Your Turn

The burden of high property taxes in East Brunswick receives much attention in these pages. To better understand matters, I've looked at the actual numbers adjusted for inflation using the most recent month of the U.S. Bureau of Labor Statistics' CPI-U "deflator" statistics. I've taken as an example the real increase over each of the previous five-year periods (in Fire District number two), beginning in 1989 when real (inflation-adjusted) property taxes had increased by 12.4 percent over the previous five years.

That particular period included a stock market run-up and crash and relatedly many new homes had then been built in East Brunswick. In spite of the new construction - just four years after the 1987 market crash, beginning in 1991 - this five-year inflation-adjusted increase in property taxes declined from 12 percent to stay at or below 5 percent for the next 11 full years. Interestingly, in the five years previous to 2002, the stock market also executed a boom-bust chart pattern as interest rates simultaneously decreased and, just as in 1989, many homes were built using the funds newly placed at the disposal of investors. By contrast to the previous boom-bust cycle however, beginning in 2002, the five-year inflation-adjusted increase in property taxes went to 12.5 percent, 16.6 percent, 17 percent, 21.7 percent, and 19.7 percent for each of the years through 2006. This year property taxes are increasing by 1.6 percent over inflation.

In other words, recent property tax increases are significantly higher when expressed in these inflation-adjusted terms than they had been in the previous boom-bust cycle, and the era of high property tax increases has now extended two full years longer than the previous cycle. These statistics add credence and a good measure of sincerity to complaints by homeowners who are saddled with the burden.

Notwithstanding property value statistics, high property taxes have several unpleasant consequences. Firstly, they represent a major financial burden signifying that a homeowner does not truly own his or her home: at stratospheric - nay, usurious - levels, he or she may justifiably consider these taxes as if paying "tribute" to the township - in effect negating the American dream of home ownership.

Secondly, if not for property taxes East Brunswick property values might be significantly higher. They are a significant portion of the monthly payments that are offset by homeowner salaries, who otherwise could afford to bid for higher mortgage payments. Retirees induced to sell actually increase the supply of homes on the market, depressing property values further and in a vicious cycle increasing the burden on municipal services. Thirdly, they amount to a frank embarrassment for the town council. Since our elected representatives have little power to do anything much about property taxes (no authority to legislate much in the way of revenue, other than property taxes), the property tax smacks of "taxation without representation," a thing which still has the power to rally Americans to action all these years later.

If the municipality indeed is almost powerless to apportion revenue from other sources, the problem must be solved at the state level. A small step was recently taken in Trenton. But New Jersey has a basic problem here. Industry has taken a hit as major New Jersey telecommunications concerns companies have been - and continue to be - restructured; large pharmaceutical companies are not able to contribute to the state economy the way they did a few years back now that patents are expiring with fewer blockbusters expected to restock the coffers. No, increasing other taxes to reduce property taxes is a crude tool and not the only one at our disposal. Just as it is asking its property owners to economize dramatically (to pay steep tax increases), the state needs to economize dramatically on aggregate public-sector budgets by sensible means if it is to be competitive in coming years.

Already, New Jersey falls behind other major states in terms of economic-development-related investments - trial balloons in the state Assembly have been popped (or deflated to flaccidity), because the state lacks funds. Neighboring New York and Pennsylvania operate major incubators and richly funded high technology centers expected to generate 21st century industries and jobs. Waste must be eliminated. Expenses must be analyzed. Efficiencies must be found. There must be no sacred cows. Placing open-ended burdens upon the property taxpayer and simultaneously preaching a rosy future is an inadequate response to the challenge now facing our state.

Joseph H. Abeles is a resident of East Brunswick