Bill to Allow Larger Property Tax Hikes in Municipalities Facing School Aid Cuts Moves Forward

The New Jersey Senate Education Committee has approved a bill allowing municipalities where a school district is scheduled to receive reduced State aid, to raise property taxes my more than the annual 2% cap.

Under a law signed by then Governor Chris Christie, a school district is generally prohibited from increasing its property tax levy by more than two percent compared to the previous school year.

This bill, which was approved by a 4-1 vote, would allow that the amount of the adjustment for school districts experiencing reductions in aid from the state, would be equal to the difference between the amount of aid received by the district in the previous school year and the amount of State aid received in the 2023-2024 school year or the 2024-2025 school year.

“By allowing for adjustments to the tax levy cap, this legislation ensures that our schools can maintain quality education and services despite financial constraints imposed by law, the bill’s sponsor, Senator Andrew Zwicker, said in a statement. “It’s about providing our districts with the flexibility they need to address unique financial challenges without compromising on our commitment to excellence in education.”

Another allowable adjustment would be permitted under the bill for a school district that is experiencing a reduction in State school aid and is spending below adequacy in any school year after the 2024-2025 school year.

Spending below adequacy means the district is not spending the funds necessary to achieve a thorough and efficient education for every student as calculated by the State.

For these districts, the allowable adjustment to the tax levy would be the amount necessary to make up for this difference.

The state’s funding formula, officially known as the School Funding Reform Act but referred to as S2, requires districts to contribute a “local fair share” to fund their adequacy budgets. The remainder of the adequacy budget is provided through state aid.

“Adequacy budget” refers to the cost of educating all public school students to meet state standards, including special education costs and costs for students from low-income backgrounds and non-English speakers.

Ever since the state enacted its new school funding formula in 2018, hundreds of school districts around the state have been seeing drastic reductions in the amount of aid received from the state, with some of the hardest hit districts in Monmouth and Ocean Counties.

But without the flexibility to raise taxes, municipalities are limited in what they can send the district.

In 2023, Lakewood Township collected a total of $246,522,429 in property taxes, with $112,123,194 (45%) going to the public school district.

For the current school year, the Lakewood public school district actually received a slight increase in aid from the state over the previous year, but Jackson, Toms River, Howell and Brick all experienced significant reductions, with many bracing for even more cuts in the Fiscal Year 2025 budget.

When New Jersey Governor Phil Murphy unveils his proposed budget on Tuesday, many are expecting to see some sort of tax hike, with a possible sales tax hike or a reinstation of the Corporate Business Tax (CBT) among the various options reportedly being considered.

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3 COMMENTS

  1. Sorry folks. Another disguised Umos Oilam money grab. Add this on to the real statistics we are getting (moderated) for and YOU and ME are losing our money beyond anything before.

  2. The way this sounds is a terrible idea for our elder retired folks. They are mostly on a fixed income and unable to get a job (which at this time in life shouldn’t have to). The law should be written in such a way that anyone over an age of let’s say 70 should NOT have this burden put upon them.

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