Readington Debt, Values, Assessments and Taxes: Preliminary View

November 1, 2016


CFR has gathered updated data on the town’s finances for your benefit.   We realize this is complex and did our best to simplify the important items that affect our property tax bills.  


Debt

The debt owed by Readington Township dropped slightly in 2015.  The debt at the end of 2015 was $56.55 million, down 1.15% from $57.21 million at the end of 2014.  This drop occurred despite additional borrowing to finance the purchase of an expensive new rescue squad vehicle.  Readington’s debt has dropped in five out of the last six years.  (See the various debt reports on http://www.readingtontwp.org/finance_main.html.)  Kudos to the Township Committee.  

Debt owed by the Readington School District increased temporarily this year as it repaired steps and repaved driveways and parking lots.  This temporary debt will be paid off in 2017 from money already set aside and thus will not affect tax rates.  The long-term trend in debt for Readington’s schools is downward.

 Property Taxes

Property taxes for the current tax year are distributed as follows: 39.7% for Readington’s schools, 25% for the regional high school, 18.9% for the municipal government, 14.4% for Hunterdon county, and 2% for open space, according to the information printed on the tax bills.  

Over the last four years total property taxes have increased by 5% or just over 1% per year; over the last 10 years property taxes have increased by 8.7%, or less than 1% per year.

Municipal Taxes

Every election year the budget and taxes for the municipal government become an issue.

CFR investigated and our findings are that the total budget has been managed well.  The difficult part is how that budget gets put into the tax rate and the tax bill.  Here are reasons why a comparison between carefully selected years could produce a misleading result. 

  • The clean-up from Hurricane Sandy affected the budget in 2013, 2014 and 2015.  Most of these costs were paid by FEMA, but the expenses are still counted in the total budget.
  • The township’s adopted budget for the 5 years: 2011-2016 (without FEMA impacts) increased by 9% or 1.8% per year.  Nice.
  • Between 25% and 30% of the budget is funded by state aid, fees, collection for delinquent taxes, and other sources.  These amounts vary from year to year.  The remainder has to be collected through property taxes ($13.7 million in 2016).
  • The municipal tax rate is determined by dividing this $13.7 million by the township’s total property value (For ease of calculations, the tax office uses “assessed” value, sometimes called rateables).
  • A complicating factor is that Readington’s assessed value was lowered over a three year period 2011-2013.  Recall that the selling price of homes declined with the great recession and the new lower assessed value was simply a way that the tax office reflect the lower selling prices.  Your property value was lowered during one of the three years.  In that year, your taxes fell.  During the other two years when other properties were reassessed lower, but your property value remained the same, your taxes increased.  For example, one CFR member’s municipal tax bill went down 5% in 2012, the reassessed year, and up 11% in 2013. 
  • Bottom line, municipal property taxes have increased by 2.3% per year between 2013-2016, or 7% overall.  If the reassessment year of 2012 is included, the average would be higher, if 2011 was included, the average would drop.   Individual homeowners may have a different experience in 2011, 2012, or 2013 depending upon when their property value was lowered.


 Total Township Assessed Value

The total township assessed value is the sum of all the township’s homes, businesses, farms, etc.  The total value is important in determining the tax rate. 

 As of December 31, 2015, the overall township assessment is down very slightly, by one-half of one percent (-0.5%).  (Data from the assessor’s office)

 The overall decline is mostly due to lower assessments on a few Merck buildings, partially offset by the addition of new homes in the Regency at Readington subdivision.  This subdivision is senior housing and thus does not add children to the school system.

Budgets

The presentation of the township budget for 2016 can be found at:

http://www.readingtontwp.org/finance-docs/2016-budget-presentation.pdf.

The taxpayer portion of the school budget for school year 2016-17 is up by one percent, (+1.0%).  http://www.readington.k12.nj.us/cms/lib011/NJ01000244/Centricity/Domain/12/User%20Friendly%20Budget%201.pdf