New property tax relief plan promising big cuts for N.J. seniors unveiled. ‘They can stay in N.J.’

Democratic state leaders on Wednesday released details of a controversial property tax relief proposal for New Jersey seniors that upended state budget negotiations in recent weeks.

The plan, dubbed StayNJ, was designed to cut property taxes in half for most New Jersey homeowners 65 and older. It was introduced earlier this month by state Assembly Speaker Craig Coughlin and later backed by state Senate President Nick Scutari, both Democrats.

“We’re proud to announce that we have reached a fiscally responsible agreement to provide historic property tax relief to our seniors,” Gov. Phil Murphy said during a press conference on Wednesday to formally announce he and lawmakers reached a deal on the plan.

“We are working to build a stronger, fairer New Jersey that is affordable for all of our hard-working families,” said Murphy, who was flanked by Coughlin, D-Middlesex, and Scutari, D-Union, during the press conference at the Statehouse in Trenton.

The latest iteration of the proposal, a compromise between Murphy and his fellow Democrats who control the state Legislature, would provide property tax credits of up to $6,500 for senior homeowners with an annual income of $500,000 or less.

The plan, if signed into law, would not go into effect until 2026 and does not include renters, a feature of the original proposal that drew sharp criticism. Instead, state leaders have proposed an increase of $250 for homeowners and renters in the $2 billion ANCHOR property tax relief program that is set to be funded for a second straight year.

That would bring the total tax credit for homeowners under that program to $1,750, and the credit for renters would increase to $700.

Coughlin, who recently became a grandfather, said Wednesday he “understands what it means to be able to be around the grandchildren you love.”

“I’m fortunate enough that I’m going to be able to do that. Not everybody else was,” he said. “This will help. This will give people the opportunity to stay in New Jersey, and it’s the right thing to do.”

The original proposal introduced by Coughlin faced widespread criticism from budget experts, progressive advocates and some state leaders, including Murphy, who threatened to shut down the state government because of the plan’s cost and the lack of income eligibility requirements.

Murphy has since softened his tone on the issue, despite only minor concessions from Coughlin, who says the plan is aimed at preventing seniors from moving out of the Garden State, which has the highest property taxes in the nation. The statewide average property tax bill hit a record high of $9,490 in 2022.

“Keeping seniors in the state of New Jersey is a priority for all of us,” Coughlin said.

Scutari called it “the beginning and continuation of Democratic ideals, which is giving back to taxpayers. These numbers reflect fiscal responsibility, as well as a game-changing property tax plan for New Jersey seniors.”

“It’s not just for one class or another,” he added. “It’s pretty much across the board.”

AARP New Jersey, which supported the original proposal, released a statement on Wednesday commending state leaders for reaching a compromise and for “their commitment to helping older residents remain in their homes and communities.”

”The framework of the deal will provide the kind of bold and transformational relief that so many New Jerseyans — who are also struggling to afford rising prices on everything from groceries to gas along with the highest prescription drug prices in the world — need to stay in New Jersey,” AARP New Jersey Director of Advocacy Evelyn Liebman said.

It is still unclear how New Jersey will pay for the new StayNJ proposal, which is expected to add at least $1.3 billion a year in new spending at a difficult time for New Jersey’s finances. The first state budget to incur these costs would come during the term-limited Murphy’s last year in office.

A new report from a bipartisan group of economists and fiscal policy experts at former state Senate President Stephen Sweeney’s think tank, the Sweeney Center for Public Policy, indicates New Jersey is barreling towards a fiscal crisis, and soon.

The budget workgroup said in its latest report that it expects New Jersey revenue collections to fall from $12.5 billion to $18.5 billion short of projected spending from fiscal year 2025 to fiscal year 2028, and that’s without the added spending from Coughlin’s StayNJ tax relief proposal.

All of this comes as leaders in Trenton continue negotiations on a new state budget, which must by signed by July 1, the start of the new fiscal year. Legislative sources say they expect the final budget to be introduced on Monday, with a vote on the measure in the full Legislature on Friday, June 30.

Murphy’s record-breaking $53 billion budget proposal, unveiled in February, includes a commitment from the governor to let a 2.5% surtax on large corporations expire at the end of 2023. With tax revenues declining and the added spending of StayNJ, it is now unclear if state lawmakers will go along with that commitment.

When asked on Tuesday about the possibility of extending the corporate surtax, Scutari said he didn’t “know the answer to that question just yet.”

“I’m not ruling out anything until we’re done,” Scutari said while speaking to reporters at the Statehouse in Trenton.

The StayNJ tax relief proposal would still need to be passed by both chambers of the Legislature and signed by Murphy for it to become law.

NJ Advance Media staff writer Brent Johnson contributed to this report.

Our journalism needs your support. Please subscribe today to NJ.com.

Derek Hall may be reached at [email protected]. Follow him on Twitter @dereknhall.