Property tax showdown?

Juggling one household’s bills isn’t easy.

Juggling two? Families say they need all the help they can get.

Cala Nanda’s family worries about two property tax bills, one for the Highland Park home she owns with her husband, and the second for her father-in-law, who lives in a home next door.

“My father-in-law is now 92 and he lives by himself. My husband is there every day helping him out,” she said, noting that while her widowed father-in-law’s fixed income covers his expenses, living next door allows him independence without hiring expensive professionals.

The senior Nanda pays more than $9,000 in property taxes, twice the tax on the Maryland home he sold in 2017 to be closer to family, she said.

“It was a big jump,” Nanda said. “Suddenly monthly expenses were up significantly.”

The Nandas are among the millions of New Jersey families whose property tax bills would be transformed by Stay NJ, a sweeping property tax savings law passed last year that would cut property tax bills for senior citizens who earn less than $500,000 by up to 50%, capped at $6,500, starting in 2026.

But passing the law is one thing. Finding a way to pay for it is another.

Tension is growing behind the scenes between state lawmakers who want to secure more funding for Stay NJ in the state budget and Gov. Phil Murphy, who is pushing to install a corporate transit fee, meant to provide a continuous funding source for the perpetually cash-strapped NJ Transit. The difference in spending priorities could lead to a contentious battle over the budget, with the potential for the state government shutting down if talks sour, sources familiar with the discussions have told NJ Advance Media.

The blueprint now under discussion by the seven-person Stay NJ Task Force, the committee responsible for recommending how to implement the law and how to pay for it, would upend the state’s current property tax break regime, said the sources, who spoke on the condition of anonymity to openly discuss the matter.

The task force is staring down a May 30 deadline to release its recommendations, which could strongly influence decisions on how the state government will spend taxpayer money in the fiscal year that begins July 1.

The recommendations are expected to include:

Beyond the specific program changes that will be felt by homeowners and renters, the Stay NJ law compels the state to meet certain financial thresholds before the program can launch. And as lawmakers begin negotiations in the first of what are expected to be several tight state budget years, what the task force recommends could shape how other priorities — including Murphy’s proposed corporate transit fee — are ultimately hammered out.

STAY OR GO?

Ken and Mary Ellen Nelson are in limbo.

They sold their five-bedroom home in Wantage, Sussex County, in August 2023, but they haven’t decided on their next permanent residence.

“We could downsize in New Jersey but are we going to save any money? No. Florida or North Carolina, that could save a lot of money,” said Ken Nelson, 76, who said their property taxes were $3,000 when they bought their home in the late 1980s.

The price tag rose to more than $10,000 by the time they sold, surpassing the state’s average property tax bill, which hit a record high of $9,803 in 2023, up 3.3% from the year before, according to data from the state Department of Community Affairs.

The couple, who is temporarily staying in their out-of-state vacation home, said they didn’t move out only because of property taxes, but it was a factor. With four adult children out of their five-bedroom house, they didn’t need it anymore, he said.

Nelson said he has doubts about Stay NJ.

“Stay NJ, are they really going to fund it and will it stay long term or will it be something that disappears?” he asked. “There are a lot of seniors, no matter what, who are going to stay in New Jersey because their family is here. The Stay NJ program will not have any impact on them staying. It’s just going to be a windfall.”

Instead, Nelson said, Stay NJ could have unintended consequences. The state already has a housing crunch. If the tax cut stops seniors from moving or downsizing and the housing stock doesn’t turn over, it will be harder for younger families to get a foothold here, he reasoned.

Nelson, who served on his local school board, said he would rather see the state cut other costs, for example, by merging municipal services.

“Could I return to New Jersey someday? Maybe. But Stay NJ, by itself, won’t make that happen,” he said.

WHAT ABOUT YOUNGER FOLKS?

Lynn Newman, 68, doesn’t think seniors are the only ones who need property tax breaks.

“No matter what your age is, if you’re a homeowner in New Jersey, you’re paying high property taxes and if you’re a young person, you might have a large mortgage payment — larger than mine, larger than a lot of people my age,” Newman said.

“I don’t believe a small slice of homeowners should get a special break. Someone who is young could use that kind of help, too,” she said.

Senior citizens who are 65 and older make up 17.4% of New Jersey’s population, according to U.S. Census data.

Newman settled down in Morris Plans, where she was born, after she married her husband David 40 years ago.

They bought their split-level, which they still call home, in 1986.

The couple raised two children in the 1,700-square-foot three-bedroom home, which had a property tax bill of about $3,000.

