Successful property-tax appeals shaved $98 million off Egg Harbor Township’s overall value between 2010 and 2012.
Consequently, township Administrator Peter Miller said, most of the township’s recent property-tax increases and fund-balance reductions have been used to cover the shortfalls.
“If we didn’t have to cover $1.2 million in taxes refunded by ourselves, if we only had to cover $200,000, the tax rate would have only gone up by a half-cent,” Miller said, instead of the equivalent of 3 cents on current rates.
The recently approved municipal budget will cost taxpayers about 3 percent more in local-purpose taxes this year. For the average township home, assessed at $208,002, that difference translates to about $52 on the municipal portion of the property-tax bill.
The township is among a number of towns in the state and region that have passed resolutions supporting a state proposal to change how successful tax appeals are handled. Instead of leaving the municipality almost solely responsible for the bill to refund taxpayers who are successful in their appeals, it would require schools, counties, towns and fire districts to share the costs equally.
Both the New Jersey School Boards Association and the New Jersey Association of Counties criticized the proposal.
“We recognize a problem with the tax appeals, but this isn’t the solution,” said John Donnadio, executive director of the Association of Counties.
The proposal doesn’t address any of the fundamental unfairness to taxpayers, he said. It only reallocates the pool of money.
Instead, Donnadio said, he is interested in proposals that would change the tax-appeal date from April to January, making it easier for municipalities to accurately budget or handle assessments at the county level.
Similarly, School Boards Association spokesman Frank Belluscio said, schools cannot reserve funds and face strict limits regarding how much they can budget for emergencies. They are also unable to collect taxes.
Property-tax appeals in New Jersey have skyrocketed in recent years, driven by a collapse in real estate values in municipalities that last held revaluations when the market was at its mid-2000s height.
State Treasury Department statistics show there were 13,883 appeals across the state in 2005. But appeals have steadily increased every year, and 2012 saw 116,048 appeals — nearly a third more than in 2011, and 735 percent more than in 2005.
Locally, appeals ebbed in 2004, when just 1,595 were filed in Atlantic, Cape May, Cumberland and Ocean counties. But 33,455 appeals were filed in 2012, a nearly 2,000 percent increase.
Between 2011 and 2012, New Jersey taxpayers cut the value of their property by more than $8 billion by appealing their taxes, according to Treasury Department statistics.
Taxpayers in Atlantic, Cape May, Cumberland and Ocean counties reduced their taxable value by nearly $3 billion.
The appeals have forced local governments to cut spending and services or find new sources of income.
Towns have complained that the current appeals system handicaps them. Municipalities are generally responsible for the property values and for collecting property taxes based on those values. This is true even though towns collect on behalf of the local school districts, fire districts and county.
If a person appeals their taxes, the municipality pays to defend the values. And if the appeal is successful, the town is responsible for repaying the taxpayer, typically through a credit on their taxes.
One proposal in Trenton would change that. The bill, introduced in 2010 by Sen. Anthony R. Bucco and Assemblyman Anthony M. Bucco, both R-Morris, Somerset, would require schools, counties and other entities to share the burden.
The bill has remained in committee in the current and previous legislative sessions.
It is an equitable solution, said Lori Buckelew, legislative analyst for the New Jersey State League of Municipalities. She said towns have been further limited by rules that place the amount municipalities can set aside for uncollected taxes within the 2 percent cap on overall expenditures.
“It’s just made it more difficult to budget for appeals,” she said.
Egg Harbor Township is one of 92 municipalities that have passed resolutions supporting the bill, Buckelew said. Other towns include Dennis and Upper townships, Avalon, Cape May Point and Wildwood Crest in Cape May County; Commercial and Maurice River townships in Cumberland County; and Buena Vista Township in Atlantic County.
Miller said Egg Harbor Township is concerned that as appeals continue, their consequences could grow more significant.
After all, he said, “the municipality is the one blamed for the tax rate going up all the time.”
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