Cap Bill Rushed through Legislature

Will the 4 percent property tax cap bill, A-1—introduced late Friday afternoon and passed on Monday by the Assembly, 71-8—hurt or help public education?

Under such short time lines, a definitive answer is not possible. NJSBA, therefore, is urging the state Senate, which could address the bill as early as Monday, Feb. 5, to conduct a hearing to allow for analysis and comment on A-1. The 51-page bill would have a far-reaching impact on local school district operations.

“We don’t need another S-1701. When speed overtakes thoughtful review, the result can be a law that helps neither public education, nor property taxpayers,” said Edwina M. Lee, NJSBA executive director.

NJSBA has issued an alert, asking members to contact Senate President Codey and their state Senators and urge them to conduct a hearing on A-1.

State Aid Factor The full impact of A-1 will also depend on a factor that is unknown at this time: the future level of state aid to education. That information will not be available until the end of February when Gov. Jon S. Corzine delivers his annual budget message to the Legislature.

“If under-funding of state school aid continues, as it has since 2002, the new property tax cap could lead to education programs cuts,” said Lee.

New Concept A-1 would replace the existing state budget cap for five years (2007-2008 through 2011-2012). Unlike the state’s current spending growth limit, the new cap would restrict increases in property tax revenue only—rather than the combined increase in state aid, federal aid and local property tax revenue. Therefore, if state aid remains stagnant, school districts would have less access to local revenue to fund cost increases that are out of their control.

Adjustments A-1 would create automatic cap adjustments and an expanded list of waivers. The approval process, however, may be more restrictive than current practice.

Beginning in 2007-2008, school districts would receive automatic cap adjustments for reductions in state aid, increases in health care costs, and sharp increases in enrollment.

For 2007-2008, districts would continue to have the current option of appealing to the commissioner of education for cap waivers based on special education costs over $40,000 per pupil, increases in tuition charged through a sending-receiving relationship, capital outlay, and new school start-up expenses.

New Waivers Beginning in 2008-2009, the bill would expand the number of commissioner-authorized waivers, which would  include the following: expenditures that address a district’s failure to meet state academic standards; energy costs; use of surplus during the previous budget year; hazardous-route busing; insurance; extraordinary special education costs; new school start-up costs; and sending-receiving tuition.

Before granting the waiver, the state could shift allocations within the district’s proposed budget.

Super-majority For the 2007 Annual School Election, districts could still propose second questions for above-cap spending. Approval of the questions in this year’s election would require a simple majority vote, and defeated second questions would be reviewed by the municipal governing body.

Beginning in 2008, however, 60 percent of participating voters would have to approve the questions. Municipalities would no longer review defeated over-cap questions; voter action would be final.

Requiring supermajority approval of public questions is without precedent in New Jersey. Even amendments to the state Constitution require only a simple majority for approval