In the News – Municipal Tax Appeals Impacting Towns and Taxpayers

Ratables not offering relief to Gloucester County towns
Sunday, March 14, 2010
Gloucester County Times
By Pete McCarthy

Municipal officials are always looking for growth in an effort to reduce the burden on property taxpayers.

In this economy, it’s not coming soon enough which leaves homeowners facing the burden.

Even if towns are seeing growth, it is coming in the form of residential development. That only creates more issues, according to officials, because of the need to increase services.

“I think you see some of the municipalities were getting a great deal of ratable growth over the last several years,” said Ed Burek, the assessor and tax administrator for Gloucester County. “They have kind of fallen off. … This is the first year that there’s been a downward turn. It just represents everything happening in the economic marketplace.”

The only way to react, Burek said, is to “make adjustments downward because the dollars aren’t there.”

That means local municipalities must find ways to cut without hurting the residents, said East Greenwich Mayor Fred Grant.

Grant’s town has seen plenty of growth, but it has mostly been residential development.

“It does help,” said Grant, “but at the same time, it’s still creating an impact of more work for the town in terms of services.”

With state cuts looming, many communities have to learn to do more with existing resources or even less.

“It’s tough in this economy,” said Grant. “We’ve cut our budget.”

Other towns are dealing with a unique kind of issue, specifically, tax appeals. In some cases, these towns have to dole out millions of dollars because they have been collecting too much in terms of taxes from large corporations.

Paulsboro saw this happen with two refineries being granted these appeals.

It “directly goes” toward the residential side of ratable growth, which ends up canceling out most of the progress, according to Burzichelli.

“When they (the industries) pay less taxes, the residential taxpayers pay more,” Burzichelli said of the commercial appeals. “The plants didn’t double in value, so the ratio has to be paid equally.”

There are two options to deal with this problem for towns like Paulsboro, which is only two square miles in size and has limited housing growth.

“You cut expenses or you have to ask the taxpayers for more money,” said Burzichelli. “It’s a delicate balance of what you can cut and what is the minimal amount you can ask for when residents are not getting more services.”

Some towns will have to start looking at ways to lessen the blow of these tax appeals, according to Al Marmero, a Woodbury attorney who represents many municipalities in these matters.

Last month, Marmero spoke to the Gloucester County Mayor’s Association about this specific topic. During his keynote address, he warned towns to be wary of settling on tax appeals without putting up a fight.

To effectively weather the current economic situation, he said, towns must challenge tax appeals.

He said there are ways to reach a compromise that does not force a municipality or other governing body to dole out massive amounts of cash in one shot.

“Each time you settle one of these cases, it hurts a municipality more and more,” Marmero said last week.

In order to file a tax appeal, a company or homeowner must pay all outstanding taxes. If they win, the governing body has to write a check for the amount found to be in excess.

“We’re trying to get them to be more creative in how they settle the case,” said Marmero. “You give them a lower assessment in the future so you don’t lose any revenue from the prior years.”

Tax appeals are filed for a number of reasons. Residential appeals are filed because the homeowner realizes their property is not worth its assessed value. Commercial properties file because they are losing business either with fewer patrons or if it’s a large shopping center tenants have vacated.

“You have to look at these things seriously, and if it’s worth fighting you might want to fight it right away,” said Marmero.

New Jersey is no worse off than other states, according to the county’s tax expert. Some are deeper in the recession with exorbitant foreclosure rates, said Burek.

“It looks like we’re flat and stabilized, and waiting for the next surge,” said Burek. “It’s the economy. It’s what is happening.”

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