County Towns’ Tax Assessment Effective, Efficient

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Those who seek to make government work more effectively or more efficiently often point to consolidation as a solution, and with good reason, too. There have been several cases where government consolidation has reduced operational redundancies and overall costs, sometimes also improving services.  

However, despite these instances, consolidation may not always be the right answer. Cape May County’s municipal-level tax assessment structure is, at present, both more effective and more efficient than the county-wide assessment operations in Gloucester and Monmouth.

In 2009, then-Gov. Jon Corzine signed legislation that created a pilot program to combine Gloucester County’s 24 municipal tax assessment offices into one countywide operation. 

Since then, Gloucester’s consolidation has been identified as a success, and several other counties have considered doing likewise. Monmouth County did so in 2013, albeit with mixed results.

So, to gauge whether consolidation might benefit Cape May County, I have spent the past year reviewing tax assessment data from Cape May County municipalities and comparing that data to data from New Jersey counties that have already consolidated. 

This review both affirmed prospective benefits and raised doubts about the merits of consolidating tax assessment in Cape May County.

The biggest selling point for consolidation is reducing costs, and several municipalities within Gloucester have reported that the 2009 pilot program has indeed had a positive effect on their budgets. Instead of being strictly eliminated though, most of those costs were either kicked up to the county government or replaced with new costs. 

Notably, Gloucester chose to hire full-time assessors rather than employing part-timers, as most of its municipalities had done prior.

To compare assessment costs between a post-consolidation Gloucester and the municipalities of Cape May County, I created an average cost of assessment per property by dividing each government’s budget appropriations by the number of taxable properties in the respective municipalities. 

This revealed that the municipalities of Cape May County already spend, on average, almost $2 less than Gloucester to assess each property. It is possible that county-wide consolidation would widen this gap and further reduce costs for Cape May County, but there are additional metrics that demonstrate why Gloucester County and Cape May County are dissimilar cases.

In addition to cost reduction, overall efficiency is another benefit of consolidation, which can be measured by the average ratio of equalization – i.e., how close a municipality's assessments are to market values – and the number of property tax appeals filed each year. 

In this area, Gloucester has also benefited by improving their overall ratio from 57.69 percent in 2009 to 95.86 percent in 2017. This would not seem to have the same benefit for Cape May County, though, because it has maintained rather consistent ratios, averaging 100.31 percent, over the last 10 years. 

Compared to Gloucester, property owners in Cape May County have also filed fewer tax appeals in the last seven years. Due in part to the 2007 housing crisis and subsequent recession, the period between 2008 and 2012 saw an increase in property tax appeals. 

However, appeals in Cape May County peaked and dropped more quickly than in Gloucester, and have maintained a constant decline. This data was certainly affected by the countywide reassessments that were part of Gloucester’s consolidation program, but Cape May County also had a higher number of appeals per year before 2011, which added an additional complication to this evaluation.

While it is clear that Gloucester has benefited (however substantially that may be) from the consolidation of its tax assessment operations, it is not certain that Cape May County would benefit in the same way or if it should consolidate at all. 

It seems apparent, from the average ratio of equalization and the number of appeals, that Cape May County’s tax assessment activity is relatively effective. 

Likewise, the collection of part-time assessors employed by Cape May County’s municipalities constitutes a form of shared services, achieving a relative efficiency. In particular, the cities of North Wildwood and Wildwood have achieved notable savings on tax assessment through a shared services agreement, demonstrating the potential of a small-scale alternative to county-wide consolidation.

For larger counties with a greater number of municipal governments, consolidation may serve to improve the effectiveness or efficiency of tax assessment activities. 

However, it seems Cape May County is deriving the expected benefits of delegating this responsibility to the lowest effective level.

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