The state Senate on Tuesday gave final legislative approval to a bill that would establish 4 percent property tax caps on school, municipal and fire district budgets. A-1 would also provide residents with property tax credits, funded through part of the new revenue generated by last year’s 1-cent sales tax increase.

The new cap would apply to property tax revenue only. Therefore, if districts face flat state aid—as they have since 2002—they will no longer be able to rely on local revenue to cover cost increases that are out of their control. The result could be cuts in school programs.

Gov. Jon S. Corzine has insisted that the Legislature pass a property tax credit and cap bill prior to his budget message, scheduled for later this month.

Correct Errors NJSBA plans to ask the governor to send the bill back to the Legislature with recommendations for changes and corrections (a “conditional veto”).

Changes sought by NJSBA include–

• Eliminating the 60-percent voter-approval requirement for above-cap ballot questions.
  
  
• Providing a cap exemption for hazardous-route busing increases in 2007-2008.
  
  
• Maintaining municipal review of defeated above-cap questions in 2008-2009 and after.
  
  
• Eliminating an unintended financial penalty on sending districts that seek cap waivers for increases in tuition charged by receiving districts.

Rush to Enactment The legislation was introduced on Friday, Jan. 26 and passed by the Assembly on Monday, Jan. 29. NJSBA had urged the Senate to slow down the process and conduct a hearing.

Last week, along with other education organizations, NJSBA began seeking amendments to A-1, which are critical to avoid education program cuts.

Visit www.njsba.org for updates on the cap bill.