New Jersey Governor, Legislature agree to compromise on "Cap 2.5"

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July 7, 2010

By Kyle Maichle

TRENTON, New Jersey: Governor Chris Christie and Democrats leading the New Jersey Legislature agreed to a compromise on the "Cap 2.5" Amendment. The announcement made over the Independence Day holiday ends tension between the Governor and legislative Democrats over fixing the state's property tax problems[1].

Under the compromise agreement, the new property tax cap will not be an amendment to the New Jersey Constitution. Instead, the cap will be statutory with all property tax increases issued by school districts and local governments limited to two percent. The new two percent cap will have more exemptions than what was proposed in the Governor's original two and a half percent cap. School districts and local governments would only avoid a referendum to go over the two percent cap to cover for increases in health insurance costs and pension payments along with debt service payments[1]. Also, exemptions would be granted to local governments and school districts if they incur expenses during a declared state of emergency[1].

The New Jersey Senate will vote on the two percent cap on July 8, 2010. If the cap is approved by both houses of the Legislature, the new cap will be in effect in January of 2011[1].

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