School officials suggest lifting cap on property tax hikes to boost school funding

Local school officials asked Assembly lawmakers on Monday to temporarily loosen a state cap on property tax hikes in a bid to head off sharp cuts to state school aid in more than 150 New Jersey districts.

More than a quarter of New Jersey’s districts are facing $157 million in collective cuts as New Jersey continues to redistribute school aid under a 2018 law that has become known by its bill number, S2.

Lisa Rodgers, president of South Brunswick’s school board, said the district’s aid cuts are too steep to be made up by property tax hikes, which are capped at 2% by state law.

“Lift the 2% cap so that districts that are currently underfunded can obtain that money. That’s a short-term fix, not a long-term fix,” Rodgers told the Assembly Budget Committee.

A longer-term solution would require reforming the School Funding Reform Act of 2008, which set the state’s funding formula, Rodgers said. South Brunswick is set to lose $4.1 million in state aid in the coming fiscal year because of the formula, a roughly 21% cut from the current fiscal year.

Gov. Chris Christie signed a bill limiting property tax increases to 2% in 2010. The cap does allow for larger increases, but obtaining them requires voters to approve the increases at the ballot box.

While the cap has proven successful at slowing increases of New Jersey’s highest-in-the-nation property tax bills, it has also introduced a measure of uncertainty into municipal budgeting by making towns and cities less able to respond to cash shortages or rising costs.

Lawmakers have floated cap reform before. Sen. Paul Sarlo (D-Bergen), the Senate’s budget committee chair, suggested lawmakers could look to reform municipal caps at a budget hearing last week, but it was unclear whether he was referring to the 2% tax cap or a separate 2.5% cap on municipal spending increases.

Sarlo declined requests to elaborate.

Lawmakers are set to reverse most of the state school aid cuts by approving a bill awarding $103 million in special aid to those districts set to lose funding in the coming fiscal year, which begins July 1. The Senate unanimously approved the bill last week, and it’s expected to clear the Assembly Thursday.