'Cap 2.0' – Not Quite a Done Deal, but Close

See also:

• NJSBA: Lawmakers Must Consider Full Toolkit, Consider Special Ed Cap Exception
• A Comparison of Current Cap and the Compromise Plan
• NJSBA Beliefs on Budget Caps

Gov. Chris Christie and Senate President Stephen Sweeney on Saturday reached agreement on a new, 2-percent tax levy cap for school districts and local governments.  Previously, the two leaders had proposed alternate plans to reduce the current cap level and the number of exceptions to the growth limit. Announcement of the compromise came three days after the governor called the Legislature into special session to deal with the cap issue.

The compromise includes two adjustments that were not part of Christie’s original hard-cap proposal: health benefit cost increases and, according to newspaper accounts, unanticipated increases in enrollment. In addition, the proposal would allow voters to approve tax levy increases in excess of the cap by a simple majority. Currently, such “second questions” need approval by 60 percent of participating voters. Christie’s original plan allowed “over-cap” ballot questions that would require supermajority approval, while Sen. Sweeney’s original proposal did not provide for any voter override of caps.

Half the amount of the current tax levy growth limit, the compromise 2-percent cap is also below both the governor’s (2.5%) and Senate president’s (2.9%) original proposals.  In addition, it is less than Consumer Price Indices applicable to the state: New York City-Northern New Jersey, 2.2 percent; and Philadelphia-Southern New Jersey, 2.6 percent.

At posting time, the compromise cap plan was not available in print. Therefore, NJSBA could not provide a thorough analysis of the proposal. The Senate and Assembly had passed Sen. Sweeney’s original 2.9-percent cap legislation, S-29/A3065, on June 28.  While the governor will not sign that bill, he could “conditionally veto” it so that it reflects the compromise. In such a case, both houses of the Legislature would have to approve the governor’s recommended changes for the compromise plan to be enacted.

Assembly Not Signed On  Assembly Speaker Sheila Oliver has not endorsed the compromise plan.  She said the lower house will take a deliberative approach to addressing the cap issue.  The Assembly Budget Committee was slated to address the subject Wednesday. The Senate Budget and Appropriations Committee will discuss the matter Thursday.

No Constitutional Change Christie’s original Cap 2.5 plan would have been implemented as a Constitutional amendment appearing on the November General Election ballot.  In contrast, the compromise 2.0 proposal would be established through a bill passed by both houses of the Legislature and signed by the governor.  In a speech to the Legislature last Wednesday, the governor said he was willing to compromise by proceeding through legislation, rather than a constitutional amendment.

(See chart comparing the state’s current 4-percent tax levy cap and the compromise plan.)

Seek Special Ed Adjustment  Although it sets a lower cap, the Christie-Sweeney compromise provides adjustments sought by NJSBA, including enrollment increases and health benefit costs.  NJSBA supports reasonable caps on local tax levies, but believes that exceptions are necessary to address costs clearly outside a local school district’s control.  One such cost not addressed in the compromise plan is extraordinary special education placements.  Last week, the Association advocated such an adjustment in the new cap law.

NJSBA asks local school board members to contact their legislative representatives, as well as members of the Senate Budget and Appropriations Committee and the Assembly Budget Committee, in support of a cap adjustment for increases in extraordinary special education costs.  These costs often result from court orders based on underfunded federal and state requirements. The current cap law permits waivers for such costs.

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