For years Plainsboro’s residential taxpayers benefited from lower taxes due to the township’s efforts to keep the tax valuations of commercial properties close to their actual market values.
This year, as the numbers from the township-wide property revaluation hit the books, the time has come for homeowners to pay the piper — to the tune of a school tax increase of almost 28 percent on the average house.##M:[more]##
Skyrocketing residential values coupled with commercial values that were much closer to market rates are resulting in a bitter tax pill this year that is going to be tough for many homeowners to swallow.
And the situation will get worse for homeowenrs if some of the largest comemrcial property owners have their way. A day before the April 1 filing deadline, six companies had already submitted appeals seeking to lower their new valuations, according to Township Administrator Robert Sheehan. Filing were Merrill Lynch for its complex on Scudders Mill Road; Firmenich on Plainsboro Road; American Re on College Road; the Doral Forrestal hotel and conference center on College Road; 109 Morgan Lane, currently occupied by Duramed Research; and the PNC Bank branch on Plainsboro Road.
Successful commercial appeals by these companies would further shift the tax burden toward residential taxpayers.
The West Windsor-Plainsboro Board of Education approved a $136.24 million budget for 2005-’06 earlier this month. Voters will have an opportunity to vote on the spending package during the annual school election on Tuesday, April 19.
Based on numbers released by the township and the school district, the average residential property owner in Plainsboro will pay some $150 more in municipal taxes (see story on page 20) and a more than $1,”000 increase in school taxes.
According to the school district, the new tax rate in Plainsboro will be $1.42 per $100 of assessed value. That means that the owner of a home assessed at the township average of $395,”000 after the revaluation will pay $5,”609 in school taxes this year.
In 2004, the owner of the same average-valued home — then set at $190,”700 — paid $4,”392 in school taxes, based on a tax rate of $2.29 per $100 of assessed value. The difference of $1,”217 equates to a tax increase of 27.7 percent.
An actual example looked at by the News — a typical town house in Princeton Landing — showed similar numbers. In 2004, on a property assessed at $159,”900, the homeowner paid $3,”656 in school taxes. After the revaluation, the townhome’s valuation was increased to $340,”000. Based on the $1.42 tax rate, the homeowner will pay approximately $4,”828 this year in taxes — an increase of $1,”172, or 32 percent. The municipal portion will also increase.
But most homeowners won’t know the actual impact of the revaluation until they receive their tax bills this summer. Residents seeing the biggest increases will be the owners of condos, townhouses, and older homes that were significantly undervalued. “It appears that the older homes are the ones being hardest hit,” says board member Henry Wieck, a Plainsboro resident. “That’s because the newer homes were already assessed closer to their true value.”
In West Windsor, the school tax increase will be comparatively painless, increasing from $2.54 to $2.57 per $100 of assessed valuation. The owner of a home assessed at the township average of $239,”000 would pay $6,”142 in school taxes this year, about $72 more than in 2004. West Windsor is currently conducting a revaluation that will go into effect next year.
According to tax experts, one reason Plainsboro’s residential property owners are seeing such a substantial tax increase is because residential property valuations were so much lower than market value and relatively lower than than commercial property valuations.
During the 1990s Plainsboro aggressively pursued tax appeals against commercial property owners to raise the valuations of their properties close to market value.
Ironically, the township was successful in increasing the valuations on many of the properties that filed tax appeals this week, including Merrill Lynch, American Re, a number of buildings in Forrestal Center, the Doral Forrestal, and the Westin Hotel in Forrestal Village. Because those properties were already close to their market values before the revaluation, they will see a lesser impact on their taxes.
“This trend is being manifested in our values as a result of a supercharged residential market and a commercial sector that is still trying to get its legs and get back from a downturn,” says Plainsboro Township Administrator Robert Sheehan. “This isn’t just something that we’re seeing in Plainsboro, but in many other communities in central New Jersey and even throughout the state.”
Sheehan adds that the township plans to be mindful of a downturn in the residential market. “Going forward we’re going to monitor things to keep values as current as possible. We’re going to watch very carefully and if residential values start to slip, then we will make adjustments.
Also factoring into the equation is the fact that once again this year Plainsboro is bearing a higher portion of the school tax increase than West Windsor. The exact number is difficult to calculate due to the revaluation, but the Plainsboro officials estimate that the tax hit is about 14 cents per $100 of assessed valuation as opposed to 3 cents in West Windsor, according to Plainsboro Mayor Peter Cantu.
Overall, Plainsboro has seen a school tax increase of about 50 cents per $100 of assessed valuation over the last three years, says Cantu. Meanwhile, in the same period taxes have only increased by several cents in West Windsor.
Cantu says he believes that once the West Windsor’s revaluation is done and hits the books in 2006, the tax burden may shift more towards West Windsor.
Wieck, a Plainsboro resident, says the formula used by the state to divvy up the share of the tax burden between Plainsboro and West Windsor remains a problem.
“Each township has their real estate assessment and the state takes those values and makes an adjustment on that,” says Wieck. “Somewhere in an office in Trenton they come up with an equalized value that determines the taxes between the two townships.”
“It’s been going on for years and years,” Wieck adds. “A few years ago West Windsor was the one who felt they were disadvantaged. It’s a bad situation because you have these swings between the townships.”
Meanwhile, school district officials are hopeful that voters will support the budget despite the tax problems.
“It is important to remember that it is a reasonable budget, with a 4.6 percent increase that will add a couple of necessary teachers and cover some cost increases,” says Wieck, who voted to approve the budget during a March 24 special meeting. “Healthcare benefits have gone up an average of 15 percent a year.”
The budget is also being impacted by a lessening of growth next school year. The student population expected to increase by about 2 percent, as compared to the 4 percent growth seen during the past few years. In addition to the three new teachers being hired for the high schools, two new guidance counselors will also be hired. The total number of administration, teachers, and support staff would be 1,”266 for the 2005-’06 school year.
Wieck says that although his own taxes are increasing sharply and he has yet to meet a Plainsboro resident whose taxes will go down — he believes the budget is worth supporting.
“I know that the bottom line is painful,” says Wieck. “But (Superintendent) Robert Loretan has done a great job minimizing the increases while maintaining the excellence of the district. And the schools are the reason that many residents moved to the district in the first place.”
Wieck stresses that a 4.6 percent increase in the budget is reasonable and that WW-P has a strong tradition of keeping costs in line, averaging only 4.7 budget increase in the last four years. “I don;t think there is another high performing district in the state with that kind of record.”
