Morristown’s proposed 2026 budget would raise the average homeowner’s municipal tax bill by $207, while officials point to tax-exempt property, rising infrastructure costs, commercial tax appeals and a $31.7 million state-aid gap tied to utility revenue.
MORRISTOWN, NJ – Morristown’s proposed $60.6 million 2026 budget would increase the municipal tax bill for the average homeowner by $207, but the pressure on local taxpayers reaches beyond one year of spending.
Official budget documents show the town is managing a smaller taxable base, rising public safety and infrastructure costs, more than $544 million in tax-exempt real property, and a long-running dispute over state-collected utility revenue that Morristown officials say has left the town $31.7 million short since 2001. The result is a local tax structure in which more of the cost of municipal services, school funding and public improvements falls on the remaining taxable property base, including residents and homeowners.
For a home assessed at the town average of $635,841, Morristown’s 2026 budget presentation estimates a total property-tax increase of 5.5%, or about $52 per month. The largest share of that projected increase comes from the Morris School District, at $27.56 per month, followed by the municipal operating budget at $17.20 per month and the municipal open space tax at $5.30 per month. The school district accounts for 51.5% of the overall property-tax bill, while municipal government accounts for 32.5%.
The town’s taxable base also moved in the wrong direction. Morristown’s total net assessed valuation fell by about $73 million, from $4.75 billion in 2025 to $4.68 billion in 2026. The decline was driven by a $125.4 million drop in commercial assessed value, while residential assessments were nearly flat and apartment assessments increased.
That shift matters because local budgets are funded by taxable property. When costs rise and the tax base shrinks, the rate must increase unless spending is reduced or other revenue fills the gap.
Morristown’s budget presentation lists public safety, insurance, public works and pensions among the largest spending areas. Public safety accounts for $12.6 million, or 23.8% of the proposed municipal operating budget. Public works accounts for $7.6 million, and the town’s proposed capital plan includes $3.65 million in projects, including $1.89 million for roads and engineering.
Utility costs are also rising. The Department of Public Works utilities line increased from $878,138 in actual 2024 spending to a proposed $1.21 million in 2026, according to the town’s budget presentation.
A separate pressure point is property that is exempt from local taxation. The 2025 Morris County Abstract of Ratables lists $544.3 million in tax-exempt real property in Morristown, including $125.3 million in public property, $109.2 million in church and charitable property, and $279.2 million in other exemptions. Countywide, Morris County had about $9.27 billion in tax-exempt real property.
Those properties are not all the same. Some are public buildings, schools, houses of worship, nonprofits, cemeteries or other exempt uses recognized under state law. As the county seat, Morristown also hosts Morris County government facilities, including the county courthouse and administration buildings. Those uses can bring workers, visitors and institutional activity into town, but they do not contribute to the municipal tax base in the same way taxable homes and businesses do.
The state utility-revenue issue appears to be a real part of the town’s argument. New Jersey’s Energy Tax Receipts system traces back to utility taxes that were historically tied to utilities’ use of public rights of way. The New Jersey State League of Municipalities says those revenues were originally local taxes and that the state later became the collection agent, with the revenue intended for municipal property-tax relief.
State law establishes the Energy Tax Receipts Property Tax Relief Fund in the State Treasury and directs payments to municipalities from utility-related revenues, including certain taxes paid by gas, electric and telecommunications utilities. Morristown’s 2026 budget presentation says the town has received $82.0 million in state aid since 2001, compared with $113.7 million that officials say the town should have received, a gap of $31.7 million.
The most precise way to describe the issue is that Morristown officials say the state has not fully distributed utility-tax replacement revenue at the level the town believes it is owed under the state aid formula. The state’s 2026 local finance guidance says municipalities should budget certified Energy Tax Receipts and related aid at the state-certified level, while municipal advocates continue to argue for full restoration of diverted or underfunded payments.
PILOT agreements add another layer to the tax-base question. Under New Jersey’s long-term tax exemption law, qualifying redevelopment projects may pay an annual service charge instead of ordinary property taxes on improvements for a set period. The municipality generally receives the payment and remits 5% to the county. Schools do not receive a direct statutory share unless a separate agreement requires one.
That does not mean PILOTs are automatically harmful. Municipalities often use them to make redevelopment projects financially feasible, especially when a site needs environmental cleanup, affordable housing, public improvements or other benefits that may not happen without an incentive. Morristown has used PILOTs for redevelopment projects that officials and consultants have said included affordable housing, public-space commitments or other community benefits.
The question for taxpayers is how those agreements are used and disclosed. PILOT revenue can help the municipal budget because the town keeps most of the payment. Morristown’s 2026 budget presentation lists additional revenue from M Station West and M Station East PILOT payments, while also noting a $158,000 decrease from the Modera 44 PILOT. Morristown Green reported that Mayor Tim Dougherty has said PILOTs generate more than $3.8 million a year for town operations and have saved the average homeowner more than $2,500 since 2017.
Schools are where the PILOT issue becomes most visible. The Morris School District is preparing a September 15, 2026 bond referendum for building needs that include roofs, HVAC systems, fire alarms, classrooms, science labs, bathrooms, auditorium work and other improvements. District materials say some building systems are past their expected useful life and that the district has not held a major bond referendum in nearly 30 years.
The district’s stated reason for the referendum is aging infrastructure and the need to use bond funding to qualify for state debt-service aid. PILOTs are not listed by the district as the cause of the referendum. But PILOTs are relevant to who pays school debt because ordinary school taxes are raised from taxable property, while PILOT improvements generally do not contribute directly to the school tax levy during the exemption period.
That distinction matters as Morristown grows. New development can increase municipal revenue, add housing and support redevelopment goals. At the same time, if more property growth occurs through PILOT agreements, the municipal budget may benefit more directly than the school district, even as school capital needs remain tied to the ordinary tax base.
The issue facing Morristown is not whether PILOTs should exist. It is whether they are reserved for projects that need public support or deliver clear public benefits, and whether residents can see how each agreement affects municipal revenue, school funding and long-term tax pressure.
The town’s 2026 budget debate brings those questions together. Morristown is paying for public safety, roads, utilities and capital work while hosting a large amount of exempt property, receiving less Energy Tax Receipt aid than officials say it should, and relying in part on redevelopment payments that do not flow through the tax system in the same way ordinary property taxes do.
For homeowners, the tax bill reflects all of those choices and constraints at once. The municipal budget is one piece. The school district is another. The tax-exempt base, state aid formula and PILOT structure help explain why growth does not always reduce the pressure on residents as directly as taxpayers might expect.