Are you a Princeton resident? Than you know the issue of whether Princeton Borough & Princeton Township should consolidate is a HUGE question this fall. Here is a recent press release from the New Jersey Association of Realtors regarding the consolidation question. Enjoy! – Josh W.
Edison, N.J. – ‘The New Jersey Association of REALTORS® (NJAR®) Governmental Research Foundation (GRF) today released a group of three reports on methods of controlling property taxes in New Jersey. The first two studies show the benefits associated with consolidating either services such as police, fire, municipalities or school districts. The third report details how property taxes can be controlled and ultimately lowered by the new 2.0 percent property tax cap that took effect at the beginning of this year. The reports listed below were conducted for NJAR® GRF by the Ball State University Center for Business and Economic Research:
Local Government Consolidation: Potential Savings Due to Economies of Scale & Efficiency Gains, Analysis of Public School Districts
An Examination of the Economic Impact of Property Tax Levy Caps on Economic Activity in New Jersey
According to NJAR® Chief Executive Officer Jarrod Grasso, “NJAR® GRF is proud to have commissioned these studies because we believe they can provide a road map of the next steps we must take to combat soaring property taxes. These three reports were prepared because REALTORS® are an integral part of the communities we serve and we understand the tremendous hardship high property taxes have on Garden State residents. Determining ways to control the property tax burden isn’t just a means of helping more people achieve homeownership, it’s also a common sense approach to keep families in New Jersey and in their homes.”
In the first two reports on consolidating municipal services and school districts, researchers studied consolidations using two types of procedures, the economies of scale model and the efficiency model. The economies of scale model examines how the cost to operate local government services and/or school districts can be decreased by spreading out the cost of those services among a larger group of taxpayers. The efficiency model examines how the costs for the same services can be decreased by lowering the number of government units within a county. In the consolidation reports for both local government services and school districts, it was found that while savings to property taxpayers were present in both models, savings were minimal in the economies of scale model but the efficiency model had the potential to be substantial.
According to Dr. Michael Hicks, Director of the Center for Business and Economic Research at Ball State University, “Our study found that inefficiencies associated with the proliferation of local governments increases the costs of government in the state (the average Garden State county has 57 local governments). Consolidating one school district, for example, so that there is one less school district in a county, could lead to $7 to $10 million in savings according to our estimates.”
“The two reports on consolidation concluded that, while the potential for lower property taxes is high by reducing the number of governmental units in a county, that cost savings for taxpayers would be subject to other fiscal decisions made by local governments facilitating the consolidation. These include contract decisions for employees in the jurisdictions where the consolidation occurs,” Grasso added.
The third report on the recently enacted 2.0 percent property tax cap shows that this reform put in place by Governor Christie and the State Legislature on a bipartisan basis will in the long-term, not only lead to lower property taxes for New Jersey residents, but also will be responsible for higher household incomes, and an increase in both employment and business sales in the Garden State.
According to Dr. Dagney Faulk, Director of Research for the Center for Business and Economic Research at Ball State University, “In New Jersey, the full effect of the levy caps that were implemented this past January will be economic growth of roughly 1.5 percent, 78,500 more jobs and effective growth in income of more than $1,100 per household.”
“The study detailing the positive effects of the 2.0 percent property tax cap clearly shows that New Jersey is positioning itself to be an incredible relocation option for families and businesses. It also indicates that we are making strides in our efforts to create more affordable conditions for our current residents,” said Grasso.
“The study showing the positive impact of the 2.0 percent property tax cap is proof that bipartisan cooperation can lead to sensible and effective policy solutions. While progress has been made in the fight to control property taxes, there are issues that still need to be addressed, including the consolidation of government services. New Jersey REALTORS® encourage lawmakers to continue working with municipalities and school districts to help implement consolidations that will lower property taxes without affecting the quality of services being provided. While there is no silver bullet to fix the Garden State’s property tax crisis, the consolidation of government entities is another tool that we should consider utilizing,” Grasso concluded.’
To view the reports in full, visit www.njar.com/about_njar/grf.
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The New Jersey Association of REALTORS®, with approximately 45,000 REALTOR® and REALTOR-ASSOCIATE® members, is one of the largest trade organizations in the state. NJAR®’s membership is comprised of real estate professionals who subscribe to a strict code of ethics and are members of the national and local REALTOR® organizations. As the leading advocate for the real estate industry and private property rights in New Jersey, NJAR® is committed to protecting the dream of homeownership. For more information, please visit www.njar.com.
The NJAR® Governmental Research Foundation (GRF) was formed in 1999 to research issues; to promote knowledge of, conducted research, and assist in issue research in the field of real estate and related fields; and to inform and educate the public on subjects of the public interest and general concern pertaining to real estate, land use and related topics.