The Current Problem
Each year, New Jersey municipalities have suffered substantial shortfalls as the result of Tax Appeals being filed after the municipal budgets have been adopted. Under the current law, each municipality must adopt its budget by March 31 and the deadline to file a tax appeal is generally April 1. In some cases, tax appeals do not get heard until several months after they are filed. The judgments resulting from those Tax Appeal applications are then mailed out several weeks later. The result for most municipalities is a major budget shortfall. Furthermore, the school system, which usually accounts for the majority of a municipal budget, is not bound to return any of the funds previously guaranteed under the March 31 budget.
The solution that many municipalities have employed is the same solution that any governmental entity employs when it has a budget shortfall. They have sold bonds, which they must pay back with interest at a later date. This solution, however, only forestalls the impact of the tax appeals. Another solution, employed by assessors is to offer to settle a matter with the stipulation that the lower assessment will not become effective until the following year. This solution allows a municipality to account for an adjustment in some of their line items prior to a budget being adopted. Nevertheless, this solution is used relatively rarely, and can only be used for settled matters.
The Proposed Solution
In light of the current issues, a bill has been proposed that would attempt to fix these problems by simply changing the taxation calendar. Under the proposed calendar, taxpayers would receive their assessment postcards by November 15. Tax Appeal applications would be due by January 15, and decisions would be mailed no later than April 30. The final piece of the proposed bill is that the municipal budget would not be due until May 15, and the tax rates would not be set until May 31, after the municipality already has an accurate picture of what the total tax base would be.
Of course, it is not realistic to expect that appeals filed before the State Tax Court will be handled with the same alacrity of the County Tax Boards. But the State Tax Court Appeals make up a small percentage of the total number of appeals, and accordingly will not, in most cases, substantially affect the budgets to the same degree as the County Appeals.
The bill entitled S2234-A3227 has not yet been adopted, but is scheduled for a “pilot run” in Monmouth County, possibly as early as this fall. The Monmouth County Board of Taxation is already on the cutting edge of technological of innovation by becoming the first County to introduce electronic filing of tax appeals in 2010. If the proposed plan goes into effect this year as planned, Monmouth County taxpayers will need to remember that their 2012 tax appeals filed no later than January 15, 2012.