PLUMSTED — Municipal officials are preparing to repay $300,000 to property owners who filed tax appeals this year and had their property assessment reduced.
The refund will make up the difference between property taxes that were paid on the higher assessment and the property taxes that should have been paid on the lower assessment.
At a Nov. 23 special meeting of the Township Committee, the members of the governing body adopted a bond ordinance that will fund $240,000 of the total amount.
Plumsted will pay the remainder of the total amount from available revenues.
Money will be refunded to property owners who successfully challenged the assessed value of their property.
Aproperty owner’s total property tax bill is determined by taking the assessed value of a property (land and improvements) and multiplying that value by tax rates set by various taxing entities, including the municipality, the school district, the county and the fire district.
A lower assessment will yield a lower total property tax bill.
Guidelines from the Division of Local Government Services state that the bond may only cover 75 percent of the appeals. The township will have to immediately absorb the remaining 25 percent of those costs.
Mayor Ron Dancer discussed the steps that are being taken at the local and state levels to ensure the township does not have to face this situation again.
In Plumsted, a complete reassessment of all properties in the township is in its planning stages. The plan will need approval from the county and state tax boards before it can take place.
“By doing a reassessment of all properties, we can bring all the properties in the township to reflect the current market value,” Dancer said. “It will give us a true assessment of all properties in the township.”
Dancer, who also serves in the state Assembly, said he has sponsored a bill that would change the way property tax appeals are handled in the state. He said the bill, if passed in the Senate and Assembly and signed into law, will allow property tax appeal payments to be issued in the first tax quarter of the following budget year.
According to Dancer, the bill would allow for all taxing entities to receive the tax funds expected in their budget while not causing a deficit for a municipality.
“Under current state law, whenever there is a successful tax appeal the refund has to be paid to the property owner within 60 days of the judgment by the tax court,” Dancer said. “[Under this bill], there [would be] no budget impact during the current budget process.
“By putting this [payment] into the next budget year, [taxing entities] would receive their credit. That way, you have a situation that doesn’t create a deficit, every entity gets its amount of tax dollars in their budget, and in the new year, you are working with a true assessment number,” he said.
The process of property tax appeals is an annual occurrence. However, with the struggling housing market and decreasing property values, more residents are appealing their property tax assessment to reflect their property’s current market value. A refund is due when a property owner’s new assessment yields a lower property tax than the previous, higher assessment did.
In 2008, 62 Plumsted property owners received a total of $31,187 in refunds after successfully appealing their property assessments.
In 2011, 176 property assessment appeals were approved, yielding $300,000 in refunds to be paid (the $240,000 bond and the $60,000 from available revenue). Officials estimate those numbers reflect about 5 percent of all property owners in Plumsted.