The city’s tax appeal settlement with Merck & Co. added approximately $400 to the average home over three years, according to my estimate. Merck & Co’s
tax appeal settlement that was approved a year ago
cut the property tax bill for the pharmaceutical giant by at least $4.5 million over three years, reducing its overall tax assessment in Rahway by $82 million, or more than 26 percent.
The appeal affected the tax years 2010-2012 and my estimate includes some assumptions based on 2011 tax rates for 2012. The biggest hit looks like 2011 (see the end of this post). My estimate doesn’t include some other costs the city might have incurred, such as appraisals, litigation and borrowing, only an attempt to quantify how much the new assessments affected the average home.
Overall, the city’s valuation dipped from $1.549 billion to $1.486 billion in 2011 and $1.467 billion in 2012 as a result of the settlement, according to the letter sent to residents last year, explaining the settlement.
As part of the settlement, Merck withdrew its appeal in 2009 and received a cash refund of overpayment of taxes that year of $1.6 million. All told, that’s at least $4.5 million, based on 2011 tax rates, that had to be made up somewhere on the tax rolls.
Some explanation of how I arrived at this estimate: The average home in Rahway is assessed at $133,000. Every $13.30 in municipal taxes on the average home generates about $149,000 in tax revenue. Feel free to check my work in this Excel file
; the key figures also are listed below (tax rates can be found on the city’s website
). For 2012, I used the 2011 tax rate since the county and schools have not set their tax rate, while the municipal tax rate has only just been proposed.
Merck’s overall assessment was reduced from $312,368,300 to:
– $280,878,500 for 2010 (-$31,489,800)
– $249,699,700 for 2011 (-$31,178,800)
– $230,000,000 for 2012 (-$19,699,700)
Merck’s property tax bill shrank approximately:
– $1,614,797 in 2010 [$144 for average home]
– $1,797,458 in 2011 [$161 for average home]
– $1,135,688 in 2012 [$101 for average home]