By: Jason Yodeah
Of all the complaints about Lakewood, by far the most popular is that the Jewish residents of Lakewood don’t pay property taxes. The common wisdom is that the typical resident has declared their home to be a house of worship, thereby earning a tax-exempt status and allowing the owner to avoid paying any property taxes. Since a large number of households are doing this, even the majority according to some accounts, Lakewood is in a perennial budget crisis due to their revenue shortfall.
It is understandable that this causes resentment in neighboring communities. After all, the average American is struggling to pay their mortgages and working long hours or multiple jobs, and watching an entire population gaming the system is hard to stomach. And if they are not paying into the system, why do they deserve services such as busing to private schools?
But is it true?
Fortunately, this question should be simple to answer since there is a plethora of information on the Internet. All of the property tax assessment records, both the details and statistics, are publicly available for free on the county website, and Lakewood’s audited financial statements are available on the township website.
To properly frame the question, what we are trying to answer is if there are a large number of households that are tax exempt. If there turns out to be a large percentage of properties that are tax exempt, this would support the theory. If there are not, then the theory is wrong.
The Ocean County Board of Taxation has a report on their website that contains all the raw data that we need. It is under Statistical Reports and then under Line Item Breakdown. The 2015 report can be found here.
There are a lot of numbers in this table, but we only need two columns. “Class 15 Exempt Total” shows the number of properties that are tax exempt. (Each of the class types are a different category of property, class 15 means tax exempt). “Total Ratables & Exempt” are the total number of properties in a town. To get the percentage, we can simply divide the two columns.
Let’s do this for Lakewood. The number of tax exempt properties is 1,591. The total number of properties is 26,208. Dividing the first by the second, we get 6%. Of course, this number includes non-residential properties such as government buildings, parks, schools, synagogues, and churches. But we have an upper bound: the number of tax exempt residences must be much less. Hardly a majority or even close.
We can do the same calculation for every town in Ocean County. Here is the results of exactly that, sorted by percentage exempt:
|Class 15 Exempt Total||Total Ratables & Exempt||Percent Exempt|
|LT. EGG HARBOR||1177||13090||8.99%|
|S. TOMS RIVER||59||1294||4.56%|
|PT. PLEASANT BEACH||74||3385||2.19%|
|PT. PLEASANT BORO||112||8342||1.34%|
We see from the table that Lakewood, at 6.0%, is slightly above the average of 5.3%. We also see that there are 10 other towns in Ocean County that have a higher percentage of exempt properties.
So despite the large number of Synagogues, and despite the accounts of all the residents turning their homes into a place of worship, the actual percentage of exempt properties in Lakewood is completely in line with the other towns of the county. This does not point to a large number of residents escaping property taxes, in fact the numbers show this is not at all a reality.
But we need to be skeptical. What if the county records are not accurate? What if residents are being assessed but are not paying their tax bills? We know that Lakewood’s finances are in shambles, so where is all the tax money going? What is going on here?
Fortunately, we can find Lakewood’s most recent independent audit here. The audit contains a detailed set of financial statements. The auditor is Holman Frenia Allison, which is a well-regarded CPA firm based in Toms River who has audited numerous municipalities in NJ.
The pertinent information is on page 11. We see that the total revenue for 2014 was $199 million. Out of that $164 million was “receipts from total taxes”. This would be the property tax payments. We can do a quick estimate: let’s divide the total tax payments by the number of properties. Dividing $164 million by 25,839 (the 2014 number) we get $6300. This is a very rough estimate of the average tax payment. That is very close to the actual average as showing in the table in this article on myCentralJersey.com.
So what does that prove? It shows that the numbers work out. We saw before that the number of tax exemptions is not out of the ordinary, and almost all residents are assessed taxes. We now proved that the tax assessments are actually translated into tax payments and realized as revenue for the town.
But wait a second! If the revenue is so high, then why is Lakewood having so many budget problems? We can answer that by looking at the same audit, also on page 11. The amount of revenue for 2014 was $199 million. The amount of expenses was $188 million. The difference is $11 million. That’s right, Lakewood had an $11 million surplus in 2014, and $5 million in 2013. The Asbury Park Press reports that in 2015, they had a $12.7 million surplus. So the surplus is not a one time fluke. And it certainly doesn’t look like there is anything wrong with Lakewood’s finances. In fact, they are quite good.
So, let’s sum up:
- Very few of Lakewood residents are tax exempt.
- Almost all of Lakewood residents are paying their taxes.
- Lakewood has a regularly occurring budget surplus, and is in an excellent financial condition.
In short, the popular belief that somehow Lakewood residents are gaming the system and not paying taxes has been thoroughly debunked, and we have shown there is absolutely no truth to that accusation.