The measure would apply to that allow school districts that have lost aid as the state shakes up its funding formula. It would allow these districts to make up their losses by exceeding the 2-percent cap on tax increases.
Gov. Phil Murphy, a Democrat, has already come out against the measure, which was introduced just three weeks ago by Senate President Stephen Sweeney.
The state is in the midst of a controversial, years-long overhaul of the school funding formula, undertaken by Sweeney, to reduce state aid to those considered overfunded send more money to those considered underfunded.
At the same time, the state is putting more and more money into schools, and in the end, every district should get 100 percent of what is owed.
Nearly 370 districts are seeing their aid increase, while 172 districts have been cut. And officials in those districts losing money over seven years have warned of steep budget cuts, massive layoffs and program reductions.
New Jersey’s school funding formula tells the state exactly how much each district should spend, how much of a district’s funding should come from the state and how much the district should generate in local property tax revenue.
The 172 districts losing state aid have been receiving more than the formula says they need.
Some have been spending at or more than the state says they should in order to provide a quality education, according an Education Law Center analysis. Others have not been generating enough local tax revenue to meet their responsibility to fund their schools, and Sweeney has characterized them as using the state as a piggybank.
Sweeney’s bill would allow those districts to exceed the 2-percent cap passed under former Gov. Chris Christie that limits how much local districts can raise their tax levies each year. Senate Paul Sarlo, chairman of the Senate Budget Committee, said he’s aware of 40 local districts that would be able to exceed the 2-percent cap if the bill becomes law.
“School districts will have the ability to automatically raise taxes beyond the existing state cap in order to make up for those budget shortfalls, but only as high as is necessary to adequately fund programming and employment," Assemblywoman Angela McKnight, D-Hudson. “Dozens of school districts, including those in Jersey City, will benefit from this legislation ..."
The Senate voted 24-15 in favor of the measure, followed by a vote of 41-26 with four abstentions in the Assembly. Based on the vote tally, the Legislature wouldn’t appear to have enough votes to override the governor if he vetoes the bill.
“We need to ensure that students do not suffer in districts that are now taking cuts after receiving more than their fair share of state aid for more than a decade,” Sweeney said in a news release announcing the proposed change.
“The new law will give school boards in these districts the ability to make up for past years when they had no incentive to provide their Local Fair Share because the Adjustment Aid windfall they were getting gave them no reason to do so.”
That 2-percent cap been credited for slowing the rate of growth of New Jersey’s sky-high property tax bills. The average tax bill in New Jersey was $8,767 last year.
Murphy quickly rejected Sweeney’s plan, saying the Senate leader should reconsider raising sales taxes and gross income taxes on people with income over $1 million, instead.
“Before middle-class property taxpayers have to again take it on the chin, we should be asking our wealthiest residents to pay their fair share through a millionaire’s tax and undoing Governor Christie’s tax gimmicks, including the sales tax reduction," Murphy said a statement. "We have a broadly popular plan for investing more deeply in our school districts without requiring them to raise property taxes.”
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