to replace the state’s current 4 percent spending cap with a 2.5 percent limit and fewer exceptions, while giving towns more power in negotiating with workers unions. He’s scheduled to promote the cap today at the Manhattan Institute.

Left-leaning groups, though, warn about the perils of property tax caps. A 2008 study from the Center for Budget and Policy Priorities, a Washington-D.C. think tank, said overall government spending hardly decreased, because it was replaced by spending in other areas. And voters in wealthy towns had the wherewithal to override the caps. Meanwhile, Christie is cutting aid to towns and schools to cobble together a $29.3 billion budget for the fiscal year that begins in July.

Researchers on both sides of the debate agree that state aid — redistributed statewide taxes, such as income taxes — shot up in Massachusetts, but they disagree on how to measure the overall cost of taxes on residents.

Iris Lav, the author of the Center for Budget and Policy Priorities’ study, does not deny that New Jersey has a problem with rising property taxes. But she says the state should consolidate its mess of towns and school districts instead of lowering an artificial cap onto the current system, and emulate Massachusetts in other ways, such as spending money more wisely on education.

"You can become more efficient by becoming more efficient — but not by putting a cap on," Lav said.

Unions say Christie’s cap will cause layoffs and prevent workers from getting any raises at all, because pay boosts would be swallowed up by the rising costs of health care, energy, inflation and other mandates. Christie, though, shrugged off a record-breaking protest Saturday at the Statehouse and said the show of force had "absolutely no effect" on him. The Republican governor said he hoped the 30,000 to 35,000 protesters "had a good time, and I hope that it helped to spur Trenton’s economy."

Christie has begun promoting the tax cap around the state, and today he also scheduled to speak at a town-hall style event in Rutherford. He needs voters and the Democrat-controlled Legislature to get behind his proposed constitutional amendment. Three-fifths of Trenton lawmakers must approve the proposed amendment before it goes before voters in November, when a simple majority is needed.