Lt. Gov. Kim Guadagno this week released a property tax plan that she says would save middle class and working class homeowners as much as $3,000 a year.

The plan, which the Republican gubernatorial hopeful is calling the Property Tax Circuit Breaker, would cap the school tax portion of homeowners’ bills at 5 percent of their household income.

A household that earns $100,000, for example, would pay no more than $5,000 a year on school taxes.

The savings would be capped at $3,000 and school districts and municipalities would still be bound by the 2 percent property tax cap — a reform that was championed by Gov. Chris Christie but which has not reversed New Jersey’s highest-in-the-nation property tax burden.

In Green Brook, where the average school tax is $7,560, a family earning $80,000 would save $3,000. A family that earns $160,000, however, would see no difference.

In Flemington, where the average school tax is $4,704, families earning less than $100,000 would see savings.

In Mount Olive, where the average school tax is $6,912, the plan would help families earning less than $140,000.

In Matawan, families earning less than $120,000 would get the credit.

There is a caveat: Guadagno's circuit breaker could not be combined with the Homestead or senior freeze benefits.

Districts would not lose funding as a result of the tax credit. The state would make up the difference in school aid, an amount Guadagno's plan estimates would cost $1.5 billion annually.

By tying the tax credit to homeowners’ incomes, Guadagno’s proposal introduces a progressive element to one of the most regressive tax systems. Unlike the income tax, property taxes don’t take into account an owner’s ability to pay.

The candidate's plan received a lukewarm response from he state’s leading liberal think tank.

"Cutting property taxes for middle-class and lower-income families is, without a doubt, an important policy priority,” said Sheila Reynertson, senior policy analyst at New Jersey Policy Perspective.

"It's certainly an idea worth supporting, but only if it is tied to a more realistic funding source. It is wishful thinking to assume that $1.5 billion can be found through cost saving measures and annual revenue growth alone."

Guadagno's plan says the state can come up with the $1.5 billion by finding savings through audits of school districts, forcing shared services, changing rules that allow retirees to amass six-figure payouts for unused sick days, and forcing the so-called Abbott districts, which receive the lion's share of state aid, to pay into their pre-K programs and construction projects.

Guadagno would not pursue Christie's proposed Fairness Formula, which would divide school aid equally among all students in the state, regardless of how poor or rich their district is. Christie's proposal, which has not received widespread support in the Legislature, would in some cases halve the funding for the poorest urban and rural districts.

Guadagno's major challenger in the June primary is Assemblyman Jack Ciattarelli, who has proposed increasing income taxes on those who earn more than $750,000 while proposing other tax cuts that would benefit residents who inherit wealth or own multiple properties.

Ciattarelli criticized Guadagno's "so-called plan" as "disappointing and akin to rearranging deck chairs on the Titanic."

"Proposing a $1.5 billion property tax plan by saying it will be paid for with undetermined savings and assumed revenue growth is both dangerous and irresponsible," he said Wednesday in a statement.

"The lt. governor’s plan is also flawed in that it provides zero tax relief to many middle-class families. Based on her own projections, a family where a public school teacher is married to a police officer would be considered 'too wealthy' to benefit."

Both Guadagno and Ciattarelli have criticized municipalities like Jersey City for awarding developers tax breaks known as payments in lieu of taxes, or PILOTs, which allow city officials to keep most of the payments while their school districts lose out on tax revenue.

Because these cities' school districts are largely funded by state aid, wealthy residents and property owners end up paying less property taxes than suburbanites who own less valuable properties.

On the Democratic side, Phil Murphy has called on raising income taxes on millionaires but hasn't released a detailed plan on how he would fund public schools.

Jim Johnson has proposed raising the rates of commercial properties. Assemblyman John Wisniewski and state Sen. Ray Lesniak also support raising income taxes on the wealthy.

Reynertson said the state could raise more than $1 billion a year by raising income taxes on the wealthiest 5 percent of the state's households.

Republicans argue that increasing taxes on the wealthy will encourage them to leave the state.

Guadagno has said she would veto any tax increases.

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