Dear Friends,

Over the past few weeks, many of you have contacted me to express your displeasure with the size of our property tax increase and to find answers why our tax increase was so large.  I share your frustration.  I too am very concerned with the size, and I am also personal impacted by this large tax increase.  My tax bill increased 21% and my August payment went up over 40%.  As a result, I am devoting this entire issue to explaining our property tax bill.

What Makes Up the Local Property Tax Bill

Our local property tax is comprised of seven components - County Tax, County Library Tax, County Farmland/Open Space Tax, Lumberton School Tax, Rancocas Valley School Tax, Lumberton Open Space Tax and Lumberton Municipal Purpose Tax, but they are not all equal.  In fact, over 70% of our tax bill supports the Lumberton and Rancocas Valley school systems.  The Burlington County government takes 18%, and the township municipal government gets the remaining 12% of our tax bill.   The pie chart below gives you a better idea how our property tax money is divided up.  

Click on the chart to see a larger version.

How Did It Happen?

There are four separate and distinct government entities which have the power to level local property taxes - the Burlington County Freeholders, Lumberton Township Committee, Lumberton Township Board of Education and the Rancocas Valley Board of Education.  The latter two groups require public approval via a referendum of all budgets and borrowing (or bonding) including any associated tax increase.   These four government entities create seven property tax components.  This year, six of the seven property tax components are increasing.  Of the six increasing, three were approved by public referendum.  In 2003, the voters approved a referendum to increase the Lumberton Open Space tax by 2 cents for two years.  Also in 2003, a bond Referendum for Lumberton School district construction was approved.  In 2004, the Lumberton and Rancocas Valley High School budgets both  included a tax increase that were approved by the voters.  

The other factor that caught many people off guard is the timing on the tax increase.  Unlike a normal tax increase which takes effect in the year approved, a tax increase resulting from a bond or increased borrowing does not take until the first payment is due.  In this case, the 2003 Bond Referendum's corresponding tax increase did not take affect until after the voters already approved the two additional school tax increases during the school board elections in April 2004.   As a result, they all take effect at the same time.  The remaining two tax increases were implemented as part of the county and municipal budget process. 

How Much Is the Property Tax Increase?

From 2003 to 2004, Lumberton's total tax bill increased a total of 21%.  Six of the seven components of your property tax bill increased.  The individual component increases are not equal.   The schools comprise 89% of the tax increase.  The Lumberton Municipal government accounts for 10% of the increase, and Burlington County will receive the remaining 1% of the increase.  The bar chart below illustrates how much each of the property tax components increased.   The blue bars show the 2003 tax rate for each tax component.  The red bars show the 2004 tax rate for each tax component.

Click on the chart to see a larger version.

Why Are the Third and Fourth Quarter Tax Bills So Large? 

If you pay your property tax bill directly, you probably noticed that your August and November 2004 tax payments are much larger than your February and May 2005 payments.  The reason for this is how government budgeting in New Jersey works.  The first two tax payments of the calendar year are estimated base on the prior year's tax rate.   But when a tax increase (or decrease) is approved, the entire amount has to be collected in that calendar year.  So the only way to collect it is to spread the entire increase across the remain two payments and not all four.  Thus, this year's August and November payments are 40% higher than last year's.  Our but February and April 2005's payments will be 15% percent lower than the August and November 2004 payment. 

If you use your mortgage company to escrow your taxes, you probably will not notice the uneven payments, but be prepared for a big escrow adjustment.

How Does All This Effect Me?

The actual dollar impact of the tax increase will vary depending on your home's assessed value.  The table below shows how much our property taxes increased based on some sample assessed values.  

I hope this helped you understand the nature of what makes up property taxes and our tax increase.

Finally, I would like to make one more appeal for volunteers to help our neighbors who were affected by the flood.  There are still about 80 families that have not been able to move back into their homes.  There are still a great deal of work that needs to be done to get some of these families back into their homes.   If you would like to volunteer, please fill out the online contact form and one of the relief coordinators will be in contact with you.  

Sincerely,