Saturday, November 1, 2008

Redistribution in New Jersey

We have had two forms of redistribution in New Jersey. One program takes state dollars and pours that money into urban school districts. Those districts now spend 50% more than suburban districts. The other is redistribution in the form of a homestead rebate. The rebate is currently 20% of property taxes up to $10,000 with the maximum rebate being $2,000.

The redistribution in the form of educational funding has massively raised property taxes in suburban areas. Those districts receive little funding from the state because all the money goes to the urban districts. The urban districts are as bad as they were before this funding increase started twenty years ago.

The redistribution in the form of the homestead rebate was cut back this year. Taxpayers with income between 150,000 and $250,000 did not receive a rebate of 10% of their property taxes as they last year. Those with New Jersey gross income above $100,000 received 10% of their property taxes back, down from 15% in the prior year. I think the New Jersey experience is relevant to the redistribution issue.

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