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Rastro
Citizen
Username: Rastro
Post Number: 2970
Registered: 5-2004
| | Posted on Monday, May 1, 2006 - 12:04 am: | 
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It has been suggested that a reval is not tax neutral. In reality, that is true. It is REVENUE neutral. The town does not make more money because of a reval. Individual homeowners' taxes will go up or down, but the town will not, by virtue of performing a reval, receive more money. That has been suggested, with no information to back it up. Rather, the poster has brought up examples of towns that have increased their budgets at the same time a reval was performed.
Again, more slowly...
A town's tax rate is determined by the value of the property in town, and the portion of the budget that will come from real estate taxes. So, unless there is some specific increase in the amount of money that will come from taxes, the total revenue brought in by RE taxes doesn't change.
Let's assume no change in the budget. Let's assume the budget is 10 million (to use round numbers). Let's assume the value of property in town is $1 billion (again, for round numbers). So the tax rate is $10 million/$1 billion, or 1%. Now let's say a reval is done, and the value of property in town is $2 billion. Since we've already stipulated no change in the budget, the tax rate will be $10 million/$2 billion, or 0.5%.
It's not all that complicated.
If the budget does not get increased, there is simply no way for a reval to NOT be revenue neutral. And thereby tax-neutral is the sense we are talking about.
No one has said anyone's taxes will stay the same. What we are saying is that a reval, in and of itself, does not increase the revenue a town receives. And though this poster had given examples of towns that have taken advantage of a reval to increase their budgets. However the reval was used as cover, it was not the actual cause of the increase. |
Neen
Citizen
Username: Neen
Post Number: 227
Registered: 1-2004
| | Posted on Wednesday, May 3, 2006 - 11:47 am: |
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Can someone explain to be how the reval works? Do they actually come to your house to make an assessment, or do they do it based on the neighborhood and what the town has on record as what you are currently paying? |
DRJ
Citizen
Username: Alaska
Post Number: 70
Registered: 9-2005
| | Posted on Wednesday, May 3, 2006 - 12:57 pm: |
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Check out the link below for reval information. It is for another NJ town, but it explains the rationale behind a reval and the process.
http://www.westwindsornj.org/revaluation.html |
Neen
Citizen
Username: Neen
Post Number: 229
Registered: 1-2004
| | Posted on Wednesday, May 3, 2006 - 1:22 pm: |
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One more question, when is South Orange's revaluation expected to actually happen? |
DRJ
Citizen
Username: Alaska
Post Number: 71
Registered: 9-2005
| | Posted on Wednesday, May 3, 2006 - 1:35 pm: |
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I believe it is to begin later this year. |
Factvsfiction
Citizen
Username: Factvsfiction
Post Number: 234
Registered: 4-2006
| | Posted on Wednesday, May 3, 2006 - 6:28 pm: |
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The thread poster, obviously familiar with all village appreciation in SO and means of appraisal should:
1. Make a determination of the collective, new appraised value for the entire village, and note the differential with the old.
2. Then determine the the tax rate given the above, if the village budget would remain zero growth from 2006. Will the re-val, say, half it?
3. Then for select areas of the village take a comparable home, review the sr-1as at village hall, unless a cma for such areas has been obtained by a realtor.
4. Then determine a prospective new appraisal for the select homes from their old appraised value.
5. Then give us the results !
More to follow. Did you actually read the posts given your comments? |
Factvsfiction
Citizen
Username: Factvsfiction
Post Number: 235
Registered: 4-2006
| | Posted on Wednesday, May 3, 2006 - 6:30 pm: |
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DRJ- A SO realtor told me it was being delayed. I would ask your town administrator's office. |
Factvsfiction
Citizen
Username: Factvsfiction
Post Number: 245
Registered: 4-2006
| | Posted on Wednesday, May 3, 2006 - 9:02 pm: |
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Rastro- Seriously,
Here is how it works. I think you have a great deal of knowledge and appreciate your intellect. However I do deal with an associate who is an appraiser, and on a weekly basis (the person is not involved with your reval).
Example: (Rough, not using calculator)
Last year the total assessable value for your town was 10 million.
Your House is assessed at 100k.
You then pay 1% of the total assessment in town.
Now-
You have a re-val.
The new total assessed value for your town is 15 million
Your house is now assessed at 200k
THERE IS NO INCREASE IN THE BUDGET
You now will pay 1.33% of total assessment in town.
Your tax payment has now gone up .33% without any budget increase. It will go up further upon budget increases.
Factor is
your current assessment/total town assessment
Good luck with your own re-val assessment.
