By Stephanie Vaccaro, Staff Writer
MONTGOMERY The downturn in the real estate market impacts municipalities as they set the tax rate during budgeting season.
At a meeting with its auditors to help finalize the 2011-2012 budget for the township, it was discovered that the ratable value used in January had changed substantially.
”We saw a decline in value of about $7.5 million from the 2010 assessment to 2011,” said Donato Nieman, township administrator.
The ratable value was estimated at $3.744 billion, while the actual was about $25 million lower.
Tax appeals alone resulted in approximately $7.5 million in reductions.
”We have to raise the tax rate to raise the tax revenue because the total tax revenue in the township has gone down,” said Mr. Nieman.
Montgomery still needs approximately $11 million in municipal taxes to pay for its operations, said Mr. Nieman.
If the overall pie shrinks, then we have to take a greater percentage of the pie, he said.
”We had over 130 actual tax appeals,” said Mr. Nieman. “We’re just responding to the market. We’ve had some significant appeals.”
Usually, the number of appeals is in the 20s.
The township received its figures late from the county owing to the number of tax appeals at the county level, said Mr. Nieman, of the issue that was not solely one Somerset County faced but was occurring throughout the state.
”We’re not unique,” he said, citing that many towns faced similar situations.
The tax rate for residential property is based on the resale value, said Mr. Nieman. In the early 2000s, you had increases in value in the double digits, he said.
When the market tanked, you had properties declining at that same rate.
When homes that once sold for $1 million now sell for $850,000, the township must make adjustments that reflect that.
The 0.68 percent decrease in property valuation impacted the school system as well.
”This seemingly small adjustment has a noticeable impact on property taxes,” said Earl Kim, superintendent of schools. “The increase to the average home will be $196 instead of $153 as had been presented previously, based on information given to us by the township. This is still a 1.73 percent increase in the tax levy.”

