What's Up with Our Property Taxes?

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OPINION

By Guest Columnist Prakash Santhana

What’s up with our property taxes?

It is well known in Holmdel that our property taxes are too high, and something must be done to lower them. To that end, it is important that we understand where our property taxes go, and why our taxes remain high. More importantly, we also need to understand how we compare with other comparable towns in New Jersey.

First, our school district’s budget is set by the Board of Education (BOE) and is independent of the township. Second, approximately 68% of a resident’s property taxes goes to pay for our schools, while only 17% goes towards funding our municipal budget. The remaining 15% goes towards Open Space and County taxes.

Said in a different way, for every $5 we pay in property taxes, the township gets $0.90, the County & Open Space account for $0.68, Library tax is $0.04, and the remaining $3.38 goes towards our school taxes. So, even a very small increase in our school taxes would be a significant increase in our property taxes. Conversely, even a big decrease in our municipal taxes would not correspond to a big decrease in our property taxes.

Since 2016, our municipal taxes have remained flat, raising approximately $14.5 Million in annual tax revenues. The school taxes on the other hand have risen every year, accounting for a 7% growth in the last three years

In looking at this data, a natural question to ask is whether we are comparable to other towns who boast of having good schools, and if their school tax to municipal tax ratio is as high as it is in Holmdel.

To do a proper comparison, we need to choose a wide range of towns with comparable median incomes to that of Holmdel. The towns we chose for this analysis were Tenafly, Bernards Township, Kinnelon, Robbinsville and Summit.

In the analysis shown below, we compared the municipal taxes per household, the school taxes per household and the school rankings of these towns with that of Holmdel. The household numbers for the towns were derived from Census data.

The above analyses show that Holmdel residents’ share of school taxes is higher than the median for the group, while our Municipal taxes are lower than its median, in fact, at the bottom of the pack. The big glaring observation from the analysis is that while our school taxes rank above the median, our school district ranks at the bottom (the higher the number the lower the rank). Holmdel High School ranks 1434 in the nation in 2020, while we ranked 422 in the nation in 2012, according to US News and World report rankings of high schools in the nation. A drop of over 1000 in just eight years!

It is important that our BOE focuses on significantly improving our school standing compared to that of our peer towns. Our school ranking not only reflects the quality of education that our children receive, but also has an indirect effect on our property values.

Looking deeper at total BOE spending for instruction costs and support services, we find that Holmdel BOE spend is higher than the median, in fact within the top group.

The BOE will have to justify over $1,700 more per household in property taxes raised, or over $2,000 more per student in BOE spending, than the school district of Summit. Summit Senior High School ranks 448 in the nation in 2020, according to US News and World report.

Staying at the lower end of our peer group, as in our municipal taxes, reflects prudent spending. Being on the extremes – higher spending and lower ranking, as in the case of our schools - is not prudent or sustainable. We should expect lower spending and higher school ranking as in the Summit school district. It is incumbent on the BOE to explain why this cannot be the case.

Prakash Santhana

Holmdel Township Committeeman