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vermontgolfer
Supporter
Username: Vermontgolfer
Post Number: 425
Registered: 12-2002
| | Posted on Wednesday, May 3, 2006 - 9:26 pm: |
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FvF,
OK, but what about everyone else's house, whose value may decrease or stay the same. The point Rastro is making is that the overall tax dollars paid it totally by all residents should not go up, assuming there are no increase in the budget.
Sounds like reval 101 to me!
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Spitz
Supporter
Username: Doublea
Post Number: 1744
Registered: 3-2003
| | Posted on Wednesday, May 3, 2006 - 9:40 pm: |
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FvF - This is where you're wrong with your assumptions. To use your numbers, the total assessed value before the reval was $10 million, and after the reval $15 million. This means that the assessment ratio for the whole town is 15/10 or 66.66%.
The house that was previously assessed at $100,000 is now assessed at $200,000. That means it was assessed at 50% before the reval, while the average for the whole town was 66.66&. Thus that house was underassessed 16.66 percentage points. Naturally after the reval its taxes are going to go up, since it was underassessed in comparison to the townwide assessment ratio.
But a house that was assessed at $100,000 and then is reassessed at $125,000 was assessed at 80% before the reval, or 13.34% higher than the townwide assessment ratio. Assuming the tax stays the same, that house will now be paying
.83% of the total budget rather than 1%.
To repeat, the example you used is a house which is underassessed in comparison to the townwide assessment ratio. Yes, those houses will find their taxes going up, even without any change in the budget.
But the houses that have been overassessed in comparison to the townwide assessment ratio will see their taxes go down, assuming there is no change in the budget. And this is why revaluations are referred to as being revenue neutral.
Edited to add: VG - Our posts crossed. My post was reval 101 for FvF.
FvF - Take a copy of my post to your associate who is an appraiser. He/she should be able to confirm what I've explained. Please try to understand it before you respond. |
vermontgolfer
Supporter
Username: Vermontgolfer
Post Number: 426
Registered: 12-2002
| | Posted on Wednesday, May 3, 2006 - 10:01 pm: |
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Spitz,
Your post was much more informational than mine. I just hope my house winds up at your imaginary .83%, Rastro can pay the higher taxes. 
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Spitz
Supporter
Username: Doublea
Post Number: 1745
Registered: 3-2003
| | Posted on Wednesday, May 3, 2006 - 10:03 pm: |
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Correction: In my post, it should have been 10/15 instead of 15/10 to get 66.66%. |
Spitz
Supporter
Username: Doublea
Post Number: 1746
Registered: 3-2003
| | Posted on Wednesday, May 3, 2006 - 10:33 pm: |
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Just to complete the examples, take a third house that is originally assessed at $100,000. After the reval, it's new assessment is $150,000. Thus, it's original assessment was at 66.66% which was the same as the townwide assessment ratio. Before the reval, it paid 1% of the budget and after the reval it still pays 1%. This probably best shows how the reval works. |
Factvsfiction
Citizen
Username: Factvsfiction
Post Number: 246
Registered: 4-2006
| | Posted on Wednesday, May 3, 2006 - 11:33 pm: |
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Vermont & Spitz- Thanks for "Reval 101"
But-----
The whole point of the post was to basically give a simple example to Rastro that in theory your taxes can go up WITHOUT A BUDGET INCREASE, AND AS A RESULT OF A REVAL. It wasn't intended as appraisal rocket scientry.
We all seem to agree that even with NO increase in the budget a home that was previously under-assessed or has risen significantly in value will have its taxes rise upon a reval. That was my point to Rastro. I wasn't talking about the entire Village rising without a budget increase.
So a reval is tax neutral in overall application, but not necessarily in individual effect. And yes, the worse impact comes after a budget increase.
What do you believe the average appreciation has been in an area, let's say like Montrose? 200-300k? More? When was your last reval or re-assessment? Whether your adjustments are easy or painful depend a lot on these things.
Another factor in your residential property tax pain or gain depends on the appraisal of your commercial properties. Have more been taken off the tax rolls, or have more been added? Plus of course your tax appeals success or failure.
I appreciate your posts and will print out Vermont's for my associate to discuss more in this thread. |
Factvsfiction
Citizen
Username: Factvsfiction
Post Number: 249
Registered: 4-2006
| | Posted on Thursday, May 4, 2006 - 7:53 am: |
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sorry, Sptiz's post. Then we can discuss "Reval 202" |
Rastro
Citizen
Username: Rastro
Post Number: 3008
Registered: 5-2004
| | Posted on Thursday, May 4, 2006 - 12:10 pm: |
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FvF, I never said an individual's taxes cannot go up or down because of a reval. I explicitly said "No one has said anyone's taxes will stay the same. What we are saying is that a reval, in and of itself, does not increase the revenue a town receives."
