Did New Jersey Signal the Start of a Property Tax Rebellion?

New Jersey is one of a handful of states where voters are allowed to approve school budgets. For years, Garden State residents have criticized these elections as expensive and pointless since the results were widely ignored and the spending plans usually passed anyway. That perception has now changed dramatically, and now, policymakers in other states had better pay attention.

According to the Newark Star-Ledger, record numbers of New Jerseyans last night voiced their anger at their state's property taxes, which are among the highest in the U.S., and voted down 260 of 479 school budgets across 19 counties. This is the first time since 1976 that more than 50% of the education spending plans failed to pass. My local school district in South Jersey held taxes flat. Voters approved the spending plan.

"Misleading Oversimplification"

Believe it or not, people were also following the advice of Governor Chris Christie, who called on voters to reject spending plans in districts that didn't freeze wages for teachers for one year. The New Jersey Education Association, the state's largest teachers' union, has emerged as the Republican governor's biggest foe, vowing to fight his plans to slash state aid to education by $820 million. Neither Christie's office nor the NJEA were immediately available for comment. The bitterness of the debate, though, has surprised many political observers.

"I don't think that any of this was unexpected, given the climate and the economy," says Jon Shure, who served as press secretary to Democratic Governor Jim Florio and now works at the Center for Budget and Policy Priorities.

"You don't usually see the politics of rage from political leaders in New Jersey," Shure notes. "It suggests that the fiscal problems New Jersey faces are the result of teachers and other public employees. It's a misleading oversimplification."

School Funding Increasingly Political

Though the fight in New Jersey has taken on some colorful twists, the issues being raised are not unique as state budgets continue to get squeezed by declining tax revenue. Education usually enjoys bipartisan support in most state legislatures. The same cannot be said for property taxes, which even during times of economic prosperity, are a lightening rod.

New Jersey residents have a rare chance to voice their discontent at the polls. Funding schools in the state and the rest of the country is becoming increasingly political.

"This is not something like funding for the arts or things like it, which tend not to be popular with some people," says Kail Padgitt, an economist with the Taxpayer Foundation. Voters are "tired of the spending that is going on."

Protest Groups Mushroom

Record numbers of homeowners are protesting their property tax assessments. Protest groups have formed in Missouri and Illinois, while Michigan's highest tax court has 24,000 appeals pending, according to The Wall Street Journal. Business is booming at Property Tax Protest, a Dallas company that helps Texas residents battle local governments to lower their assessments, says Jonathan Kutner, a senior property tax consultant.

Says Kutner: "People are not waiting."