Star Leger on West Oragne Taxation

Which candidate will dare to cross the West Orange Line?

Print By Paul Mulshine/The Star Ledger
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on October 07, 2013 at 7:30 AM, updated October 08, 2013 at 11:01 AM


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Gov. Chris Christie meets state Sen. Barbara Buono in a debate Tuesday eveningStar-Ledger file photos 

 

Property taxes will be a big issue in this evening’s gubernatorial debate between Gov. Chris Christie and his Democratic challenger Barbara Buono. So just for the fun of it, I thought I’d put in a call to Adam Kraemer, a guy who helped me recognize a financial phenomenon that I suspect is unique to New Jersey.

I call it "the West Orange Line" after the Essex County town of that name where Kraemer lives. West Orange is a pleasant little place, so much so that it became the inspiration for the song "Pleasant Valley Sunday" popularized by the Monkees in the 1960s.

Not much has changed since then, except of course the property taxes. They’ve just kept going higher. In that time, New Jersey added an income tax dedicated to property-tax relief, raised that tax twice, added a so-called "millionaires tax" to it and then dedicated half a cent of the sales tax to property-tax relief.

Still the taxes rise. They’re so high now that they’ve reached the point where the typical homeowner’s tax bill threatens to exceed the amount of his monthly mortgage. When I spoke to Kraemer three years ago, he told me the tax payment on his four-bedroom house on a quarter-acre lot was about $27,000 a year. The house value was worth about $500,000, he figured. At that rate, anyone buying the house would likely have a tax bill exceeding his mortgage.

But that was just theoretical. Shortly thereafter, Kraemer decided to put the house up for sale.

"It was on and off the market for years," he told me. "Buyers looked at the taxes and ran. It’s a great location with nice parks and ethnically diverse neighborhoods. But people see the taxes and they run for the hills."

Finally Kraemer lucked out and found a buyer. He got what he’d expected, about $500,000. The buyer’s tax bill would indeed have exceeded the West Orange Line, but for one thing: Kraemer had filed a tax appeal and got his bill reduced to $21,000. That means the new owner will pay a mere $1,750 a month in property taxes, probably a bit below his mortgage payment.

"I’m sure there are plenty of other people in town above the line," said Kraemer, who moved his wife and kids to a condo in town with a slightly lower tax bill. Many older residents are forced out by taxes, he said.

"Slowly it’s becoming a town where the grandparents are disappearing," said Kraemer.

He recalled that his mother worked on the campaigns of Gov. Brendan Byrne back in the 1970s when that income tax was first adopted.

"He said gambling would get rid of the slums of Atlantic City," he recalled. "And he said the income tax would end the property tax problem."

"Slowly it's becoming a town where the grandparents are disappearing" - Adam Kraemer on the tax situation in West Orange

It did at first. But then the state Supreme Court threw out Byrne’s school-aid formula on the grounds that the governor and Legislature could not be trusted to distribute such aid. Since school aid is the primary form of property-tax relief in New Jersey, that leaves towns such as West Orange at the mercy of the judges.

They haven’t been very merciful. The residents pay about $60 million a year in income taxes but get back just $10 million in school aid. That leaves the residents picking up 90 percent of the cost of the local schools.

Will Buono help them? Not likely. She’s been pushing a "millionaires tax" to fund property-tax relief. That sounds nice — until you realize that the millionaires tax she pushed back in 2004 is still in effect, along with the sales tax hike she backed two years later. Neither solved the problem, perhaps because she argued the revenues shouldn’t go to help "rich" towns, a category into which the state places West Orange and its neighbors, such as Montclair and Maplewood.

As for Christie, he’s mired down in a fight over naming new judges to the high court. And if his fellow Republicans somehow manage to take control of the Senate Nov. 5, he would have the power to name his own majority to the court.

But the governor has yet to make it clear just what he would do about property-tax relief if he had his druthers. I’m sure Kraemer will be listening for some sign tonight, along with a lot of other people stuck in towns like West Orange.