Understanding Your Property Taxes
May 30, 2007 Filed in: Taxes
A major continuing concern of most citizens is the
level of their property taxes. It is a subject too
often addressed with more heat than light. We hear
often that New Jersey has the highest property taxes
in the country. While true, it's impossible to
address unless we are willing to 1) pay higher
income/other state taxes in exchange for higher state
aid to our communities, or 2) reform our highly
fragmented system of local control over education and
municipal services. State officials are currently
grappling with these issues, but the political and
practical obstacles to real change are formidable.
What Can Be Done?
At the local level, your City Council members can positively affect the municipal portion of your tax bill in at least five ways: 1) by insuring effective management of staff to provide municipal services at minimal cost, 2) by hard bargaining with employee groups and officials over salaries and benefits, 3) by making effective use of federal and state assistance programs, 4) by striving to prevent taxable property from being sold to tax-exempt institutions and, conversely, to place tax-exempt property back on the tax roll, and 5) by carefully managing expansion of tax ratables to spread costs over a larger base. #1, #2 and #3 also apply to the members of the Board of Education, who determine the school portion of your taxes.
Resistance to Change
Candidates for local office routinely express their concern for the tax burden borne by their homeowner constituents. However, once in office, these politicians must face the political realities of cutting costs and bargaining with employee groups. For example, members of the high-cost Police Department routinely complain about inadequate manpower, and can generate political support for their complaints. Privatization of services, as when the Board of Education hired an outside maintenance firm in 1993 at an annual savings of $1,000,000, aroused considerable community antagonism. Hard bargaining by the Board of Education can result in labor unrest, including threatened or actual strikes.
Stable Bureaucracy
Council members and Board of Education trustees come and go, whereas the bureaucracies they depend on are more permanent. Therefore, it is easy to go along with the way things have always been done and not rock the boat. Both municipal and school officials are subject to a plethora of State regulations and guidelines. This is particularly true in personnel matters, where the influence in Trenton of teacher, police and other State-level labor groups is considerable. The net effect is that local officials find that the bulk of their budgets, consisting of salaries and benefits, is essentially fixed, and often they are happy to hold annual increases close to the rate of inflation.
Revaluations
Every few years Englewood, in common with all New Jersey towns, is required to conduct a property revaluation. This has no effect on the total amount of taxes to be raised in any given year, but is merely a reallocation of the tax burden based on "fair market value," as determined by ostensibly qualified professionals. Our quarterly tax payment due August 1, 2007, will be the first one to reflect the recently completed revaluation.
Development
City officials determined some years ago that the best way to fund necessarily rising costs while minimizing the impact on residential taxpayers was to encourage more intensive development of Englewood’s industrial area. So the City created a zone for low-rise light industry for just that reason. However, as time went on, property values elsewhere rose much more rapidly. Consequently, the industrial area's tax contribution to the total became minimal. City officials argued for more intensive development, which translated into the construction of medium to high-rise buildings. This wave of more intensive development began in the 80s with the construction of the hotel and neighboring office building on South Van Brunt Street. Nearly complete are the Windsor Park project facing the County golf course and the Englewood South project just north of Rt. 4. Just getting under way is the controversial Flatrock Square project south of Rt. 4.
Controlling Development
Developments of this magnitude can over time have a major impact on Englewood financially, socially and politically. For this reason, City officials should proceed with care before signing off on major projects. Decisions which will have long-term consequences should not be made on the basis of short-term market factors or political motives. After all, new construction means new tax ratables, but it also means new costs.
The rule of thumb is that new construction which doesn't increase school costs is beneficial on balance. However, there are many other variables to be considered. The assumption that the construction of hundreds of new residential units won't place undue strain on municipal systems could, in retrospect, seem naive. Therefore, the larger a development project is, the more important it is to be aware of all its possible consequences.
