By Roy Frieman
Six hundred million. That is a sum of money so large most people can’t wrap their heads around it, let alone think about what it would mean to a state like New Jersey. So when I think about figures that large, I like to think concretely about what it would mean in our state.
So what could we do with $600 million? We could keep property taxes stable for two years for over 400,000 New Jersey homeowners through the state’s Homestead Benefit Act. Or we could freeze property taxes for three years for the 30,000 seniors and disabled residents who take part in the “Senior Freeze” Property Tax Reimbursement program. Or we could pay for all of New Jersey’s obligations to Special Education in our state, which would allow school districts to directly cut their property taxes.
In other words, that type of money has the ability to bring real benefits to people in New Jersey
Last week, we learned, thanks to a law I authored last year, New Jersey will save just that.
Here’s the problem I was trying to solve: When you pay taxes, many of your dollars don’t go to the things in your community that you care about like roads, schools, parks, or keeping your neighborhoods safe. Some of it goes to pay interest on debt incurred from projects that our state didn’t pay for years ago.
That’s not right. When you pay taxes, that money should stay in your communities and fund the things you care about and that we all rely on. It should make sure you have safe neighborhoods, great schools and clean drinking water.
After a stronger than expected economy and tax collection rate last spring, I came up with an idea that has at times seemed radical in Trenton: What if we made sound financial decisions such as paying down our debts to enable a future where we can make real investments or cut your taxes?
The law I sponsored created something called the New Jersey Debt Defeasement and Prevention Fund. Those are a bunch of words used in financial markets
In simple terms, here’s what we did:
First, we took the funds available to New Jersey from surplus state revenues, and made a deliberate decision to spend it wisely — and more importantly, not all at once. We made another deliberate decision to set some of it aside.
We then used some of that money to retire some of the debt taxpayers are on the hook for — taxpayers will no longer be paying high-interest rates on many projects from the past. Think about it this way: If you have some extra money, it’s smart to get rid of your credit card debt. That’s the approach we took.
We used additional money in the fund to pay for things like building new schools — except this time, we didn’t borrow any money in the first place to build those schools, and taxpayers will pay no interest on them in the future.
Thanks to this smart, measured approach, over the lifetime of the legislation, New Jersey taxpayers will save more than $600 million. It also may lead to an improved credit score for our state, which means —you guessed it — when you pay taxes, even more will stay in your communities and less will go to bond traders on Wall Street.
These types of smart investments and strategies of thinking outside of the box are helping bring New Jersey back to fiscal health. As proud as I am of this law, the part I am most proud of ensures this strategy for saving taxpayer money can continue and save even more money in future years. And you can bet that when that happens, I’ll be right back at the table thinking again about the Senior Freeze Property Tax program, Homestead Rebates, ways to allow school boards to cut your taxes, and much more.
Assemblyman Roy Freiman represents the 16th Legislative District, which includes parts of Mercer, Hunterdon, Somerset and Middlesex counties.