Gov. Phil Murphy (Danielle Richards for New Jersey Monitor)
Gov. Phil Murphy on Thursday announced a $900 million replacement for the aging and perennially underfunded Homestead Benefit Program, the latest plan in Murphy’s second-term push to make New Jersey more affordable.
The proposal — the Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) Property Tax Relief Program — would boost direct relief to homeowners and extend smaller rebates to some renters. Murphy will formally propose the program during his budget address on Tuesday.
“Inconsistent funding and constantly changing rules have led many to never really fully know whether they qualify for a rebate, how much it would be, and when it would arrive,” Murphy said at a press conference in Fair Lawn. “The time has come to recognize that continuing to rewrite and rewrite the Homestead program renders its meaning to more and more families meaningless. Continuing along this path is no longer tenable.”
On average, homeowners earning less than $250,000 would receive an average credit of $700 in the coming fiscal year. Renters whose income does not exceed $100,000 would be eligible for a rebate of up to $250.
That funding would ramp up through fiscal year 2025, to $1.5 billion, Murphy said, and average awards for homeowners would then rise to $1,150. That is nearly twice the average $626 rebate meted out by Homestead.
Up to 1.8 million residents would be eligible in the coming fiscal year, Murphy said, compared to about 470,000 who benefit from Homestead.
“More than 5 million New Jerseyans live in a household set to receive relief through ANCHOR,” Murphy said. “This is relief that will provide greater protection from property taxes, and this is relief that will allow those folks to stay in their homes.”
Murphy said he spoke with Assembly Speaker Craig Coughlin (D-Middlesex) and Senate President Nicholas Scutari (D-Union) about the proposal. Coughlin called the plan “bold” in a statement Thursday.
Both chambers have focused on affordability issues after suffering their worst legislative defeats in more than a decade last year.
Despite its popularity, the Homestead program has often been ignored by lawmakers during annual budget negotiations. Until lawmakers updated the program last year, it calculated awards using 2006 tax bills.
The state’s average property tax bill has risen more than 42% since then, to $9,284 last year, according to data maintained by the Department of Community Affairs. Last year, lawmakers updated Homestead to use 2017 tax bills, raising the average award by about $130.
“We will continue to invest in ANCHOR so it meets the levels of relief promised back in 2007,” Murphy said. “Put another way, ANCHOR will represent the first time in nearly 20 years that we will fully fund direct property tax relief.”
Senate Republicans on Thursday announced their own tax credit plan, which would offer tax credits of $500 for single filers — or $1,000 for joint filers — with annual incomes of less than $500,000.
Those credits would be paid out for tax returns filed in April and funded by a $4 billion surge in the state’s tax collections. They would be refundable, meaning if you qualify and the amount is larger than the tax you owe, you would receive the difference as a refund.
Assemblyman John DiMaio (R-Warren) in a statement panned Murphy’s proposal, saying state programs have not kept property taxes from rising. The newest plan would be like “putting gauze over a permanent wound instead of a Band-Aid,” he said.
“The root causes of higher property taxes continue to be unaddressed,” said DiMaio. “School funding hasn’t stopped increases. Homestead benefits and senior freeze haven’t stopped increases. And municipal aid hasn’t stopped increases. At some point Democrats have to realize state spending doesn’t address municipal problems.”
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