It’s now just shy of $11,000 a year, she said.

Newman said she worries that to fund Stay NJ to benefit what she called “a small group of people,” lawmakers will have to divert money from other programs.

“It was not lost on me that this came about before last November’s election,” she said, noting the property tax break was passed just as all 120 seats in the state Legislature were up for grabs.

“Responsible officials should stop feeding taxpayers pablum,” Newman said. “They should spend taxpayer money more effectively and cut taxes for all.”

A FIGHT AHEAD?

The politics of Stay NJ, at the outset, might seem simple: What politician wouldn’t want to boast a huge tax cut for their constituents?

But there could be a showdown ahead, with senior citizens on one side and commuters on the other.

Both groups are expected to become hefty bargaining tools as the governor and top state lawmakers negotiate the new state budget while facing tax revenue that’s 2.3% lower than the year before and the end of pandemic-era federal cash infusions.

Murphy’s biggest budget ask is a corporate transit fee, a 2.5% tax on wealthy corporations, earmarked exclusively to fund the beleaguered NJ Transit.

While the governor included $200 million to ramp up Stay NJ in his budget, the state must meet several thresholds — including a surplus equal to 12% of the budget — for the tax cut to launch in fiscal year 2026. Critics argue more money is needed to prepare for that, setting the stage for a duel between tax relief and transit funding priorities.

In exchange for supporting the transit fee, Stay NJ’s author, state Assembly Speaker Craig Coughlin, D-Middlesex, could press for more property tax relief in the budget, including assurances that Stay NJ will be funded, three sources said.

Coughlin could ask to use a portion of the new tax to help fund Stay NJ, said one source, who called full funding for the program and other property tax relief the speaker’s “No. 1 priority.”

There’s a long way to go. Right now, sources said, budget talks are still in the early discussion phase.

But if Murphy and Coughlin don’t come to an agreement by the June 30 deadline for the state to enact a budget, it could lead to a state government shutdown. That means state parks and services could be shuttered around the July 4 holiday week, which is what happened in 2017, when then-Gov. Chris Christie shut down the government over a budget fight — one that included those famous photos of Christie on the beach.

Asked about the road ahead for Stay NJ, Coughlin told NJ Advance Media he is “encouraged“ by the task force’s work so far and he is “looking forward to an effective rollout of the program.”

The governor’s office declined to comment on ongoing budget negotiations.

MONEY ISN’T EVERYTHING

For Tom and Beverly Holoman, it’s their four-year-old granddaughter.

The couple has lived in their South Bound Brook home for 40 years, when property taxes were about $1,600 a year. They said they’re not going anywhere even though their property tax bill has hit $10,200.

“We considered moving,” said Tom Holoman, 72, but the couple didn’t want to leave their two daughters and their only grandchild, who live just a few miles away.

Holoman said for now, they can afford their property tax bill, but he called a 50% property tax cut “considerable savings.” It would allow them to do some work on their home, travel “before we are too old to do it,” and help their children financially should they need it, he said.

He said he looks at decisions made in Trenton through a lens that focuses on his adult children and what their future will look like.

“My biggest concern is the budget every year. This budget is mind-boggling,” he said, noting that he’s not a fan of spending money on boardwalks. “I think it’s going to be more and more difficult for people’s children to stay in the state and I think it’s going to be more and more difficult for older people to afford it.”

“Things that politicians talk about don’t always happen, especially concerning property taxes,” Holoman said.

“And really, where would I go if I sold my house?” he said.

HELPING GENERATIONS?

The Nandas are the kinds of young professionals New Jersey wants to keep.

Cala Nanda, a nurse, said the Stay NJ tax cut would make a big difference for her family, even though she and her husband Vik, 50, a professor, are too young to qualify.

They live in Highland Park with their two children, 12 and 10, right next door to Vik’s father Ved, 92.

Ved’s tax bill of more than $9,000 would be cut in half under Stay NJ, while the younger Nandas pay $10,259 a year for what Cala Nanda describes as a “two-story beige box,” up from $7,568 when they purchased the home in 2008 — a more than 35% increase.

“We struggle because we know Highland Park has higher taxes for the value of our home, but we stay because our kids can walk everywhere, we know a lot of people in town and we’re not sure what value we would get from moving to another place,” she said, noting her husband, a professor at the Rutgers Busch campus, takes his bike to work every day.

She doesn’t think they would move unless they could find a home where they all — including her father-in-law — could live comfortably.

“We’re stretched pretty thin. Stay NJ would just ease the burden of having to stay here significantly,” she said.