South Brunswick Tax Appeals May Force Property Revaluation

As the township is still in the early stages of formulating the municipal budget for 2013, South Brunswick officials remain concerned about the overall impact of tax appeals from residents and businesses.

Last year, 391 tax appeals were filed in the township, up from about 180 appeals in 2011, when approximately 100 companies successfully sued the township for a tax reduction. That reduction resulted in the loss of over $100 million in ratables. Of that total, $98.5 million came from commercial and industrial tax appeals. 

"The biggest concern we have is the fact that these suits are rising from people appealing their taxes," said Mayor Frank Gambatese. "We expect to have a pretty big number again from last year to this year, so we need to see where we stand. We can't afford another big hit, but we really can't tell what the number will be at this point."

Tax appeals by both homeowners and business owners experienced a sharp increase during the recession. In New Jersey, appeals surged by 221 percent from 2008 to 2011, according to a report in SmartMoney Magazine.

Over the past several years, the impact of tax appeals contributed to a significant decline in South Brunswick's ratable base.

The township's ratable base dropped 4.3 percent to approximately $3.6 billion in 2010. South Brunswick experienced another decline in ratables of about $5.4 million (2.3 percent) in 2011. Over the last seven years, the township's ratable base has decreased by over $180 million. The drop in assessed value has a greater impact on the tax rate for the municipality and school than any other factor, according to township officials.

The South Brunswick Board of Education started out the budget process for the 2012-13 school year looking at a deficit of $5.4 million, or a 7-cent tax increase, as a result of the ratable loss. 

Over the last six years, the school tax levy increased by about $300,000. The 2012-13 budget maintained the tax levy at the same level for the third consecutive year in South Brunswick.

"Every time somebody gets their assessment reduced, think of that as a swimming pool with a leak," said South Brunswick Superintendent Gary McCartney at a Board of Education meeting last year. "Five of the last seven years, we sprung a leak."

With the continued flood of tax appeals showing no sign of slowing down, Gambatese said the township may need to consider a property revaluation program to appraise all real property according to its full and fair value.

"Assessments went from 44 percent to 47 percent of the true value of a property, so if property values have gone up that tells me hopefully the tide is turning, so people can regain what was lost in true value," Gambatese said. "Sooner or later we have to look and see if we're continuing on a downward spiral with true assessed value, and then maybe we'll have to look at revaluation."

While concerned about the continued influx of tax appeals, Gambatese said a revaluation wouldn't be his first choice.

"That would be a last ditch effort that we may have to do to stabilize the suits that are coming in," he said. "Once we get a firm handle on how many suits there are this year, then we'll look at where we are. If we have an increase in true value then that's a good thing, but if it drops below 44 percent again then we may seriously need to look at different options."