NJ Insurance Hikes Cause Grumbling In Essex County About Tax Impacts

ESSEX COUNTY, NJ — A big jump in the health insurance rate for more than 800,000 state and local government workers may result in higher property taxes for many New Jersey homeowners, including Essex County. And the rate hikes may hit especially hard in an area already saddled with some of the highest taxes in the nation, some local officials say.

Based on a vote by the State Health Benefits Commission in September, some municipal governments in New Jersey will see an estimated 23 percent health insurance rate increase for their workers, while state employees will see about a 21 percent hike. Read More: Rising Insurance Rates Hammer New Jersey Workers

After the commission’s vote, Newark Mayor Ras Baraka said that New Jersey’s largest city is now is facing “astronomical” health insurance rate hikes for its city employees – which may end up getting passed on to local taxpayers.

Baraka released a statement blasting the rate increases, which the city had “neither control nor say” over. Read More: Newark Faces 'Astronomical' Health Insurance Hikes For City Workers

“At a time when health insurance companies are making record profits, plans to increase health care costs for New Jersey public employees are a betrayal of thousands of hardworking members of Newark’s municipal family, who are already being harshly impacted by rising costs of living,” Baraka said.

Baraka isn’t the only elected official in Essex County who says the rate hikes may end up putting the squeeze on local taxpayers.

Essex County Executive Joseph DiVincenzo Jr. – who touted a “zero percent property tax increase” earlier this year – said that the hikes are expected to cost the county about $21 million, a development that “doesn’t look good for the people of this county,” NJ.com reported this week.

“How do you expect us to be able to put a budget together? It’s impossible,” DiVincenzo said. “The only thing I could do is raise taxes, lay off employees and find other ways to cut costs within the budget, and it’s going to be very difficult to do.”

Baraka and DiVincenzo, both Democrats, aren’t the only members of their party to question the rate hikes.

State Assemblywoman Eliana Pintor Marin, who chairs the Assembly Budget Committee, has supported the administration’s previous two budgets. When Gov. Phil Murphy signed the largest budget in state history last June, she said it was a spending plan “we should be proud of.”

• See related article: Massive NJ Budget Gets Mixed Reaction In Essex County

But the following month, Pintor Marin and other members of the Assembly Democratic Senior Leadership team put out a statement about the then-hypothetical rate hike, calling it a “major concern.”

“Particularly, it is unacceptable that increased costs of this magnitude are being contemplated without advising the Legislature of this decision,” the lawmakers wrote.

Pintor Marin said that she believes the Murphy administration was not answering questions truthfully during budget hearings and negotiations at a news conference on Wednesday, NJ.com reported.

“If we would have known what was coming ahead of time, the budget negotiations would have looked very differently,” the assemblywoman said. “I guess I’ll be a little more cautious going into budget season this year. We are always open and willing to negotiate, and I think it’s time for the administration to show that as well.”

Meanwhile, some Republican state lawmakers continue to criticize the Murphy administration over the rate hikes.

“The governor and his advisors have some explaining to do,” Sen. Michael Testa (R-1) said Thursday.

“These important indicators were hidden from the Legislature and the public during the budget process which resulted in the $50 billion budget signed by Murphy in late June,” Testa said. “Why would they sit on this devastating news, robbing local and county governments of the opportunity to plan for exploding costs as they crafted their budgets?”

PROPERTY TAXES IN ESSEX COUNTY

It's no secret that property taxes are one of the biggest gripes for people living in Essex County, which was one of four in New Jersey with the highest median bills in the entire nation, according to a recent study from The Tax Foundation.

Jack Ciattarelli, a Republican who unsuccessfully ran against Murphy for governor last year, made property taxes a major part of his campaign. Read More: Ciattarelli Reaches Out To 'High-Taxed' Essex County Homeowners

According to the most recent state statistics from 2021, here’s how much homeowners in each town and city in the county paid last year (click the pins to see the local statistics).

Some people have claimed that Essex County’s notoriously high property taxes may not be distributed equally, however.

If you take a look at a town’s “effective tax rate” – the amount of property tax paid relative to a home’s value – a much different story emerges, former Belleville Board of Education Michael Sheldon told Patch earlier this year.

Analyzing the data in a Patch article, Sheldon came up with a startling hypothesis: the wealthiest communities almost always had the lowest effective tax rates.

Adam Kraemer, the Republican candidate for county executive this November, told Patch that local property taxes are “regressive, inequitable, excessive and confiscatory.”

Think that just because you rent your home, you don’t have to care? Think again, Kraemer said.

“About 20 to 30 percent of the rent bill is a hidden tax,” he claimed. “Landlords need to devote about 20 to 30 percent of what they collect in rent to property tax, so they just do this by passing on the tax to tenants in higher rent.”

“These taxes harm us all in Essex County,” Kraemer added.

• See related article: Tax Gap In Essex County; Many Wealthier Towns Pay Lower Rates

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