Demand Fair Property Taxation: Using the Equalization Ratio as a Civic Tool

How can taxpayers ensure that local municipal and county governments are keeping property taxes fair and balanced?

This excerpt is from the “Standards for Valuing Property” pamphlet published by the NJ Treasury.

One suggestion: make sure that assessed values, i.e. the value of properties on the tax rolls, fairly reflect market values. One way we can do that is to refer to the annual equalization ratio, also known as “the Director’s Ratio”.  Taxpayers can demand that local government reviews this ratio on an annual basis, and votes up or down to conduct a citywide revaluation (this could, for instance, be in the form of a resolution).

The equalization ratio is the average of assessed values in the town divided by the average of market of values. This ratio tells us how in-synch or out-of-synch the municipality’s tax assessed values are. The ratio is published annually by the state of NJ here and also here (for 2018).

Per NJ state guidelines, if the city’s equalization ratio falls below 85%, then the city should consider conducting a citywide revaluation. Of course, a citywide revaluation involves a cost-benefit trade-off since the city must pay a 3rd party appraisal firm to conduct the revaluation.  But of course the larger issue is fair taxation, and ensuring all taxpayers are being taxed fairly.

I wrote about the equalization ratio in my Property Revaluation series that I began writing in January 2016, nearly 3 years ago. I was prompted to write the series after listening to Mayor Fulop and those aligned with him on the City Council speak incorrectly to the revaluation process. The deliberate stalling of the revaluation process led to unfair taxation for wide swaths of Jersey City taxpayers. For instance, the revaluation process revealed that homes on one street in Jersey City (Neptune Avenue) realized an estimated $511,000+ in decreased property tax expense once assessed values were finally updated as part of the citywide revaluation process.

Since writing the series, I’ve learned how to use Tableau, an interactive data visualization software. That led me to publish the list of equalization ratios for every municipality in NJ – that is below.  In the table below, readers can see all equalization ratios, ranked from lowest (potentially most unfair) to highest (where assessed values are most consistently uniform with market values).  There may be reasons why some towns have lower vs. higher ratios; it is ultimately up to that town’s taxpayers to come to an understanding as to what is driving the ratio (low or high) and petition local government (municipal and county) to act accordingly if the ratio indicates lack of fairness in assessment values. For now, I hope this is a useful tool and can spur some civic thought around fair property taxation. Another thought/idea I have, and this is a bit of brainstorming on my part, is to build in the coefficient of deviation ratio — I’d have to compile that data, something I hope to do for a future post and visualization.

One note: the data below reflects data current through 2017. I will publish 2018 data (which includes Jersey City’s revaluation process) once that data is published on the state website.

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