LAWRENCE: Appeals cost $362,000 in tax losses

By Lea Kahn, Staff Writer
   A spate of property tax appeals filed by owners of residential, commercial and industrial properties has resulted in the loss of $362,000 in property taxes — through credits or refunds — for 2012, according to Lawrence Township officials.
   Property owners challenged the assessments of 164 properties with the Mercer County Board of Taxation, and 37 in New Jersey Tax Court. The owners actually appeal the assessed value of the property — not the property tax bill. The assessed value is based on a property’s market value, or sales value.
   Tax appeals of properties that have an assessed value of less than $1 million are heard at the county level, and those with assessments of $1 million or more are sent to the state tax court. Most of the appeals filed at the county tax board involve residential properties, and those filed at the state level are commercial or industrial properties plus a handful of residential properties.
   Municipal Manager Richard Krawczun cautioned that while the tax appeals filed with the county Board of Taxation have been resolved, the cases pending before the New Jersey Tax Court have not been settled.
   Mr. Krawczun said as a result of the tax appeals that have been settled, the overall value of the property tax base has declined by $8 million in assessed value — and that decline in the overall property tax base puts “upward pressure” on the municipal tax rate.
   That’s because after factoring in other sources of revenue for the municipal budget, township officials determine how much money is needed from property taxes to balance the budget. If the value of taxable properties has declined, the municipal tax rate likely will increase to generate the same amount of money needed to balance the budget.
   ”Any time you have a reduction (in the property tax base), there is reason for concern,” Mr. Krawczun said. “The problem is, the township has had consecutive years of reductions in taxable values. This is causing fiscal strain on the municipal budget.”
   Lawrence Township also must refund or credit $362,000 to the property owners whose appeals were successful, he said. The municipal property tax makes up about 20 percent of the property tax bill and the school district and county taxes make up the rest, but all of the money for the refund or credit comes from the municipality. The school district and the county do not reimburse property owners for their proportionate share of the tax bill to be refunded or credited.
   Mr. Krawczun said the money to make $362,000 in refunds or credits to the property owners comes from the township’s surplus fund — which in turn means there will less available money from that account to apply as a revenue source in the 2013 municipal budget.
   The manager added that there is still some time left between now and Jan. 10, when the property tax base for 2013 will be determined. The property tax base could decrease by more than $8 million in assessed value, depending on the resolution of tax appeals in the New Jersey Tax Court, he said.
   Mr. Krawczun said the New Jersey Tax Court settlements could result in a “big loss.” It is too soon to know the full impact of the effect of the property tax appeals on the property tax base, “but the overall trend is downward,” he said.