By Salvador Rizzo and Eric Sagara/The Star-Ledger

New Jersey homeowner taxes went up 1.4 percent last year, the smallest bump in more than two decades and a hard-fought milestone for one of the highest-taxed states in America.

Residents paid $7,870.28 on average in property taxes for 2012, an increase of $132.46, a Star-Ledger analysis of all 566 municipalities shows.

(See tax figures for your town in the table below.)

The 1.4 percent rise was the lowest since 1991, and for the first time, property taxes rose by a smaller percentage than the 2 percent cap on local tax growth enacted by Gov. Chris Christie and lawmakers in 2010. The analysis shows that after decades of searching for fixes, New Jersey is heading off the kind of rampant property tax increases that dominated the 2000s.

New Jersey’s property taxes — which fund schools, local services and county functions — are notorious for being among the country’s highest, and residents consistently rate them as the biggest issue facing the Garden State.

Christie said there’s still work to be done and his real goal is to reduce homeowners’ tax bills, not just stifle their growth.

"I’m very happy but not yet satisfied," Christie said in an interview. "In the 10 years before I became governor, we were averaging 7 percent a year. The last two years, we’re talking about an average of 2 percent, and that’s I think significant for the people of the state."

The next move, Christie said, is to pass a bill sponsored by Senate President Stephen Sweeney (D-Gloucester) that would roll back the size of local governments by forcing them to share services such as police and fire departments and garbage pickup. Towns that don’t agree to share would lose state aid under the bill (S2).

Christie also renewed his commitment for a 10 percent income-tax cut that he could not get last year.

"All those things are good, and the tax cut proposed (last year) by Senator Sweeney is good," Christie said. "But in the end, the best thing to do is to spend less."

Property taxes rose 2.4 percent in 2011, the first year Christie’s cap was in effect. But the trend of lower increases could be reversed because of Hurricane Sandy.

In Manasquan, which suffered some of the worst damage from Sandy, local officials said the cost of rebuilding might drive up tax rates by at least 20 percent. To top it off, the tax base shrank as properties were washed away. Towns are allowed to exceed the 2 percent limit on property tax collections for emergencies such as Sandy.

"It’s going to be a rough year," said Valerie Bills, the Manasquan tax collector. "Outside of this disaster, we’ve been able to work with the 2 percent cap, but the disaster just kind of threw a monkey wrench into everything."

AN IMPACT ON SERVICES

In parts of the state unscathed by Sandy, local officials said they searched far and wide for nips and tucks to their budgets and have sought more funding from the federal government to keep their police and fire departments staffed.

The cap is not perfect, mayors said, but it’s helped them trim their expenses. Mayor James Anzaldi of Clifton, where property taxes grew 2 percent last year, said it meant his police officers and firefighters will get the smallest salary increase ever.

"In the end, it does affect some services," Anzaldi said. "Last year it was a very tight, difficult budget, but we have to do what has to be done — it’s the law."

Mayor Michael Gonnelli of Secaucus, where property taxes grew 1.4 percent, said construction spiked last year and brought in $1.2 million in fees. He also instituted some new parking fees, and saved $1 million a year by enrolling public workers in the state’s health benefits plan.

Gov. Chris Christie said he's glad property taxes went up only slightly last year but added his real goal is to reduce homeowners'ÂÂ tax bills, not just stifle their growth.

Bill Dressel, executive director of the New Jersey State League of Municipalities, said recent changes to state laws that cut back on pensions, health benefits and arbitration awards for public workers were even more instrumental than the property tax cap.

"I go up and down the state quite often, and every time you start talking about this, mayors say the number one reform is not the cap law but the arbitration reform," Dressel said, noting that the limit on arbitration awards restricting them to 2 percent growth per year will expire at the end of 2013.

The Star-Ledger analysis also found:

•âProperty tax bills rose in 447 of the 566 municipalities that the state had in 2012. (This year began with 565 after Princeton Borough and Princeton Township merged.)

•âTwo counties had average property tax bills above $10,000: Essex, with $10,705, and Bergen, with $10,477.

• Property taxes actually declined in one county: Morris, where the $9,184 average was 1.5 percent lower than in 2011. Property tax growth exceeded 2 percent in only six of the 21 counties.

Among municipalities, the largest property tax hike was in Washington Township in Warren County, where the average bill grew 79 percent, from $4,493.11 to $8,035.72. But the increase had a special circumstance: Evan Howell, the local tax collector, said it was because the town’s share of teenagers in a regional high school jumped last year, and the school sent a much higher tax bill as a result. According to county records, property assessment values rose 71 percent in the town last year.

A BIG DROP

Montville Township residents in Morris County got a big break in 2012 — the average bill there declined 37 percent, or $4,114.31, the largest drop in the state.

The biggest property tax bills fell on one of the smallest towns in the state, Tavistock, a country-club community in Camden County. The three households there averaged $23,863.44 in property taxes, up 7 percent from 2011. The 12-household township of Walpack in Sussex County had the smallest average bill, at $448.20. That was down 11.3 percent from 2011.

"What most municipalities have done has been to right-size their operations," Christie said. "They’re still providing services at the municipal level."

Sweeney said he was the first to propose the 2 percent cap on property taxes, but that it "can only do so much."

"When you factor in the cuts the governor has made to rebate programs, the real result has been skyrocketing property taxes, especially for working families and the middle class," Sweeney said in a statement. "And the problem will only grow worse if the governor’s plan to simply allow property taxes to increase on those towns most affected by Sandy takes shape."

While the towns are allowed to exceed the 2 percent cap to recover from Sandy, Christie said "an aggressive federal aid package" would significantly reduce their burden. The fate of that aid package is still being mulled in Washington.

"You’re going to see towns, depending on what kind of federal package we get, towns may have to eat some of the costs of debris removal, some of the costs of rebuilding, depending on the aid package we get," Christie said.

LITTLE RELIEF

For residents, even a small increase in property taxes is nothing to cheer.

Julie Emmons, 61, of East Windsor, said her husband, who works at Princeton University, is at retirement age. But retirement doesn’t look possible right now, in part because of their property taxes. "We both have to work. My husband is at retirement age," said Emmons. "We’re thinking about moving to the South so the taxes can be lower."

Star-Ledger staff writer Matt Friedman contributed to this report.

Note: The original version of this story incorrectly reported the increase in the average statewide property tax bill from 2011 to 2012 as 1.7 percent. In fact, the news is better than originally thought. Farm homesteads were not included in the calculations of the 2011 average but were in the 2012 number. Including them brings the increase down to 1.4 percent , still a 21-year low.

The original version also incorrectly reported a 37 percent decrease in the average property tax bill for Montville Township. The calculations were based off of incorrect data published by the New Jersey Division of Taxation. The actual change in property taxes for Montville was a 0.1 percent increase from $11,192.21 in 2011 to $11,202.96 in 2012. The data obtained from the state for Morris County also was incorrect. The average tax bill for the county increased by 0.8 percent from $9,318.51 in 2011 to $9,395.62 in 2012 rather than the 0.8 percent decrease originally reported.

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RELATED COVERAGE

• Gov. Christie expects property taxes to rise in Sandy-ravaged areas

• Gov. Christie turns up heat in tax fight, calls Legislature to special session Monday

• N.J. Gov. Christie signs 2 percent property tax cap bill

