‘Huge tax hike’ unless NJ avoids health benefit hike
TRENTON — Property owners across the state are facing huge tax hikes, officials warned Wednesday.
Local officials say the state must step in to lessen the impact of roughly 22% increases in state health plan premiums for local government employees.
State health benefit plan increases were approved by a state panel a month ago, but continue to reverberate among local officials who said they had no idea a such a rise was looming until mid to late summer.
East Windsor Mayor Janice Mironov said the financial impacts would be huge and a double whammy for many taxpayers whose cities and counties are in the state health plan. She said it’s inconceivable that Gov. Phil Murphy and lawmakers won’t resolve the issue, hopefully within four weeks.
“It is both a human question. This is a huge problem for taxpayers. It’s a matter of officials. And it will be a political issue,” said Mironov, president of the New Jersey Conference of Mayors.
Compensation for the tax increase
John Donnadio, executive director of the Association of Counties of New Jersey, said the health plan itself needed long-term reforms, such as adding local government officials to its board. But as a matter of urgency, he said state surplus or federal COVID funds must also be tapped to offset the rise.
“Immediate relief must come from the administration in terms of subsidizing local employers and employees the same way they did for state employees,” Donnadio said.
How much will it cost local communities?
Premium increases for state workers have been capped at 3%, in exchange for the unions agreeing to increase certain medical quotas. It is not known what this will cost the state.
Similar changes applicable to local workers could be enacted, Treasury Department spokeswoman Danielle Currie said.
“The Legislature has the power to make plan design changes that would reduce rates,” Currie said.
It’s unclear how much the roughly 22% increase in premiums will cost local governments, though Donnadio estimated it could cost the state $350 million to $400 million to cap the increase to local governments at 3%.
If this cost is kept in local government budgets, it is possible that all of this could be passed on to taxpayers, as health care costs are among the exceptions to the 2% cap on property tax increases.
For context, the entire statewide property tax increased by $583 million last year. A $400 million increase would equate to nearly $120 on the average tax bill — though the impact would vary, as some local governments participate in the state health plan but others do not.
Others could exit the plan now, although the timeline makes it difficult for governments to line up alternative health plans for 2023.
“Big tax hike”
Newark Mayor Ras Baraka called rising health care costs “inhumane” and said his city and others were working together to seek another insurer.
“I think it’s draconian at any time to increase it by 20%, period,” said Baraka, president of the New Jersey Urban Mayors Association. “Doing it now, right in the middle of us trying to recover from COVID, is insensitive at best.”
Baraka said the cost of the increase for Newark was $24 million. Essex County Executive Joe DiVincenzo said it was $21 million for Essex County.
“The situation now is that we have to make decisions – what are we going to do, how are we going to prepare this budget by January 15,” DiVincenzo said. “And that doesn’t look good for the people of this county as far as our taxpayers are concerned.” It will be a huge tax increase.
Democrats criticize the Murphy administration
Senate Majority Leader Teresa Ruiz, D-Essex, said there had been a lack of transparency from the Murphy administration regarding rate hikes, compounded by the fact that the state n did not extend the open registration window to give cities and counties time to research alternatives.
“There is a clear message being sent to all of us that there is no urgency or need to protect the taxpayer,” Ruiz said.
Assemblywoman Eliana Pintor Marin, D-Essex, who heads the Assembly Budget Committee, said budget negotiations would have gone differently in the spring had the administration shared what was seen with health benefits. She also said some of her answers to questions from lawmakers were not truthful.
Currie said the Treasury Department worked closely with the Office of Legislative Services and legislative leaders to answer as many questions as possible during the state’s budget process, as well as throughout the summer leading up to it. rate approvals last month.
“In fact, some lawmakers raised questions about the proposed appropriations for fiscal year 23 health benefits during the April and May budget hearings, and those questions received a full answer from Treasury officials and the increase in usage trends has been publicly noted,” Currie said.
“The Treasury has, and had, no reason to withhold information on usage or cost increases and has followed the same process this year as we have in previous years, in accordance with the law of state,” she said. “We understand the challenges of rising costs, but any suggestion that the Treasury has withheld information or has not done everything in its power to ensure a fully transparent process, whether during budget season or when setting rates, is simply wrong.”
Michael Symons is the Statehouse Bureau Chief for New Jersey 101.5. You can reach him at [email protected]
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