July 5, 2015
By Paul Mulshine
A political trivia question: Who was the last mayor of Jersey City to be elected governor?
It was A. Harry Moore, way back in 1938. Many have tried since. All have failed. The problem they faced is simply stated: What is good for Jersey City is not necessarily good for New Jersey.
If you doubt that, consider the rowhouse that current Mayor Steven Fulop is purchasing.
“This wonderful one family has left no detail undone. 3 decks with direct New York City views,” says the online ad. “The interior features 4 bedrooms, 2 full baths, Viking stainless steel appliances, exposed brick and tin ceiling in the dining room … ” and so on.
All of that is nice. But even nicer are the property taxes, a mere $7,700 per year. That’s about 1 percent of the asking price of $739,000. This is a real bargain according to the guy who informed me of the deal.
That’s state Sen. Mike Doherty, the conservative Warren County Republican who could be a contender for his party’s nomination to run for governor in 2017. So could the the guy who’s buying that condo.
The 38-year-old Fulop is widely considered to be among the front-runners for the Democratic nomination. He certainly has the credentials, including a handful of degrees as well as service in Iraq as a Marine.
Doherty’s a West Point man himself, so he’s ready for battle. His weapon is property taxes, specifically the state’s penchant for giving vast amounts of tax relief to cities like Fulop’s and tiny amounts to suburban and rural towns. That aid makes possible the low tax bill on the mayor’s new crib.
“If that house was in my district he would be paying $25,000 a year,” said Doherty. “We’re paying a lot more in and what are we getting from it?”
Not much, he said. Jersey City has services ranging from free preschool for 3- and 4-year-olds to full-time fire. Most towns in the northwestern part of the state have neither.
Ever since the first income tax was passed in 1976 the big-city politicians have managed to grab a disproportionate amount of state school aid, the primary form of property-tax relief.
That’s because those urban mayors know how to play the game. And the name of that game is “hide the ratables.” The last Jersey City mayor to run for governor, Bret Schundler, was a master of it.
Schundler, a Republican who lost to Jim McGreevey in 2001, perfected the art of luring big developers to the city with promises of tax abatements. This deals are great for the cities, not so good for the rest of us.
The city still gets its revenue in the form of a PILOT (payment in lieu of taxation) but the schools are shut out. No problem, though. Under the state school-funding formula, Trenton has to make up the difference even to towns like Jersey City and Hoboken that have plenty of million-dollar homes.
“The suburban taxpayers have been told how important it is to get the big cities back on their feet,” said Doherty. “Yet when they’re back on their feet they’re still on the dole.”
That’s just one way those canny Hudson County pols outsmart us rubes. The other is through a simple refusal to revalue their real estate. Jersey City has not had a reassessment since 1988. The prior mayor had scheduled one, but Fulop canceled it upon taking office in 2013.
As a result, houses in the trendy Heights neighborhood where he’s buying have low tax bills while people in the poorer sections of town have proportionally higher taxes.
Fulop’s people told me that he canceled the reassessment because he disagreed with the method the prior mayor employed for choosing the appraisal firm. He will move ahead with it after ongoing litigation is settled, they said.
But it’s smart politics to put off revaluations as long as possible. As for Doherty’s criticisms, Fulop’s office emailed me that “it is a little creepy that Sen. Doherty would pry closely into the Mayor’s personal life in order to grandstand.”
The email added, “If Sen. Doherty solved problems in Trenton instead of stalking Mayor Fulop, I am sure his constituents would actually realize a benefit.”
In fact, Doherty has been trying to solve this problem, but he’s met resistance all the way from the big-city mayor’s best friend.
That’s Gov. Chris Christie. He spent his last campaign courting Democratic mayors and he had some in attendance last week as he kicked off his next campaign, this time for president.
“The whole point of his speech was that he could get along with Democrats,” said Doherty.
He certainly could. But how will they get along without him?
That is a debate for the post-Christie era.
Fortunately for suburban taxpayers, that era started on Tuesday.
ADD: Here’s an excerpt from a release Doherty put out that explains Jersey City’s tax dodge in greater detail:
Doherty noted that Jersey City’s use of PILOTs also increases the income tax burden on state taxpayers who already bear the majority of the burden of paying for Jersey City schools through state school aid. While state law provides that counties collect five percent of PILOTs, school districts collect nothing (page 5).
“As a former Abbott district that is slated to collect more than $400 million in state aid this year to fund its schools, it’s unfathomable that Jersey City is preventing its school district from collecting school taxes on $2 billion of tax exempted property in the city,” added Doherty.
In FY 2014, Jersey City will receive $417 million in state school aid, approximately $14,188 per student.
Doherty further noted that as part of the so-called “New Jersey Gold Coast,” Jersey City has seen extensive redevelopment, construction and price increases on existing properties due to surging demand for real estate in towns along the Hudson River.
PLUS: The last Jersey City mayor to run for governor, Bret Schundler, faced a similar problem when he ran for the Republican nomination for governor in 2005. At a debate, Schundler was challenged by conservative Steve Lonegan on whether he supported the Abbott rulings that channel almost two-third of state aid to 31 urban school districts, including his own.
Schundler replied that he supported the Abbott approach, a stand that is highly unpopular with the Republican base. He went on to lose the primary.
As for Christie, from the beginning of his tenure as governor he’s been refusing to lift a finger to help suburbanites get their fair share of state aid. Here’s a piece I did for the Wall Street Journal back in 2010 that explains how he reneged on his campaign promise to change the distribution of state aid.
Nothing has changed in the past five years.
In that piece I mention Proposition 13, the 1978 ballot measure that gave California homeowners permanent property-tax relief. Coincidentally enough, Proposition 13 set a maximum limit on property taxes of 1 percent of a home’s value – about the level at which Fulop’s new home will be taxed.
Or in other words, Christie gave Proposition 13 to the cities – and the back of his hand to the suburbs.