Task force releases report on Stay NJ tax credit program

Officials say logistical and technical challenges will require the first year of Stay NJ awards go out on checks, if they go out at all. (Dana DiFilippo | New Jersey Monitor)

A task force assigned to review the ambitious property tax relief program called Stay NJ released a report Thursday making recommendations on how to implement the plan — one it’s not clear the state can fund.

The 101-page report details changes to how benefits would be paid out, a timeline change that could cost some residents benefits under the existing Anchor tax relief program, and difficulties in standing up quarterly tax credits called for by Stay NJ.

“The Task Force recognizes that the recommendations presented here are only a part of the solution to addressing property taxes in New Jersey,” the report says. “The Task Force also recognizes that property tax relief is just one, albeit significant, component of the State’s budget and one choice the Governor and the Legislature need to consider when balancing the needs of all New Jerseyans.”

Stay NJ payments are due to begin in the fiscal year that starts on July 1, 2025.

The report is an attempt to unify three disparate property tax relief programs — Anchor, Senior Freeze, and the nascent Stay NJ.

Because Stay NJ was written to be exclusive with the other two programs, officials must tease out how to unify their applications. The three programs run on different timelines and pay out their benefits through different mediums.

The task force recommended the residents eligible for multiple programs first receive Senior Freeze rebates and Anchor checks before Stay NJ is applied. Under their recommendations, the homeowner — Stay NJ has no provisions for senior renters — would then receive credits equal to half their property tax bill, less the other awards.

Such a system would be more feasible, the report said, and residents who receive awards through Anchor and Senior Freeze that are larger than Stay NJ’s first-year cap of $6,500 would continue to receive them.

The task force recommended income calculations for Stay NJ include some sources of non-taxable income, including pension and social security benefits, but said some other sources of revenue — inheritances and bequests — should be removed from Senior Freeze’s income calculations.

The report says the state would not be able to pay out Stay NJ benefits through a tax credit in the program’s first year and would instead pay them by check.

Though the state previously paid out property tax credits through the now-defunct Homestead program, the task force’s report warns that process was cumbersome and labor-intensive.

“While a certain level of success was achieved, the potential for error was high,” the report said.

And Stay NJ’s property tax credits will be more complicated still. Unlike Homestead credits, which were applied once or twice a year, Stay NJ credits must be applied quarterly.

A law that criminalizes the release of addresses belonging to judges, prosecutors, and law enforcement officials — which did not exist until after Anchor replaced Homestead — will also complicate the process and likely require technological upgrades and intensive cybersecurity reviews, the report says.

The task force recommended a unified application for the three property tax relief programs be open from Feb. 1 to Oct. 31, 2025. Residents under the age of 65, who are ineligible for awards under Stay NJ or Senior Freeze, would use the same unified application when seeking Anchor benefits.

The task force said each program should calculate benefits using the most recent tax year. Senior Freeze and Stay NJ both do that to calculate benefits, while Anchor tests eligibility using tax filings from two years earlier.

“It should be mentioned that there are consequences to these recommendations. By aligning the eligibility year for all of the programs, there will be cases in which individuals lose an ANCHOR benefit,” the report says, citing residency changes or deaths in an estate.

It adds that lawmakers should update a property tax deduction to the state’s gross income tax to only allow residents to deduct property taxes they paid. This would prevent residents from deducting $6,500 in property taxes they did not, in fact, pay.

Stay NJ should be amended to be based on property taxes billed instead of property taxes paid, the task force said. As written, a resident who receives a Stay NJ credit in one year would receive a smaller credit the following year if the award meant they paid less property tax overall because of the credit.

It’s not clear whether the state can fund Stay NJ absent changes to its enabling legislation . That bill required the state not fund Stay NJ in any fiscal year that it fails to maintain a surplus equal to at least 12% of spending from the general fund and property tax relief fund.

Officials from the Treasury and Office of Legislative Services have forecasted state spending proposed for the coming fiscal year will push New Jersey’s surplus below that level — to about 11.2% of spending, or roughly $6.3 billion.

Falling below the threshold won’t necessarily kill Stay NJ, as legislators could simply write the surplus requirement out of law. Enacting some of the task force’s recommendations would require legislation.

“The task force report does not change any of the underlying problems with the original StayNJ proposal, namely that it directs the biggest benefits to wealthy homeowners while providing little support for lower-income households and renters struggling to stay in their homes,” said Peter Chen, a senior policy analyst at New Jersey Policy Perspective who has been critical of the program.

Residents above age 65 with incomes of not more than $500,000 are eligible for Stay NJ.

The task force’s report says changes to benefits or income limits lay outside its purview and made no recommendations on the same.

Trenton Republicans emerged from the report with renewed skepticism. Sen. Tony Bucco (R-Morris), the chamber’s minority leader, said it reaffirmed Stay NJ as a fantasy, warning quarrels over its future could derail budget negotiations. Gov. Phil Murphy must sign an annual spending bill before July 1 to avoid a state government shutdown.

“Unless Trenton Democrats heed our advice and cut wasteful spending, there’s no way they can afford this $1.2 billion annual program,” Bucco said. “The only other alternative they have is to make further cuts to the programs that serve our most vulnerable populations or raise taxes.”

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