Tax Appeals Increase Costs for the Rest of Us

Tax PreparationImage by agrilifetoday via FlickrDue to the increasing number of tax appeals, plans are now in the works to complete a tax reassessment for the entirety of Pequannock by the close of 2011.  This is vital, as tax appeals can increase the tax burden for some residents in town.

All towns operate on a budget: a certain amount of cash coming in each year and a certain amount being expended on operating expenses, salaries, repairs, schools, and  infrastructure improvements.  When a property owner files a successful tax appeal, they reduce the amount of taxes that they pay while there is no reduction in expenditures from the town budget.  Where does the balance come from?  Check your taxes, someone has to pay it after all.  The other option is to recover the necessary funds from program cuts or via increased municipal debt, neither of which are attractive options.  Meanwhile, those with reduced taxes get a discount, but see no reduction in services.  This situation is especially problematic when these appeals are filed by businesses, drawing a significant amount of income out of the municipal budget.

To put a fine point on it, here's a list of tax appeals in Pequannock Township for 2011 (http://mcweb1.co.morris.nj.us/TaxBoard/AppealDistrictSearch.jsp?District=31&Year=2011).  There are 315 appeals listed (and successful or not, that represents a cost of processing those 315 appeals as well!).  In some cases we have people or businesses who own multiple properties on opposite sides of town making successful appeals for BOTH properties!  In an average case, this represented a reduction $55,000.  That's  $55,000 in additional property value distributed among the other 5,024 households, essentially as though you were pay taxes for an additional $10 in value on your home.  ...but it's not just $10 (and your home hasn't increased in value) and this process happened another 313 times in 2011 alone!

So that's a lot of numbers, but how much do tax appeals actually cost the township of Pequannock?
$184,000 as of April 2010
That's correct, with 160 appeals filed as of April 2010, $184,000 came directly out of the budget to be saddled on the remaining, non-appealing, tax payers.  Unfortunately, that was less than half of the 325 appeals filed in total for 2010.  315 appeals were filed in 2011 and have yet to be accounted for in full, as per above. Conservatively, that's over half a million dollars (approx. $500,000+) in additional tax burden taken on by non-appealing tax payers over the course of 2 years.


...but this is not an anti-tax appeal article.  Certainly, if you have been incorrectly assessed, if junior has flown the nest and the extra bedroom is long recovered as a sewing room or den, there is no reason you should let the mistake stand.  That's what tax appeals are for: addressing legitimate errors in assessed taxes.  In the event of a changing economy (as ever), where many homes no longer hold the value they did during the previous assessment, that's when a reassessment is a much more fair, ethical, and most of all practical solution.

As of this writing, Pequannock plans to complete a town wide tax reassessment (significantly less expensive than a tax reevaluation) at a cost of $175,000 , with an additional $65,000 in associated expenses to come from funds already earmarked from a prior reevaluation.  That's a savings of $260,000 to the municipal budget over 2 years of would be appeals.

This news comes as a relief to those of us who have dutifully paid our taxes over the years without appeal, I have to say I'm quite looking forward to it.


During the reassessment, please read your assessment carefully, if there are any mistakes, this is the time raise the issue.


Christopher Lotito is a member of the Pequannock EnvironmentalHistoric District, and Flood Control Advisory Commissions as well as the author of  "Torrent," a book about flooding in the region.  Lotito's personal mission is to reduce new taxes, drastically reduce flooding, and preserve more green spaces for our children.  Christopher Lotito Profile

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