Trenton Math

A few comments below about last night’s Mayoral debate. But first, a note to set the Mayoral debate in context:

This morning’s Trenton Times features an article about Trenton High’s heartbreaking first -round loss to Howell last night in the State Tournament, 48-47.

The article by Kevin Moloney starts by describing the promising start to the Trenton Tornadoes’ Season:

“One year removed from failing to qualify for the NJSIAA Tournament for the first time since the 1995-96 season, Trenton exploded out of the gates, winning 12 of its first three games.”

A pretty neat trick, that!

The Mayoral debate at times sounded pretty much the same. Hanging over most of the questions posed by the sponsoring Old Mill Hill Society was the ongoing and escalating financial crisis the city faces. How would the candidates build their Administration in the face of these conditions?

Well, in many cases, by creating more government! One candidate announced he would create an office to assist small business owners as they establish and expand their businesses. Another promised to create a liaison office between the Mayor and the School system. Yikes! Facing what is sure to be at least one full term of severe austerity, some candidates want to expand the city’s government? Really, guys, what you want to do with those new offices is worthy.  But you know, that’s what we would hire you to do, personally. Those ideas, and that mindset, are definitely non-starters during this campiagn. Next!

I was disappointed with most of the responses to the question posed regarding the need for a property tax reassessment.  Most answered that they would be against one,  one or two said they would not want to do a reassessment, but would be guided by what the law requires (Offering to do what the law requires? Well, that’s a relief!). Only one candidate answered honestly, by saying that an accurate reassessment would help make the effective tax rates fairer for everyone, but even she didn’t fully explain how. Even so, her response served as the one moment of clarity and honesty on the subject.

We need to make sure we hire a mayor and council who understand how important this is, and be able to communicate that frankly and honestly to residents, without scaring people. I’m probably going to miss some nuance here, but here goes.

Take a look at the attached table on Mercer County’s website. It shows, for 2009, the difference between Trenton’s formal assessed valuation of ratable property along with the formal tax rate, and the effective (or “Equalized”) property value and tax rate in the City.

For 2009, Trenton’s Formal tax rate was $4.69 per $100 of assessed value. But it was more effectively $2,78 based on market value.  If you are a homeowner who’s been in your house for years, the fact that you are paying such a high rate is made easier by the fact that the assessed value is basically 61% of market (Of course, the 2009 numbers don’t reflect where the market is right now.)

But if you were a developer, or a contractor, or anyone else considering building a new structure in this city that would be assessed at the market rate – being  brand new – would you rather pay a tax rate of $4.69, or $2.78???

Of course, you’d want to pay the lower rate; it would be fairer. But as long as there is such a distortion between our formal and equalized rates, development and property rescue will be discouraged.Our ratable base will continue to stagnate and decline.

For homeowners, reassessment can and should be neutral: higher assessed values will be offset by a lower formal rate. But, of course, the devil is in the details, which is why everyone is usually pretty gun-shy about reassessments.

There are many things that scare people away from building in this city.  A lot of them – the city’s crime rate, its poverty, its crumbling infrastructure – will take a long time and a lot of work to fix. Equalizing the tax rate to make it fairer should be one of the – relatively – easy things we can do.

I want to elect a Mayor who understands this, and who will explain this. If I am lucky enough to be elected to Council, I hope to be serve with six other colleagues who get it as well.