Tax Impact Of Chatham Referendum Addressed By Borough Officials

CHATHAM, NJ — Chatham residents recently received a letter from the School District of the Chathams last month regarding the tax impact of the two independent funding proposals that will be on the November ballot.

The letter explained how the costs connected with the distinct funding options would be split between Chatham Borough and Chatham Township. However, according to the Borough of Chatham, some of that information was not entirely accurate.

“The information on how the cost is allocated between the two districts is accurate,” said Borough Budget and Finance Chair Jocelyn Mathiasen, “But the impact on Borough taxpayers appeared overstated because the school district based these on assessed property values before they were revalued in 2021.”

The borough's properties underwent a state-ordered property revaluation process last year as a way to assess property values and "fairly distribute" taxes throughout the borough.

Jason Cohen of Appraisal Systems, Inc. previously stated that the tax rate could rise, fall, or stay unchanged. He described it as a pie, with the assessment only determining the size of each taxpayer's slice.

The revaluation increased ratables by 45 percent, amounting to $975 million, which has been reflected in the 2023 tax bill.

In Chatham Borough, residents are billed based on last year's taxes for the first two quarters, so this year's tax bill may look different for some homeowners.

For example, a home valued at $690,000 in 2022 that was revalued 40 percent higher to $966,000 will see a $212.87 reduction in taxes overall.

"A lot of people's taxes are going to swing quite a bit in one direction or another. By the third quarter, there will be a huge correction," Mathiasen said. "People whose valuation went up by significantly more than say 45 percent may get a big surprise in the third quarter, and then people who were below the average might find that they already paid the bulk of their taxes for the year."

When it comes to the tax impact from the school district, Mathiasen said that the actual amount will be based on the residents’ current assessment and is considerably less than stated in the letter.

“When valuations go up, tax rates go down,” she explained.

Last year, the school district made the decision to include a referendum on the November election ballot, with the final interpretive statement being submitted to the county clerk's office this summer.

According to Chatham Superintendent Michael LaSusa, the first question will ask voters to authorize an additional $850,000 this year for the building of security vestibules in all of the district's schools, making it a permanent part of the baseline budget, resulting in a 1.23 percent annual increase.

As the increase to the tax levy would remain permanent, that excess of money each year would be used for other safety and security-related projects within the district.

The second question that was presented to the community requests $900,000 to give health care benefits to paraprofessionals and make it a permanent part of the baseline budget, with a 1.30 percent yearly increase.

Because the School District of the Chathams is a regional school district, which simply means that it is made up of more than one municipality, the formula used to apportion taxation is based on the equalized value of property in both municipalities.

The total value of property in the district is determined by adding the values of property in Chatham Borough and Chatham Township. The tax levy determined by the Board of Education is then allocated depending on the proportion of each municipality's total value.

“How the levy costs are split between the Borough and Township is based on equalized values provided by the County,” explained Peter Daquila, Business Administrator for the School District of Chathams.

These numbers are utilized since reassessments in the two towns are frequently out of sync. This formula was devised when the regional school district was formed, and it is typical of how regional school districts share costs.

Based on equalized value, the Township pays 58 percent of education costs, and the Borough pays 42 percent.

If the proposals are approved, the exact tax amounts will be based on the present assessed values of the homes, not the equalized values. Because the Township has not recently completed a revaluation, its assessed values are below market, implying a slightly higher rate.

The below list reflects the costs of the two levies per year if they are passed in November:

• Chatham Borough:
  • Question 1: $11.40 / year
  • Question 2: $12.16 / year
  • Yes to both: $23.64 / year
• Chatham Township:
  • Question 1: $14.59 / year
  • Question 2: $15.45 / year
  • Yes to both: $30.04 / year

Some locals have expressed alarm over the suggestion of a permanent tax increase since the introduction of the second question. The school board has addressed some of those worries, stating that the second question would be growing the base budget rather than the tax levy percentage each year.

"It's not that we are going to add $850,000. It becomes part of the base budget. It's different from a one-time expenditure," board president Jill Weber said.