Governor pushes
property-tax relief plan
BY COLLEEN LUTOLF
Staff Writer

In a tour to promote his new tax relief plan, Gov. James E. McGreevey last week sat with reporters to review his "three-pronged" FAIR (Fair and Immediate Relief) tax relief plan.

The plan includes what McGreevey has dubbed a "millionaires’ tax" that would place a 2.6 percent tax on households making $500,000 or more annually, as well as a 2.5 percent cap on administrative spending and a proposed constitutional convention on property taxes that would allow New Jersey’s citizens to make recommendations to the state legislation.

While eating what appeared to be a turkey sandwich, McGreevey said the millionaires’ tax, which one critic called a "Robin Hood fairy-tale" would raise $800 million for property tax relief.

McGreevey said that under President George W. Bush’s tax cuts, a family earning $550,000 received a $19,000 break. If McGreevey’s plan is instituted, that family will lose $825 of that amount annually.

The governor said the $800 million raised through the tax on high income taxpayers, which he said would be introduced to the Legislature this week, will be used only for property-tax relief.

"This doesn’t happen without the millionaires’ tax," he said. "Every dime, every cent goes back to property tax reform."

"I would argue that this is fair and equitable and the right thing to do," McGreevey said. "We all understand the importance of keeping seniors and middle class families in their homes."

Under the plan, approximately 40,000 seniors who are currently eligible for a maximum $775 homestead rebate, will see the maximum rebate rise to $1,200. The average rebate is expected to be $760.

Homeowners who earn less than $125,000 a year, will receive a maximum rebate of $800, according to a press release from the governor’s office.

McGreevey also proposes a 2.5 percent cap on administrative spending for municipalities and school districts.

"As a state, we need to look at innovative ways to control administrative costs," McGreevey, who served as mayor of Woodbridge Township before he was elected to his first term as governor, said.

Despite insurance rates increasing about 20 percent a year and teachers’ contracts also increasing annually, McGreevey did answer a question about whether he would be willing to take on the state’s teachers’ unions.

"The cap is the cap is the cap," he said. "It’s a 2.5 percent cap in overall spending."

McGreevey said New Jersey districts spend more in administrative costs than any state in the nation.

"The money needs to be in the classroom," he said. "This is good public policy."

McGreevey said he was not an "enthusiastic supporter" of the constitutional convention because the constitution is an "almost sacred document." Still, the governor said he was convinced to propose a constitutional convention on property tax reform to voters in 2005, which could be an election year for him.

"I wasn’t an enthusiastic supporter of the constitutional convention," he said. "But [former] Governor [Brendan] Byrne convinced me that it’s not the only way to fix the property tax crisis, but it is the best way."

McGreevey said 2005 was the first year that a constitutional convention could occur.

He said the state’s economic circumstances have greatly improved and that New Jersey’s revenues are the fourth strongest in the nation. He said his first two years in office, revenues were down.

McGreevey said the second reason that 2005 may be the right time for the convention is because "it will take time."

"A citizens task force will ensure an open, inclusive process," he said, adding that although time is needed to achieve a consensus, a citizens task force could be announced soon.