Tonight at 7 pm is an important City Council meeting that I hope you can attend, or at least watch.
- To Watch: Facebook Live or YouTube Live
The two big issues that will be discussed and voted on tonight are:
- the Hoboken Municipal Budget and finalizing our Tax Rate Increase, and
- whether or not the City Council will accept a proposal to significantly weaken our Rent Control ordinance or leave it to voters to decide in November.
Because I fully expect the City Council to reject the rent control proposal, I will address this issue in a separate newsletter. This newsletter will be exclusively about property taxes to which the City Council will be considering and voting tonight on the following:
- An amendment to the proposed 2024 Hoboken Municipal budget that would bring the city’s portion of your tax rate down to 2.9%. If you remember, Mayor Bhalla introduced a Hoboken budget with a 5.8% tax rate increase. This amendment would be a $1.85M savings for taxpayers, sponsored by CM Ramos and me.
- An amended version of the proposed 2024 Hoboken Municipal budget with a tax rate increase of 4.5%. This amendment was narrowly approved by a 5-4 vote at the special City Council meeting on July 1st. I voted against this because I felt there was more room to find savings for taxpayers in the budget.
If the new 2.9% amendment passes, and the 4.5% amended budget fails – which I hope happens, we will have a special City Council meeting in a couple of days to vote and approve the 2.9% amended budget. Once we confirm this last piece of the combined tax puzzle – the Hoboken Tax part of the equation - we will also then confirm what will be our total, combined, property tax for 2024.
BIG PROPERTY TAX INCREASES
Right now, we are facing a property tax rate increase in the range of 7.5% to 8.1% vs. 2023 depending on the outcome of tonight’s meeting. Typically, since the city’s budget isn't finalized until mid-year, the last two quarters end up shouldering the full year's increase. When the annual rate is as high is we expect for 2024, it magnifies this impact which was exactly the case when property owners saw a shocking almost 9% jump in their Q3 tax bills two weeks ago, with no explanation provided. Unfortunately, we should brace ourselves for another ~11%-13% hike in our Q4 bills (depending on outcome of council vote tonight) to average out for the year. You can see this quarterly variation over the past few years:
Renters, take note: while you don't pay property taxes directly, annual tax increases often get passed on through rent increases and tax surcharges. So the increases impact everyone. A positive in all of this is that we should expect to see a big reduction in your tax bill in the first two quarters of 2025 vs what we will be paying in Q3 and Q4 of 2024.
**Note: this table and the ones that follow assume the 2.9% amendment is passed and adopted.
2024 HOBOKEN MUNICIPAL PROPOSED BUDGET AND TAX INCREASE
The primary drivers in Mayor Bhalla’s original 6.3% tax levy / 5.8% tax rate increase that he introduced in April were payroll related increases and rising debt costs due to the significant capital investments we have made in Hoboken and higher interest rates.
What taxpayers weren’t getting from his budget, was any expansion of services that address the real quality-of-life issues I hear from you every day like:
- safer streets and sidewalks free from dangerous e-delivery bikes,
- paved roads,
- a fully resourced rent leveling office,
- the need for better enforcement and community policing,
- more effective homelessness interventions,
- more recreational opportunities,
- mitigation of our rat crisis,
- clean and functional open spaces, and
- improvements to our sanitation schedule.
And clearly such a high tax increase, well above inflation, ignored affordability concerns which are impacting people at all income levels.
*** I feel strongly that our job as public servants is to provide responsible governing that directly responds to the needs of our community.
The 4.5% amendment, which narrowly passed last week, wasn’t about cuts in the budget – it incorporated $500k more in surplus, a new grant secured to offset health department salaries, and minor cuts in the mayor’s office salaries. Unfortunately, it is difficult to make cuts this late in the year. I had proposed a responsible amendment to eliminate the entire tax increase using a greater portion of reserve funds that have accumulated in our Parking and Water utilities and cutting out excess reserves from over-budgeting in our healthcare. Unfortunately, this proposal was one vote shy of garnering enough support. Reason: the administration prefers to save powder for future spending needs.
Councilman Ramos and I have now introduced the compromise amendment for this Wednesday’s agenda. This would reduce the increase to 2.9% by using some of the excess reserves accumulating in the bank, albeit to a lesser extent than my previous proposal, and cutting overhead in our legal department. I am hopeful our colleagues will support this to provide some relief to taxpayers amid rising costs.
BUT WHY IS OUR TAX RATE SO MUCH HIGHER THAN THE MUNICIPAL RATE?
Your property taxes comprise a combination of Hoboken Municipal, Hudson County, Hoboken Public School, Municipal and County Open Space, and Library Taxes. Municipal, County, and School taxes account for about 95% of your annual tax bill. Here's a breakdown (based on 2023):
Although spending and taxes are up across the board, the 17% Y-O-Y annual increase in our Hoboken Public School tax rate is driving the majority of our 2024 tax increase:
The following table shows some history on annual tax rate changes since 2019. Note that the Hoboken line reflects changes that were made by the City Council to reduce the tax rate each year from what the mayor had initially introduced.
The Hudson County portion of our tax rate went up 4% in 2024, caused by two things:
- Size of the pie - the increase in Hudson County’s tax levy – this year was a 3.6% increase. I have not yet gone through the details behind this, but they typically see an annual increase of this magnitude.
- Size of our slice of the pie - Our share of the County Tax levy went up relative to other Hudson County towns. This is based upon total Equalized Property Values which are basically estimates of current property values. So if our EPV grows faster than other Hudson County towns, which it tends to do, our slice of the pie grows unless other towns grow even faster which is what we are seeing more recently. The biggest example of this was in 2022 when the county rate dropped 7% which helped offset the biggest annual Hoboken rate increase we had seen in a decade. Notably, in the years just prior to the table above, there were large County tax increases reflecting Hoboken's significant growth relative to our Hudson County neighboring towns.
The remaining categories combined only contribute 5% toward our tax rate and two of the three are set by statute / ordinance:
- Library Tax is a specific rate applied to property values established by state statute.
- Hoboken Open Space is a specific amount applied to assessed property values established by local ordinance.
- Hudson County Open Space is determined annually by County officials.
I know this is a lot, but I think it addressess the many questions that people have asked me about. If you would like to see the 2.9% compromise budget adopted (vs the 4.5% one), please send an email to my City Council colleagues and ask them for their support. #MoreVoicesAreAlwaysBetter.
There is a lot more I want to discuss with you, and get your feedback on (HINT: a few 2-3 question surveys are coming) and I will be including these in newsletters over the next few days. As always, please share this with everyone you know who may be interested and reach out any time on any issue important to you: 201-208-1764 or [email protected].
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