When assessments are made by different persons in different places there is always room for variations in judgment. New Jersey has 21 counties comprised of 565 municipalities. With the exception of Gloucester County's 24 municipalities, each has its own local tax assessor. In Gloucester a pilot program authorizes the County Assessor to conduct all assessments. "Equalization" is the process of insuring that each property carries its fair and legal share of the tax burden in every taxing district. Equalization in property taxation can mean either ensuring a just assessed value is placed on individual properties as compared to other properties within a taxing district or that true values assigned to entire municipalities are fair and just. In other words, equalization seeks to establish equity both within municipal borders and within county borders.

As early as 1799 all township assessors were directed by law to equalize assessments at an annual meeting in order to fairly spread the cost of county government. Various other administrative devices to achieve the same end were tried during the nineteenth century, but
apparently with little success. In 1906 county boards of taxation were established having equalization as one of their principal responsibilities. Nevertheless, real equalization seldom, if ever, was obtained. Each local assessor was under pressure to keep his assessments low, for the lower the rate at which he assessed the lower the proportion of the cost of county government which his taxing district had to pay. 

Competitive Under Assessment

This became known as "competitive under assessment." In the twentieth century a further pressure for competitive under assessment was introduced by the formula used for distributing State financial aid to local school districts. The formula granted a larger amount of State aid to districts with low assessed valuations. Under assessment became even more competitive and assessments, in most cases, dropped far below the legal true value level. 

In the mid 1950s the Legislature empowered the Director of the Division of Taxation to determine the "ratio of aggregate assessed to aggregate true value" of real estate in every taxing district in New Jersey. Not long after the Director of the Division of Taxation implemented the "assessment-sales ratio program," (which is the study of comparing recent sales-prices to the properties assessment to determine what percentage the assessment is relative to the properties market value) the New Jersey Supreme Court instructed county boards of taxation to take official notice of the Director's aggregate assessed to aggregate true value ratios in their equalization functions.

Ongoing Function

Equalization as among individual properties within a municipality is an ongoing function. It is an important concern since its aim is to stimulate a continuous striving to ensure each individual parcel of property bears its just share of the property tax burden. Government property assessment professionals exercise this function in many ways, including carefully studying and watching assessment-sales ratios and coefficients of deviation calculated from sales occurring in each municipality, and ordering municipalities to revalue or to reassess based on the results of statistical analysis or lack of records. Where assessments or assessment practices are improper a county board of taxation may cause the assessor to change his assessments (or may, on their own initiative, hold hearings and change assessments) to ensure a more equitable basis. All this is done to promote equalization among individual parcels of taxable property in a municipality.

Equalization in the Aggregate

"Equalization in the aggregate" is another way of saying equalization among municipalities within a county. At the present time the equalization program is conducted for two major purposes: the distribution of State school aid, and use by the county board of taxation in apportionment of the costs of county government and of school districts covering more than one taxing district. The principal part of the work of equalization lies in determining the aggregate true value of all real property in each of the state's 565 taxing districts. The assessment-sales ratio program involves a comparison of the sales prices of parcels of real property which have been sold with the assessed values of these properties. 

The object of the program is to discover at what ratio of true value real property is being assessed in each municipality within the time frame of a fiscal year, July 1st to June 30th. Once this ratio is determined the aggregate taxable value of real property in a municipality may be raised to true value through use of the ratio so determined. The aggregate true value of real property, together with the value of second class railroad property and the assessed value of locally assessed business personal property is known as the "equalized valuation." Equalized valuation is used as a measure of the wealth of the taxing district. As a matter of law, a township's wealth is the sole factor on which its proportionate share of county taxes is determined.