TRENTON — A day after New Jersey Gov. Chris Christie placed a 2 percent cap on the nation’s highest property taxes, towns are likely to trigger an exception to the law to cover a projected 12 percent increase in health-insurance costs. The rise in medical premiums for 2011 was presented to the State Health Benefits Commission today. Such costs...
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Seated at the testimony table with mayors from other New Jersey towns, East Windsor Mayor Janice Mironov speaks before the Assembly Budget Committee at the Statehouse on the 2 percent property tax cap.TRENTON — A day after New Jersey Gov. Chris Christie placed a 2 percent cap on the nation’s highest property taxes, towns are likely to trigger an exception to the law to cover a projected 12 percent increase in health-insurance costs.
The rise in medical premiums for 2011 was presented to the State Health Benefits Commission today. Such costs above 2 percent are exempt from New Jersey’s new limit on property-tax growth, under a compromise between Christie and Democrats who run the Legislature. The governor, a first-term Republican, had originally opposed exemptions for anything except debt payments.
“This is something the compromise included,” Christie’s spokesman, Michael Drewniak, said of the premium increases in an interview before Aon Employee Benefits Consulting appeared before the benefits commission in Trenton. “That’s not to say in the future we’re not going to have changes.”
Property taxes in New Jersey, the second-wealthiest U.S. state by income, rose 72 percent from 1999 to 2009 to an average of $7,281, according to data from the state Department of Community Affairs. Towns, schools and counties raised a total of $24 billion through the levy last year.
The law signed by Christie yesterday reduces the current 4 percent threshold on real-estate taxes, the prime funding source for schools and local governments, and cuts the number of exemptions to four from 14. Local governments get exceptions to cover bond payments, higher health insurance or pension costs and natural disasters. The new cap takes effect in 2011.
Waivers Sought
As Christie’s law aims to control local tax growth, eight communities received approval today from the state’s Local Finance Board for waivers from the current limit.
Newark, New Jersey’s largest city, is seeking approval from the same board to stay within the cap partly by converting its water system into a municipal authority to raise as much as $100 million over two years. Mayor Cory Booker, a Democrat who has endorsed Christie’s tax limit, told reporters in Newark today that without the water deal, property taxes would rise as much as 35 percent.
““If we don’t act now we are in danger of causing massive, monumental tax increases which would have painful consequences,” Booker said.
Waiver petitions such as the eight presented today will cease after this year, when the new cap law abolishes the Local Finance Board system, Drewniak said. Instead, towns hoping to exceed the 2 percent cap for reasons other than the listed exemptions would have to win voter approval in a local election.
$856 Million
The 360 of New Jersey’s 566 communities enrolled in the state health-insurance program paid $856 million into the system this year, according to Aon’s 2009 report to the Health Benefits Commission, and school boards paid $1.1 billion.
The program paid out $686 million in benefits to local government employees and $1.6 billion to school district workers in the year that ended June 30, 2009, according to the latest audit of the system.
The new rates will cost local governments a total of $869 million next year, Aon said in today’s report, which projected an overall increase in the premium rate of 11.6 percent. The benefits program covers 374,000 employees and retirees, and 437,000 of their family members, according to the state’s Division of Pensions and Benefits 2009 Annual Report.