Democrats say bills to ease tax burden are in response to November elections
A Senate panel kicked off the new legislative session Thursday by advancing a series of bills lawmakers say are intended to address New Jersey’s ever-rising cost of living.
The Senate Community and Urban Affairs Committee approved bills aiming to reduce residents’ tax burdens by increasing a deduction for renters and requiring municipalities reduce their property tax levies after receiving certain types of state aid.
“It was made crystal clear by the electorate this past November that New Jersey’s affordability has reached crisis levels,” said Sen. Troy Singleton (D-Burlington). “We have to do more to make sure, as policymakers, we are enacting policies that are cognizant of that fact and do things to bend the curve to correct it.”
New Jersey Democrats were distressed by Republican turnout in November that thinned Democratic majorities in both chambers to their slimmest in years. In the aftermath, the majority party has turned its focus to the state’s cost of living.
“That’s going to be the forefront of what we’re doing this year — trying to make New Jersey more affordable,” Senate President Nicholas Scutari (D-Union) said.
Under existing law, New Jersey renters can deduct up to 18% of their annual rental payments from their tax bill. A measure sponsored by Singleton, the committee’s chairman, and advanced Thursday would raise that deduction to 30%.
The bill was amended to take effect immediately upon its passage and could be amended again later to allow for the deduction to apply to people living in rental units in buildings that make payments in lieu of property taxes.
If it becomes law, the deduction would cost the state between $83 million and $131 million in lost revenue, the Office of Legislative Services predicted in a fiscal note attached to the bill in the previous legislative session, adding its yet-undetermined impact on the rental market could leave the costs outside those bounds.
The sponsor said he expects the measure to drive economic activity among members of New Jersey’s middle class.
“We know that these individuals not only save for a rainy day, but it’s raining often in their lives, so they’re spending money, putting it back in through the economy,” Singleton said. “We believe this will actually have a multiplier on our economy and help drive it.”
Undoing Great Recession cuts
A separate bill would restore payments to municipalities from the Energy Tax Receipts Property Tax Relief Fund and under Consolidated Municipal Property Tax Relief Aid to their 2008 levels and require municipalities offset their tax collections to account for the additional aid.
Some of those funds were diverted to the state in fiscal years 2009, 2010, and 2011 amid budget constraints caused by the Great Recession, dropping by roughly $331 million in total, and were never restored.
Those increases wouldn’t take effect until fiscal year 2023, which begins in July. Twenty percent of the cut funding would be restored then, with identical increases for the next four years.
A break for struggling homeowners
The committee also approved a measure requiring lenders to give mortgage forbearances to homeowners facing pandemic-related financial hardship.
To qualify, homeowners must affirm to their lender they were financially impacted by the COVID-19 crisis, earn no more than 150% of their area’s median income, and have less than six months’ wages in their bank accounts.
If approved by lenders, the forbearances would last 90 days and could be extended for an additional 90 days.
The panel also advanced bills increasing the amount of money counties and municipalities can contribute to volunteer emergency medical services and allowing local and county governments to create regional economic development partnerships.
Existing law allows counties and municipalities to contribute $70,000 to volunteer first aid, ambulance, and rescue companies. They can give another $35,000 in situations of dire need. The bill would raise those limits to $125,000 and $70,000, respectively.
The committee unanimously approved each of the five bills. A sixth piece of legislation, sponsored by Sen. James Holzapfel (R-Ocean), that would have eliminated a tax on home sales was pulled from the committee’s agenda.