By Lakewood Mayor Steve Langert
“You can’t escape the responsibility of tomorrow by evading it today.” —Abraham Lincoln
It seems everyone is fed up with taxes. The members of the Township Committee and I take your comments about taxes and the quality of life in Lakewood very, very seriously. The decisions we make, as a result, always have you and your wishes in mind.
One question people have is, “Did my taxes go up or did they go down?” The Township Committee and I recently introduced a budget with a Zero Tax Levy increase, meaning no increase in the taxes. In fact, our proposed budget reduces spending by a nominal amount. So why did some people see a raise in their taxes when the overall tax levy of the town remained flat? Before I explain that paradox, let’s talk about what we have to work with.
We lost $1.3 million in aid from the state, which means we had to find a way to cut $1.3 million just to make up what we lost in that revenue. In addition, we have to budget additional money to cover legal fees and other costs that resulted from the approximately 4500 tax appeals we had last year. The loss of state aid and the cost of the tax appeals alone could possibly add up to over $2 million. We had to find a way to cut that amount of money from our budget in order to make up for the additional expenses and loss of revenue.
In addition to that, we have contractual obligations we must take into consideration. And what about the cost of utilities? I’m sure you have seen your own personal costs go up — electrical costs, gasoline costs, maintenance costs, etc. These same costs also affect the operation and maintenance of our township buildings and vehicles. Where is that money going to come from?
I want to commend the township manager, the township committee, and all those involved who have taken a sharp knife to the budget, cutting wherever we could. There will be those who say, “Well, you know, you can cut more”; but there reaches a point of diminishing returns. We want to be able to provide the highest quality of municipal services that we can.
Now to answer your questions about your taxes and assessment. What happened? The intent of a tax levy is to make sure everyone is paying his or her fair share. For example, let’s say our town has 100 properties and they were worth $1.00 each. If the town needed to raise $100.00 in order to function, the tax assessment of each property would be $1.00.
After a number of years, some houses/properties would be worth more than $1.00 and some would be worth less than $1.00. So the state mandates a reassessment to make sure everyone is still paying his or her fair share. With the new assessment, however, it comes to light that instead of being worth a $1.00, the houses are now worth $.50. Everyone is thrilled-taxes will go down, right? Well, not quite….
It’s a balancing act. The township still needs to collect the same $100 to provide services; therefore, they raise the tax rate to $2.00 so they can collect the amount needed. Basically everybody is still paying the same amount; but because the assessment changed, the tax rate had to change.
In our case, because the values went down, the tax rate had to go up. But remember, everyone is supposed to be contributing equally. Our task is to figure out a formula that will keep everything the same as the previous year. The tax rate increased approximately 20 percent so if your assessment went down by 20 percent exactly, your taxes will remain exactly the same. If your assessment went down by 30 percent, you would actually see a drop in taxes. If your assessment went down by 10 percent, however, your tax bill will go up because of the reassessment, not because of an increase in taxes.
Please take note, that if your taxes have increased this year due to the reassessment, you will see the increase in the third and fourth quarters only. For example, let’s say someone’s taxes increased $500 because of the reassessment. Normally that increase would be spread over four quarters, making the amount owed $125.00 each quarter. Since we only have two quarters left this year-the third and fourth quarters-the increase would have to be $250.00 each quarter.
Before the reassessment of property, logic dictates that if your assessment went down by less that 20 percent then you have probably been under assessed and paying less than your fair share; others have probably been paying more than their fair share. After the reassessment and a new formula, everything should even out. Those whose taxes drop will be ecstatic, of course; those whose taxes don’t change will be happy; and those whose taxes go up will be angry.
I am happy to say that when we originally went out for reassessment in 2009, when I first came on the Township Committee, the committee authorized the assessor’s office to spend up to $700,000 for the reassessment. I was actually able to lower that to $560,000, and recently we have been able to negotiate a further reduction of about $35,000. So I am proud to say that with the support of the committee I renegotiated with the vendor and we were able to save $175,000 of taxpayer money.
As a result of the reassessment this year, there are less than 500 defendable tax appeals, which should mean a relief for the taxpayers in next year’s budget. The Township Committee and I feel this is a direct result of the attitude of the assessor’s office. Now when someone files an appeal, the assessor is looking at it and trying to settle it before we have to spend money defending the appeal. The assessor’s office is a lot more customer friendly this year.
I am proud that in my first term as mayor I have introduced a budget with a zero tax increase. We are all extremely aware of the economy and the tax issues facing each and every one of us. Please be assured that we will continue to do everything we can to control expenses. We have already made plans to begin working on next year’s budget. ###