Tax Rate Perspective
Englewood’s tax rate was formerly among the highest in Bergen County. By 2006, however, there were eighteen other Bergen County towns with higher rates, many of which do not have our full range of services. The following are the rates of selected neighboring towns in 2006, shown on an equalized basis to make them comparable:
Bergenfield 2.453
Bogota 2.112
Cresskill 1.631
Englewood 2.011
Fort Lee 1.687
Hackensack 2.267
Leonia 1.940
Ridgefield Park 2.376
Teaneck 2.419
Tenafly 1.910
What Can Be Done?
At the local level, your City Council members can positively affect the municipal portion of your tax bill in at least five ways: 1) by insuring effective management of staff to provide municipal services at minimal cost, 2) by hard bargaining with employee groups and officials over salaries and benefits, 3) by making effective use of federal and state assistance programs, 4) by striving to prevent taxable property from being sold to tax-exempt institutions and, conversely, to place tax-exempt property back on the tax roll, and 5) by carefully managing expansion of tax ratables to spread costs over a larger base. #1, #2 and #3 also apply to the members of the Board of Education, who determine the school portion of your taxes.
Resistance to Change
Candidates for local office routinely express their concern for the tax burden borne by their homeowner constituents. However, once in office, these politicians must face the political realities of cutting costs and bargaining with employee groups. For example, members of the high-cost Police Department routinely complain about inadequate manpower, and can generate political support for their complaints. Privatization of services, as when the Board of Education hired an outside maintenance firm in 1993 at an annual savings of $1,000,000, aroused considerable community antagonism. Hard bargaining by the Board of Education can result in labor unrest, including threatened or actual strikes.
Stable Bureaucracy
Council members and Board of Education trustees come and go, whereas the bureaucracies they depend on are more permanent. Therefore, it is easy to go along with the way things have always been done and not rock the boat. Both municipal and school officials are subject to a plethora of State regulations and guidelines. This is particularly true in personnel matters, where the influence in Trenton of teacher, police and other State-level labor groups is considerable. The net effect is that local officials find that the bulk of their budgets, consisting of salaries and benefits, is essentially fixed, and often they are happy to hold annual increases close to the rate of inflation.
Revaluations
Every few years Englewood, in common with all New Jersey towns, is required to conduct a property revaluation. This has no effect on the total amount of taxes to be raised in any given year, but is merely a reallocation of the tax burden based on "fair market value," as determined by ostensibly qualified professionals. Our quarterly tax payment due August 1, 2007, will be the first one to reflect the recently completed revaluation.
Development
City officials determined some years ago that the best way to fund necessarily rising costs while minimizing the impact on residential taxpayers was to encourage more intensive development of Englewood’s industrial area. So the City created a zone for low-rise light industry for just that reason. However, as time went on, property values elsewhere rose much more rapidly. Consequently, the industrial area's tax contribution to the total became minimal. City officials argued for more intensive development, which translated into the construction of medium to high-rise buildings. This wave of more intensive development began in the 80s with the construction of the hotel and neighboring office building on South Van Brunt Street. Nearly complete are the Windsor Park project facing the County golf course and the Englewood South project just north of Rt. 4. Just getting under way is the controversial Flatrock Square project south of Rt. 4.
Controlling Development
Developments of this magnitude can over time have a major impact on Englewood financially, socially and politically. For this reason, City officials should proceed with care before signing off on major projects. Decisions which will have long-term consequences should not be made on the basis of short-term market factors or political motives. After all, new construction means new tax ratables, but it also means new costs.
The rule of thumb is that new construction which doesn't increase school costs is beneficial on balance. However, there are many other variables to be considered. The assumption that the construction of hundreds of new residential units won't place undue strain on municipal systems could, in retrospect, seem naive. Therefore, the larger a development project is, the more important it is to be aware of all its possible consequences.
Tax Rate Perspective
Englewood’s tax rate was formerly among the highest in Bergen County. By 2006, however, there were eighteen other Bergen County towns with higher rates, many of which do not have our full range of services. The following are the rates of selected neighboring towns in 2006, shown on an equalized basis to make them comparable:
Bergenfield 2.453
Bogota 2.112
Cresskill 1.631
Englewood 2.011
Fort Lee 1.687
Hackensack 2.267
Leonia 1.940
Ridgefield Park 2.376
Teaneck 2.419
Tenafly 1.910
