LAWRENCE: Mayor says tax reforms necessary

If municipal government is to stop lurching from fiscal crisis to fiscal crisis, state lawmakers must sit down and work on meaningful property tax reform, Mayor Jim Kownacki told the MIDJersey Chamber of Commerce

By Lea Kahn, Staff Writer
   If municipal government is to stop lurching from fiscal crisis to fiscal crisis, state lawmakers must sit down and work on meaningful property tax reform, Mayor Jim Kownacki told the MIDJersey Chamber of Commerce Wednesday afternoon.
   Lawrence Township has been buffeted by the economic downturn and while it has experienced fiscal contractions, “there has been no diminishing of the required or expected services that are provided by municipal government,” Mayor Kownacki said in his annual State of the Township remarks.
   ”During the past few years, the municipal budget has been impacted by many internal and external factors. These conditions will continue to influence the budget,” he said, despite efforts to rein in spending and “to do more with less” — including 31 fewer municipal employees in 2012 as compared to 2008.
   Property tax appeals have had an enormous impact on the municipal budget and fiscal operations of the township, Mayor Kownacki said. Between 2008 and 2013, Lawrence Township experienced the second-highest decline in tax ratables of all Mercer County municipalities — the result of successful property tax appeals, he said.
   In a property tax appeal, a property owner seeks to reduce the assessed value of his property. A property owner’s tax bill is based on the assessed value of that property. When many property owners successfully appeal their assessed values, it reduces the total value of the ratable base.
   A successful property tax appeal means the municipality must refund the difference between the original tax bill and the revised one. Lawrence Township reserved $1 million at the beginning of 2013 for pending tax appeal refunds, and it has already used up that money, Mayor Kownacki said.
   And although a municipality collects the property taxes for itself, the school district and the county government and then turns the money over to them, the municipality is required to refund the entire amount of the successful tax appeal for municipal, school and county property taxes out of its own funds, he said.
   ”The time has come that we must stop placing the full burden of tax appeal refunds on New Jersey municipal governments,” Mayor Kownacki said. “The time has come that New Jersey school districts and county government also share the tax burden for their portion of taxes.”
   ”The time has come that we urge all our (state) legislators to sit down and make it happen that the true amount of taxes levied or tax appeals refunded are properly divided among each unit of government,” he said.
   Mayor Kownacki said that any dialogue about property tax reform must include whether to continue the statutory relief granted to nonprofit organizations that exempts them from paying property taxes. Many of those statutory tax exemptions were authorized more than 50 years ago, he said.
   ”Last year, I initiated an appeal to the nonprofit tax exempt entities in Lawrence for a voluntary contribution equal to 25 percent of the total property tax bill that would otherwise be due if they were not tax-exempt,” he said.
   Those tax-exempt properties accounted for $287.5 million in assessed value for which no property taxes were collected, he said. But if they had paid property taxes, it would have generated $2.5 million — based on the 2012 municipal property tax rate.
   ”Let me make it clear. This request was not an attack on nonprofits in Lawrence or in any other place. These groups provide services that in some instances would not otherwise be available. The request for a voluntary contribution is quite simply a matter of equity,” he said.
   ”The objective of this unique effort is to create a system of formalized, on-going financial support from tax-exempt organizations toward the cost of municipal government. I welcome full participation to develop such a model in cooperation with the tax-exempt organizations for use in Lawrence and other municipalities,” Mayor Kownacki said.
   While those measures would help, “the answer is not only to get control of property taxes, but it is equally important to get control on how all revenues in support of the municipal budget are generated,” Mayor Kownacki said.
   The mayor pointed out that since he was elected to Township Council in 2010, the township has lost $1 million in state aid and a total of $12.3 million in energy tax receipts — earmarked for property tax relief — that state law required to be adjusted annually for inflation. The energy tax receipts are taxes meant to be the rent that corporations pay for the use of public rights-of-way for their lines, poles and wires.
   ”State officials of both political parties chose to divert large amounts of municipal property tax relief dollars to the state budget,” he said. “This cycle will be difficult to break, but it is important that a start be made immediately. The amount legally due will help our municipal budget and give overdue relief to township taxpayers.”