This year, there have been 19,788 appeals to county tax boards in 150 towns surveyed by the state League of Municipalities — a 44 percent uptick from last year
Bill Dressel, executive director of the League of Municipalities, speaks with the media in this August 2010 file photo.TRENTON — Already reeling from a quarter-billion dollar cut in state aid, New Jersey’s towns and cities face another daunting challenge: Dealing with a spike in property tax appeals that will leave them with less money than expected.
This year, there have been 19,788 appeals to county tax boards in 150 towns surveyed by the state League of Municipalities — a 44 percent uptick from last year, when there were 13,760 appeals in those same towns.
Enough of those appeals were successful to bring property values down by $88 million in those municipalities, according to the League.
"It hurts the municipalities a lot," said League Associate Counsel Martin Allen. "Now they’re in a situation at the end of the year where they have to cope with something they were not able to budget for."
The survey attributed the rise in appeals to the drop in property values, which allowed financially hard-pressed homeowners to successfully appeal assessments done when the real estate market was hot and their homes were more valuable.
Most towns give refunds as credits on fourth-quarter property tax bills. This forces many towns to either dip into surplus or ask the state Local Finance Board for permission to borrow money to pay for the refunds. League President Bill Dressel said some towns could reopen their budgets to further cut services.
And successful tax appeals lead to more tax appeals, Dressel added, meaning next year could be worse.
"When neighbors learn of their neighbor’s tax reduction, it increases the likelihood of more numerous appeals," he said.
Although many towns keep reserve funds to pay for tax appeals, in many cases they did not anticipate how much they would have to pay back.
"From what I have heard, they’ve indicated that they’ve used it," said Dressel.
Monroe Township is among the most extreme examples. Last year, it had 550 appeals and refunded about $800,000 in tax dollars. This year, it had 2,751 appeals, forcing it to refund more than $5 million.
Township administrator Wayne Hamilton said the uptick stems mainly from attorneys, who specialize in property tax appeals, convincing residents of the town’s many senior citizen communities to file. For instance, the town had to give back $1.7 million to residents of a luxury adult living complex called Concordia.
"We’re an easy mark here in Monroe because we have 10 planned retirement communities," said Hamilton. "We got caught in a tsunami of multiple bulk filings."
Hamilton said he plans to apply to the state Local Finance Board for permission to borrow the money and pay it off over three to five years.
South Brunswick Chief Financial Officer Joe Monzo said he also plans to ask the finance board for permission to borrow the $572,000 his town has to pay in refunds and pay it back over five years. If they say no, Monzo said the town will have to take it out of its surplus.
"Surpluses are more for emergencies," he said.
Michael Drewniak, a spokesman for Gov. Chris Christie, said the survey underscores the need to enact the governor’s 33 proposed "tool kit." The package, most of which has not advanced in the Legislature, is to help towns get property taxes under control before the recently passed 2 percent property tax cap kicks in.
"This is serious business, as local elected officials know and as this survey reveals. The legislature must stop stalling," he said.
Editor's Note: An earlier version of this story on a League of Municipalities' associate counsel. His name is Martin Allen.