STONE HARBOR – At the governing body’s Aug. 1 meeting, Stone Harbor Chief Financial Officer James Craft explained the county equalization process to Borough Council. What Craft was doing was making sense of why in a year the county says it decreased the tax rate by 2.5%, the county tax levy actually rose.
The purpose of the county equalization process is, according to Craft, “to ensure that every municipality and each property within the municipality carries its fair and legal share of the county tax levy.” This is done through a process that creates a ratio of the assessed to true value of a municipality’s tax base.
Each year, the process uses sales data for comparable properties and increases or decreases the value of a municipality’s assessment base for purposes of allocating the county tax. If the ratio is above 1.0, the town’s relative assessment base is lowered for county tax purposes, and if below 1.0, it is increased.
The Stone Harbor example is that for 2023, the borough has an assessed value of $5 billion. When sales data is analyzed, the true value is corrected to $7.5 billion, meaning the ratio is 66.62%. In effect, the county analysis is saying the town is significantly underassessed.
Thus, in a year in which the county says it lowered its tax rate and in which no reassessment was performed, the county tax levy share to Stone Harbor went up from where it was in 2022. The apportionment of the levy to the municipalities is based on a municipality’s share of total true value of properties across the county.
In this case, Stone Harbor’s value, based on the assessed to true value ratio, is 9.73% of the total county value, setting its share of the county levy.
As Craft explained, the actual percentage of total county value in Stone Harbor this year is only slightly higher than last year. It moved from 9.67% of total county value to 9.73%. That’s because it was a good year for the county, as a whole, in terms of true value. Yet, Stone Harbor’s county levy did rise from $14.43 million in 2022 to $15.67 million in 2023.
Craft’s explanation was simple: “The county had a bigger value base to tax on and they just taxed on it.” This goes to show the wonders of a reduction in the tax rate and an increase in the tax levy.
Contact the author, Vince Conti, at vconti@cmcherald.com.
