But this week, the Assembly gave final approval to a plan, signed Tuesday by the governor, that includes an override provision. Under the compromise, a simple majority in a town can override the cap, instead of the 60 percent initially sought by Christie.
Some legislators remain uneasy with the override measure.
"I know that we as a state have two New Jerseys, one that's the haves and [one that's] the have-nots," said Sen. Shirley Turner (D., Mercer), one of four senators, all Democrats, who voted against the bill. "My feeling is this 2 percent cap, which allows for voters to override the 2 percent cap, will further exacerbate the two New Jerseys. We will continue to be even more separate but unequal as far as education is concerned and the quality of life."
According to a study by the Municipal Finance Task Force in Massachusetts, a group created by an organization of the 10 chief executive officers for urban-core communities in metropolitan Boston, from 1983 to 2004 the chances of an override's success correlated strongly with the wealth of a community.
Twenty-seven percent of override attempts in the communities with incomes in the lower two-fifths succeeded, compared with 43 percent in the second-highest fifth and 57 percent in the highest fifth. Communities with incomes in the highest two-fifths also attempted more overrides, 1,627, than the lower two-fifths, 1,190.
Because Massachusetts directed extra state aid to the poorest communities, however, their budgets as well as those of the highest increased the most. Communities in the middle faced the tightest constraints because they could neither override the cap nor receive extra state aid.
Among the New Jersey lawmakers who voted for the compromise bill despite reservations about the override provision was Assemblyman John McKeon (D., Essex). He said not having the provision would have forced people to pay attention to how the cap affected all communities.
"If we're all playing under the same rules, if the people throughout the state determine that these caps are such that basic services that are important to me and my child's education - extracurriculars, music, the arts - [are cut], there will be a groundswell of screaming," McKeon said. "If a lot of those towns are able to pay a couple extra bucks because they can afford it, they're not going to be so focused on pushing change."
The counterargument, made by Christie and others, is that voters should be able determine when they want to pay more taxes.
"I would be able to support that cap if it includes a vote of the people as the only way to override the 2.5 percent cap," Christie told the Legislature in a speech. "It is time to make the people a part of controlling and determining their own taxes. Anything less would be unacceptable to me."
In Massachusetts, some argue that the impact of the overrides has really depended on the state's finances.
"We have a distribution formula for state aid in which the poorer, largely urban areas get much more state aid than the wealthier communities, and so in good economic times, that problem of inequity is addressed," said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a nonpartisan public-policy research organization. "But in bad times like these, the cities, the poorer urban areas, tend to suffer more because they depend more heavily on state aid, and they in many cases never have done an override.
"Signing this legislation at a time when there are cuts in aid to cities and towns will almost certainly lead to greater inequities between the richer and poorer communities in New Jersey."
Geoffrey Beckwith, executive director of Massachusetts Municipal Association, said communities with higher personal incomes had been more likely to pass overrides and working-class communities likelier to cut services.
"This idea of an override as a safety valve only works in communities where people are generally more affluent," Beckwith said. "It creates a divide between communities in the state based on income."
Under Christie's first budget, for the fiscal year that began July 1, municipal governments lost about $446 million in state aid, about 23 percent.
But municipalities had been trimming spending even before that. According to the state Civil Service Commission, 1,908 positions have been targeted for elimination this year by municipalities, counties, fire departments, libraries, and commissions in the civil service system, which includes about a third of towns in New Jersey. (The number of positions eliminated could be smaller if towns change their minds after notifying the state.) That figure is nearly twice the number that were targeted for elimination in all of 2009.
Collingswood Mayor Jim Maley said that in this economic climate, few elected officials in New Jersey were likely to risk asking voters for permission to spend beyond the cap.
"Where they're at right now, they would opt to lay more people off, and it won't be until after those layoffs happen that a town realizes that we really needed some of those cops or firemen or a public works guy to fix the sewer lines," Maley said.
Contact staff writer Adrienne Lu at 609-989-8990 or email@example.com.