The Ratables Race Does Not Pay
"While some appropriately placed development is both needed and fiscally prudent, many times the tax-ratables chase leaves us
in the red. In fact, while New Jersey is the most densely
populated (developed) state in the union, the Public Affairs Research Institute reports that 'no state in the nation which also levies both sales and income taxes relies on property taxation to
a greater degree than New Jersey.' The average property tax bill in New Jersey doubled between 1980 and 1990. This explodes the myth of the benefit of 'ratables chase', i.e., that
additional ratables will lower property taxes. The decade of the 1980s was a period of record construction, adding thousands of new homes and commercial buildings."
Assemblywoman-District 22 ___________________________________________________
Over the 20-year period from 1972 to 1992 Rockaway Township was 7th among the 39 Morris County municipalities in the gaining of new commercial and industrial ratables. Yet the towns with the highest proportion of commercial and industrial properties do not have the lowest tax mil rates. These towns pay almost the same proportion of total taxes levied, proving that the cost of running government is not reduced for homeowners by the increase in commercial and industrial ratables – there have been no decreases in tax mil rates, basically because they do not fulfill their promise to lower government costs and residential taxes.
THE MYTH OF RATABLES
Leonard W. Hamilton, PhD
Paul B. Wehn, PhD
In a study on the economics of Princeton buying land with Green Acres funds* or allowing it to be developed, it was determined that new single family homes in Princeton impose a net burden on tax payers because they contribute more public school children than the average existing household -- 1.5 children versus 0.4 for existing households. In addition, the cost to educate a child is $10,000. Payments to Green Acres for purchase of the land was found to be far less of a tax burden than the subsidizing of new homes.
ECONOMIC ANALYSIS OF ACQUISITION OF
INSTITUTE FOR ADVANCED STUDY LANDS BY
May 7, 1991
Delaware & Raritan Greenway, Inc.
* In the Princeton analysis, the Town would be required to repay Green Acres for a low interest loan. In the case of Copperas Ridge, State Green Acres has proposed purchasing the property and thus Rockaway Township funds are not required. In addition, with the State purchase of land. Green Acres routinely provides payments in lieu of taxes in a 13-year payout, beginning at 100%.
In a study of Mendham Township, it was determined that only homes assessed at $850,000 or more pay for themselves and that a new development of $500,000 homes would result in the general taxpayer subsidizing each new home at $5,932 due to the increase in school population. It was determined that each new house would average 1 new public school student at a cost to educate in the public system of $11,176 per child. The average annual tax increase per household would amount to $385 if the property were to be developed as proposed, but if the property were to be purchased with Green Acres funds, the average annual increase would amount to $104 until the 20 year loan was paid back.
ECONOMIC ANALYSIS FOR
SCHIFF RESERVATION IN MENDHAM TWP.
Citizens for Controlled Development
Schiff Reservation Preservation, Inc.
December 15, 1993
In Randolph Township it was determined that expensive new homes add 1.9 school children per 5 bedroom home and 1.3 for a four bedroom home.
Randolph Township Master Plan
In Kinnelon a study of a proposed development determined that a $450,000 new home would result in a tax loss of $4,164 per home because of the addition of 1.3 children to the school system per four bedroom home. The cost to educate children in Kinnelon is $10,285 per student.
Proposed Development Comparisons
For a Kinnelon Subdivision
In a Dutchess County, New York, study it was determined that residential properties cost $1.36 for each $1.00 of revenue. It was determined that the cost of increased government services to accommodate new growth is substantial. Prevention of costly suburban sprawl makes good economic sense.
John Humbach, Professor of Law
Dutchess Land Conservancy
Often communities presented with development proposals are told these projects will increase the tax base and thereby lessen the burden on local taxpayers. This is not usually the case. in fact, as this study demonstrates, where housing is proposed, the opposite is true -- those developments end up costing more in services than the taxes they generate. By contrast, open space and agricultural lands costs so little in services that overall they are a plus for the tax base even though they may not generate as much in total taxes as more developed land.
THE REAL COST OF DEVELOPMENT
Scenic Hudson, Inc.
Morris Parks and Land Conservancy
Research by Diane Nelson