This is part of a series about the 2022 Jersey City budget. To see the full series, click here. For a listing of public data used in this post, please see the bottom of the post.
Many thanks to those in community who gave feedback about this topic/post and helped improve it from concept to published post.
Midway through the year, property tax bills are being adjusted for new local tax rates and questions arise, including:
- What might the new total tax expense be in 2022, based on 2022 local government budgets?
- What is the new breakout of school versus municipal versus county tax?
- And…where do the local tax rates come from, anyway?
Hudson County View provided a good overview of this topic last month here. That was a good primer for me personally, but I wanted to write up a post about how we can glean insight into these questions by looking at the three local budgets (schools, municipal, county) and also the tax base data. I’ve attempted to visualize some of these insights below, with the caveat that this is based on a final schools budget, a final county budget, but an introduced city budget that could still change (which, if it changed, would change the tax expense calculation). Also important to point out: the visual below provides an annualized view, in anticipation of what the total tax expense may be at the end of the year.
I’ll highlight upfront facts and assumptions that are at work in the visual:
- The 2022 schools levy is finalized per a budget approved in May.
- The 2022 county levy is finalized per a budget approved in July.
- The 2022 municipal (aka city) budget is not yet finalized but we have an introduced budget as of June 15th, 2022 which is what I’m using in this post.
- See the bottom of this post for additional context, disclaimers, and links to public data.
Let’s dig in.
Example: $462,000 assessed home.
Jersey City’s average residential assessed value per 2021 tax records was $462,000 so I’ll use that as an upfront example to illustrate the tax math.
How total tax expense may change from 2021 to 2022
A home assessed at $462,000 paid about $7,408 in property tax in 2021, which is shown in the visual but you can also see this in the public records here. In 2022, the tax expense would increase about $2,219 to $9,626.
What’s more, that $2,219 increase in total tax expense would be driven by:
- $1,244 school tax increase,
- $1,050 municipal tax increase, and
- $76 county tax decrease.
So this is the change in tax. Now let’s dig into more detail about 2022 specifically.
How the allocation of school, municipal, and county tax could look in 2022
As I noted above, in 2022 our sample homeowner would pay $9,626 in total property tax. That total tax bill be broken out as follows:
- $3,997 in tax to help pay for the public schools
- $3,651 in tax to help pay for the municipal government, and
- $1,979 in tax to help pay for the county government.
Importantly, this “split” is specific to 2022, and it’s different from 2021. To understand this allocation of our total property tax to municipality, schools, and county, we have to look at the underlying tax levies that are within each government’s annual budget, and that ultimately get passed to taxpayers through the tax bills. Let’s use a pizza pie to help illustrate.
Imagine the entire tax levy — all the property tax needed to fund all three governments – like a pizza pie. Each year, that “tax levy pie” can be sliced in three — one slice for the schools, one slice for the municipality, and slice one for the county.
When the three tax levies – in total – increase, that is like the pizza pie getting bigger…like going from a medium to a large pie. And at the same time, as the individual tax levies change, that is like the slices of the pie growing bigger or smaller in relation to each other.
So there are two important tax-related shifts happening each year based on tax levy movement alone: the entire pie is changing size, and the slices within the pie are also changing size.
Here is how these levy shifts would play out in 2022, given the already-approved schools and county levies, and if the city levy passes as proposed:
- The total tax levy will increase by over $200 million, from $636 million in 2021 to $852 million in 2022; this is the levy “pie” growing larger.
- The slices within the larger 2022 pie would also shift in size. Specifically:
- The public schools would consume 42% of total property tax in 2022, vs only 37% in 2021. So schools would claim a larger slice of the pie in 2022.
- The municipal tax would consume 38% of total property tax in 2022, vs only 35% in 2021. So the municipality would also claim a larger slice of the pie in 2022.
- The county tax would consume 21% of total property tax in 2022, falling from a 28% share in 2021.
A final note. I’ve been asked repeatedly: what do the average ‘slices’ look like throughout NJ? Meaning, how do most towns and cities divvy up the tax burden between the public school system, the city, and the county? Here’s what the state data tells us:
- The state average for the allocation of property tax towards the public schools is 53%; so Jersey City would be below the state average in 2022 with respect to allocation of tax to the schools.
- The state average for allocation of property tax towards the municipal government is 28%; so Jersey City would be above the state average in 2022 with respect to allocation of tax to the municipality.
- The state average for the county’s share of property tax is 19% and thus Jersey City would be above the state average for county tax, too, with respect to allocation of tax to the county.
Now, for the visual. The default assessed value is $462,000 which is the sample home referenced above. But, you can input your assessed value and see how the numbers shake out. I have a “Tax Math Explainer” below the visual to help a reader walk through the math and learn the nuance.
Check out other posts in this city budget series & related topics:
1. Series Kickoff: the 2022 Municipal Budget
2. Jersey City’s 2022 Municipal Budget: the Big Picture
3. Jersey City’s 2022 Municipal Budget: a Focus on Structural Expense
4. Jersey City’s 2022 Municipal Budget: Focus on Revenues & Increasing City Tax Levy
5. Learn about school levy and budgets on my public schools landing page here.
Tax math explainer.
