TRENTON, N.J. – Republicans introduced legislation Monday (A5253) that would increase the state’s school funding obligations and lower property taxes by using state income tax revenue, which can more than pay for the plan without taking money from the surplus.
The plan was dropped the day before Gov. Phil Murphy’s budget address to challenge claims that he is fully funding schools and providing tax relief, which Republicans contend isn’t true.
“Property tax relief means property taxes go down. Saying property tax relief doesn’t manifest it in tax bills,” said Assemblyman John DiMaio (R-Warren), the Republican Leader and prime sponsor of the bill. “And a school isn’t fully funded until it reaches its adequacy budget. That target should be a district’s minimum funding level, not the maximum.”
School property taxes have increased by more than $1.1 billion under Murphy, around 2% each year as school districts push their property tax cap. Republicans propose lowering those taxes by at least $1.2 billion in the first year. That averages to a 7% cut on each bill.
Murphy also announced plans Tuesday to increase school funding, but won’t fund schools up to their formula-defined adequacy budget – the minimum level to provide a thorough and efficient education as required by the state Constitution – which Republicans propose the state should do. Despite increasing aid by $832 million, nearly $240 million is coming from cuts to other schools. The only schools that are over their adequacy budget have the highest property taxes. DiMaio wants the state to fund every school up to adequacy to lower property taxes.
“There is enough revenue each year to fully fund schools up to adequacy so we can lower the share people pay through property taxes,” DiMaio continued. “Income-tax payers and property-tax payers are the same people. They deserve a break on one of those taxes, and property taxes have a larger effect on the working-poor and middle-class so we focused on cutting that by increasing the state’s funding obligation.”
DiMaio has left sponsorships open hoping that there will be a bipartisan effort on the bill, which he worked on for a year with education and property tax stakeholders.
“We want the best possible solution for all parties involved, so we kept politics out of the conversation and focused purely on policy,” DiMaio affirmed. “Every school district in the state benefits from the plan and so does every tax paying resident. It might seem too good to be true, but it is possible when politics are taken out of the equation.”
To ensure middle-class and low-income residents benefit the most, the plan adheres to standards for poverty-level housing costs that are 30% or more of a household’s income. That means property taxes should be no more than 5% of housing costs.
Every year a district receives an increase in state aid, it would have to lower property taxes until they fall below 5% of a school districts’ income, which the school funding formula defines as residential income within the borders of the school district.
“Equitable funding means providing more aid to people based on what they can afford. That has never been done before,” iterated DiMaio. “This legislation is an opportunity to do that. Importantly, this is property tax relief every year and doesn’t require anybody to fill out a form to receive money they already worked for.”
Appropriating $2.95 billion to fully meet the needs of school districts as set by the state’s funding formula passed in 2008 is more than enough to provide additional help for school districts whose property taxes are higher than they should be due to years of underfunding.
Districts would be allowed to petition the state for additional aid if they agree to lower their tax levy by an equal amount. Taxes could then be increased from the lowered levy baseline, providing tax relief while providing more funding.
“It’s important because we have to recognize that taxes are unaffordable even for people in school districts that are already heavily subsidized by the state,” DiMaio exclaimed. “There is a significant connection between household wealth and educational attainment. Lowering property taxes and increasing state aid will help students and their families.”
Included in the bill is financial help for districts cut under a state law passed in 2018 so they can rehire teachers, reinstate lost programs, better address learning loss, and provide mental health services among other needs. Property taxes have not been able to rise enough to offset the loss of state aid.
“We really want to help every single school district that needs it,” concluded DiMaio.