New Rutgers Research Looks at Unequal Property Tax Burdens, Multiple Causes
Ouch! Property Tax Bite Hurts More in Some Towns, but not for Reasons Most Often Cited
NEW BRUNSWICK, N.J. – With New Jersey’s property taxes frequently cited as among the highest in the nation, their unequal burden on the state’s municipalities and residents is a topic of continual debate at town meetings and in the media.
But new research issued by Rutgers’ Center for Government Services (CGS) finds that two of the most oft-cited causes – high levels of municipal and school spending – are rarely responsible for the excessive property tax burdens in the state’s most burdened municipalities.
Rather, says the researcher, Dr. Ernest Reock Jr., it’s much more complicated than that.
In his paper, “Determinants of Property Tax Burden in New Jersey – 2008,” Reock offers a methodology for identifying the causes of the relative tax burden in cities and towns – causes that often reach beyond municipal and school expenditures to county and state levels of taxation and funding. He specifically looks at ’08 in comparison to 2004 to identify statewide changes, such as declining property values, which began to have a profound impact on property tax burdens across New Jersey in 2008.
“The property tax in New Jersey is far from the monolithic monster often portrayed,” writes Reock, professor emeritus and former director of CGS. “It is more complicated and diverse, having different impacts for different reasons throughout the state’s many municipalities … A factor that causes high taxes in one place may be the salvation of another municipality.
“Too often, attempts to ‘solve the property tax problem’ try to apply sweeping restrictions without identifying the different components of the ‘problem’,” he concludes.
Reock proposes a new model for a Property Tax Burden Index - a tool for measuring the distinct property tax burdens on New Jersey’s municipalities. He uses 12 primary determinants of property tax burden broken into four broad categories – local financial resources, expenditures, demographics and state aid – to evaluate and compare the tax burdens in the state’s municipalities.
The paper identifies the 30 most heavily burdened New Jersey municipalities* in 2008 (the most recent year with complete data), and analyzes 12 of those in detail to illustrate various patterns of determinants. The paper also includes a table showing the property tax burden rankings of nearly all of the state’s municipalities for that year. Data and formulas are included, permitting local officials in other communities to make a similar analysis of their own situations. Reock’s findings include:
- The heaviest property tax burdens are found in small, older suburbs that have low property tax bases and limited personal incomes among their residents.
- Among the most burdened municipalities, only one – Pohatcong in Warren County – was most affected by the high county tax levy per capita.
- Urban areas tend to be less burdened, especially those benefitting from state aid to education.
- The most heavily burdened municipalities generally have very limited financial resources.
- State municipal aid is insufficient and poorly distributed and state tax rebates do not correct the imbalance.
- High property tax burdens do not necessarily correlate with high public expenditures.
- The tiny borough of Alpine in Bergen County, known as the country’s “wealthiest zip code,” had the lightest property tax burden relative to the determinants.
“Dr. Reock’s research offers an important perspective on property taxes in New Jersey and a new way to compute their burden on individual communities,” said Alan Zalkind, director of the Center for Government Services. “This information can be useful to local governments as they develop their budgets and evaluate their impact on residents. It can also help legislators gain a better understanding of why property tax burdens are unequal.”
An authority on state government, Reock officially retired in 1992 as director of CGS, but continues to do research and teach part-time for the center. He joined what was then the Bureau of Government Research at Rutgers as a graduate student in 1950. He went on to earn a Ph.D. in political science, while becoming the bureau’s most prolific researcher.
Reock’s longest-running project, the annual Legislative District Data Book, was first published in 1976, and is regarded as the state’s most comprehensive source of official data about New Jersey, its counties and municipalities. The 2013 Data Book, which is being published this month, includes data that can be used to calculate municipal tax burdens.
The Center for Government Services (CGS) has been providing timely and relevant training for New Jersey state and local officials for more than 60 years. The Center was established in 1991 from the consolidation of the Bureau of Government Research (created in 1950) and the Department of Government Services.
CGS aims to improve the knowledge, competency, and professionalism of state and local government employees and officials. More than 8,000 individuals are trained each year through 22 separate programs that include more than 750 individual courses, seminars, and conferences. For more information, go to cgs.rutgers.edu.
*Woodlynne, Roselle, Salem City, Woodbury, Hillside, Lawnside, West Orange, Laurel Springs, Orange, Lindenwold, High Bridge, Haledon, East Orange, Prospect Park, Penns Grove, North Plainfield, Stratford, Somerdale, Barrington, Glassboro, Ridgefield Park, Bloomingdale, Newton, Irvington, Willingboro, Pohatcong, Pompton Lakes, Mount Ephraim, Washington Borough, Magnolia.