I put effort into sharing insights on Civic Parent mostly so that others can learn too. My hope is that readers will feel empowered to dig into the data and engage in these numbers in community.
The math driving all of these insights is fairly straightforward, with a tax rate formula at the center:
Tax Rate = Tax Levy / Tax Base
What can complicate the landscape is that we have three local governments (schools, municipality, county) and each has its own tax rate. But to understand those rates, we really have to understand the tax levies and the tax base.
Tax Levy & Tax Base.
Key public data used in the visual include:
1–each government’s tax levy (the amount in property tax used to fund the budget) and
2–the tax base (the sum total of all the real estate in the community).
3–these two numbers give us the local government’s tax rate.
These numbers live in public data, notably three different government budgets and tax base data published by the county.
Tax data: like pieces of a civic puzzle that taxpayers must put together.
Tax expense math is like putting together pieces of a civic puzzle that are hiding in plain site within the public domain. Some of this data is compiled by the state and easy to access on a historic basis if you are comfortable working with spreadsheets. For example, the Department of Community Affairs website (here) is the source for the 2021 data you see in this post.
But the three local governments we pay property tax to do not have individual mandates to create one holistic visual for us, in real-time, as the budgeting process is playing out. That’s part of what can make this topic confusing. So we are left, in a civic space, to put this data together on our own.
We do see a micro-view of this puzzle in our tax bills which contains a total tax rate (and sometimes the individual tax rates) and the real-time tax expense. But the tax bill is an incomplete picture because it does not contain information that drives the tax rates, notably the three levies and the tax base. What’s more, the tax bill doesn’t tell us what the government is proposing to demand; rather, it contains what is now final and actually demanded.
So the true “proposed” amount in tax is in the budgets, and that’s why the budgeting process is so important.
In my view, the DCA has done a good job attempting to improve its visuals each year, though taxpayers do need to dig into Microsoft Excel to access those visuals and not all taxpayers have that skillset. In my view, all of this data could (and should) be web enabled via Tableau or other business analytics software, similar to what the state has done with COVID-19 dashboards.
Post Script: 3rd Quarter Tax Bills in Jersey City
The visualization in this post uses public budget and tax base data to provide acalendar year view of tax expense. This visualization does not attempt to re-create or provide insight into an actual tax bill on a quarterly basis. That said, I did want to point out something that I was curious about when I received my own tax bill, which was the 1.88 tax rate. I did some digging and confirmed that:
- the new 2022 school tax rate (0.8651%) plus
- last year’s municipal tax rate (0.5629%) plus
- last year’s county tax rate (0.4448%) adds up to
So our tax bills in Q3 are using the approved school rate for 2022, but the since the city and county tax rates were not yet approved by the start of Q3, those rates are not yet reflected in our Q3 tax bills. I don’t want to delve too much further into tax bill mechanics or process; I defer to local city officials (including elected reps) on that.
Post script: Jersey City vs state averages.
In obtaining feedback on the visual above, I was asked if I could share information about the statewide average allocations of municipal, school, and county tax. I put that together too, but note this is for 2021 (not 2022). The 2022 statewide data is not yet available.
Notes / Disclaimer / Etc.
- This visualization uses public budget and tax base data to provide a calendar year view of tax expense for teaching purposes around the topic of property tax. This visualization does not attempt to re-create or provide insight into an actual tax bill.
- All 2021 data in this visual was sourced from the Department of Community Affairs “Property Tax Tables” for 2021 located here.
- All 2022 data in this visual was sourced from available public data at the time this post was published.
- The schools operate on a fiscal year beginning July 1st and pass a budget for the fiscal year. The state however apportions the levy on a calendar year basis by averaging two fiscal year levies. For example, the fiscal year (FY) 2020/21 school levy and FY 2021/22 school levy are averaged to arrive at the calendar year 2021 school tax levy.
- There is a small (<1% of total budget) amount of school district tax that appears on the city’s budget, as part of overall municipal property tax, called “Addition to local school district tax.” This is tax collected by the city to service school-related debt. The state’s “Property Tax Tables” backs this school tax out of the municipal levy and adds it to the school levy. I have done the same in this visual for 2022, backing $1.586 million of school district tax out of the introduced municipal budget‘s total municipal levy and including it instead in the 2022 school tax levy.
- The municipal and county operate on calendar years. It is typical for both municipal and county governments to pass their budgets during the calendar year.
- Tax base assessed value data and 2021 School, Municipal, and County levy data were sourced from the Department of Community Affairs’ “2021 Property Tax Tables” located online here.
- The 2022 tax base assessed value was sourced from the “Final Equalization Table” for Hudson County, certified on March 7, 2022 by the Hudson County Tax Administrator, located here.
- The 2022 proposed city tax levy was introduced on June 15th and is viewable online here.
- The 2022 school tax levy was passed in May 2022 and is viewable in the 2022-23 advertised budget, on page 12, here.
- The 2022 county tax levy was introduced on June 9th (introduced budget viewable here) and passed on July 11th. Details about the final approved budget were reported by NJ.com here.
- You can view your own tax bill expense in the Jersey City online payment system here.
* This visualization is for general teaching purposes only and should not be relied on for accounting or tax advice. This post does not attempt to explain a taxpayer’s tax bill; readers should contact the city tax office for questions related to a tax bill.