The Jersey City BOE’s “10% Tax Levy Hike” Isn’t Enough & Doesn’t Value Our Kids or JCPS

Jersey City’s Board of Education is emphasizing a “10%” school tax levy increase as if that’s a big jump. Except 10% isn’t a big dollar-for-dollar jump, when you look at the entire picture. In actuality, 10% is way too small, given the fiscal hole we’re in as a district. A simple example can illustrate how these percentages are gamed in talking points to make it look like the BOE is making a huge lift, when in fact it’s not doing nearly enough.

Let’s say I pay each of my kids an allowance:

  • Indira gets $1 / week.
  • Arjun gets $10 / week.

Then I give each a 10% increase:

  • Indira gets a dime more (10 cents is a 10% increase on $1). So now she’s at $1.10.
  • Arjun, however, gets a full $1 ($1 is a 10% increase on $10). Now he’s bumped up to $11.

Arjun received more, in dollar terms, than Indira, simply because he was at a higher starting point when the “10% increase” was given.

Indira’s problem is structural; her allowance is at such a low starting point (a measly $1 a week), that a 10% increase, while it may sound good in theory, is actually just a token amount that doesn’t really help her. Her starting point (only $1) is TOO LOW, thus the 10% hike upward is also TOO LOW. Indira can’t go out and buy a candy bar with that extra dime…she needs way more than a 10% increase to get close to Arjun’s purchasing power.

And Arjun: well, he has a structural advantage when we compare him to Indira. He’s starting out at a much HIGHER point ($10/week) than Indira, thus the 10% hike serves him really well. He can go out and buy a new candy bar with that extra $1.  And, Arjun has very little interest in disrupting the status quo, because Arjun has become acclimated to his spending habits.

JCPS is in a similar boat as Indira, using the simple example above. And Arjun is like the municipality, ie the city. Consider:

  • The Indira/JCPS Analogy: The school tax levy is currently TOO LOW. It needs way more than a 10% increase to make up for the state aid cuts. This post I wrote in March goes into some of this detail, about how our local levy is way too low, compared to where we need to be, in terms of “Adequacy” as defined by the state.
  • The Arjun/City Analogy: Jersey City, the municipality, is in a similar boat as Arjun using the example above. The mayor and city council have a much bigger tax levy to work with. So for them, a “2% hike” means a lot more spending in dollar terms.
  • But let’s now wrap in PILOTs…because Jersey City (the municipality) also has $121 million in PILOT fees to fund its spending habits. Here’s how to think about the PILOTs: say my parents (the kids’ grandparents) decided to send Arjun $5 a month and ignore Indira completely. That extra $5/ week is like the PILOT fees; more cash to spend, and creating an even bigger structural spending gap between Indira/JCPS and Arjun/The City. It’s toxic. It creates what NJ Comptroller Matthew Boxer termed in 2010 as “a perverse incentive whereby the municipality may gain revenue through granting an abatement, while other government entities lose out.”

The Indira/Arjun allowance and one-sided gift from the grandparents: it’s unfair. A child can see this as unfair. Yet it illustrates the structural fiscal imbalance that exists in Jersey City, in terms of how our schools are cut out of local tax revenues.

One final point: *this is not like previous years*. JCPS is experiencing, in this year alone, a $27 million cut. This is not accounting gimmickry, these are real dollars being removed by the state from our budget (I wrote about the $27 million cut here, and you can also watch a video here about the “why” of the cut here). Next year JCPS will experience another $25-30 million cut. Then the next year another $25-30 million cut. Then the following year another $25-30 million cut. This is not like prior years, and if we want a public school system the paradigm must change: city spending must be curbed, local school spending must go up. A paradigm shift is needed.

The paradigm shift won’t be driven by local government officials, because local government is itself part of the problem. What we need is a groundswell of community to demand a change to the status quo. Absent that groundswell, this funding paradigm will remain and our public schools will continue to suffer from systemic underfunding.

 

Posted in Advocate, JCPS Funding Crisis, Property Taxes.