I said a reval does not cause an increase in the budget. YOU are the one who said, and I quote "Don't kid yourself, revals and re-assessments do increase the amount of taxes brought in, otherwise towns would not do them." So you WERE talking about the taxes of "the entire Village rising without a budget increase." You are now taking my position. Thank you.
VG, I'll pay your higher taxes with my tax reduction! I'm in a similar situation to Spitz, I believe. |
mrosner
Citizen
Username: Mrosner
Post Number: 2755
Registered: 4-2002
| | Posted on Thursday, May 4, 2006 - 12:15 pm: |
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Towns do revals because they are required to do them. Theoretically I think they are supposed to be done no more than every ten years. In our case, Essex County has given S. Orange to 2008.
I have said it before - but the property tax system in NJ is broke and needs serious fixing. Revals are supposed to make sure each propertyowner pays their fair share (and I know that is debatable).
There is never a good time to do a reval.
Rastro is correct that a Reval is revenue neutral.
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Spitz
Supporter
Username: Doublea
Post Number: 1747
Registered: 3-2003
| | Posted on Thursday, May 4, 2006 - 1:19 pm: |
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I sent an email to John Gross asking whether there was any delay in the reval. He responded saying there was no delay and RFPs were going out next week for a 2008 implementation.
FvF - You seem intent on stirring things up. What is your keen interest in the SO revaluation? Your postings were just wrong - bascially trying to get everyone concerned that everyone's taxes would go up because of a revaluation. That's just plain wrong.
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Factvsfiction
Citizen
Username: Factvsfiction
Post Number: 259
Registered: 4-2006
| | Posted on Thursday, May 4, 2006 - 2:52 pm: |
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Spitz-
You seem intent on reading my mind and discerning that somehow, someway I have a negative purpose in discussing your re-val. And that's just plain wrong.
I have posted in the MSH thread about our coming re-assessment and intend to discuss it more. Property tax issues interest me in general. Perhaps I misunderstood or misread Rastro in the previous thread. It can happen since I am working at the same time I am posting. I will go back and read it. I also find it difficult at times to be able to fully explain/express myself in such a short format.
For the record,I don't have any vested commercial or political interest in SO to pursue. Frankly I welcome comments about MSH from out-of-towners as their perspectives and ideas may be different than my own, and thereby beneficial.
Don't be so xenophobic about SO. It is a great town, but how others may perceive it, like potential home buyers, may have great effect down the road on your home values and desirability. All towns are in that position.
Other than relating your objections you didn't respond to my post. I don't think using appreciation examples of only a $25,000 increase or so is realistic. This of course depends upon when your last re-assessment or re-val was.
Since you guys have such objections to outsiders, I won't post under your proprietary SO tax thread, but open a general posting on the subject. Feel free to comment there. |
Factvsfiction
Citizen
Username: Factvsfiction
Post Number: 260
Registered: 4-2006
| | Posted on Thursday, May 4, 2006 - 3:14 pm: |
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Rastro-
Please read the above comment and my previous post as to my understanding of your contentions. The quote you used was not the complete expression of my opinion. My comment actually was consistent with yours that towns can take advantage of new re-val appraisal figures with a new budget. A reval may also a helpful tool in some redistribution of tax liability from residential to commercial, if commercial property appreciation across the board has been substantial. But if you wish to regard my post as my " Persians are Arabs" moment, feel free. |
Rastro
Citizen
Username: Rastro
Post Number: 3019
Registered: 5-2004
| | Posted on Thursday, May 4, 2006 - 3:29 pm: |
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Well Done. Almost an admission, but not quite. And you still find a way to get a dig in.
Our entire discussion on the other thread was whether a reval, in and of itself, causes revenues for a town to go up. You expressed the view that it does. I explained that it does not. Now you are agreeing with my point. I'm glad you've come to see it my way. |
Factvsfiction
Citizen
Username: Factvsfiction
Post Number: 263
Registered: 4-2006
| | Posted on Thursday, May 4, 2006 - 3:37 pm: |
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Rastro,
Let's go the the video. Was not my point I believe. But at this stage... |
MHD
Citizen
Username: Mayhewdrive
Post Number: 4095
Registered: 5-2001
| | Posted on Monday, May 22, 2006 - 3:06 pm: |
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Interesting article in Sunday's Star Ledger about how the reval in Montclair is progressing:
http://www.nj.com/news/ledger/essex/index.ssf?/base/news-2/1148186119212800.xml& coll=1 |
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