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The Impact of Corporate Tax Appeals on South Brunswick

Net affect of tax appeals by corporations resulted in the loss of over $100 million in ratables for South Brunswick.

As the recession continues to affect the number of new businesses opening across the state, the impact of tax appeals by existing businesses has resulted in a large chunk of lost revenue for South Brunswick.

The success of South Brunswick companies in challenging their property values resulted in the loss of over $100 million in ratables last year, according to township officials. Approximately 100 companies successfully sued the township for a tax reduction last year, said Mayor Frank Gambatese.

"Revenue is the major problem we're having," Gambatese said. "With the economy being the way it is and residential property values dropping, these corporations whose property values really don’t drop in a given year, what happens is they see the value of homes in the residential part of town drop, and then they feel that they're paying too much taxes. The impact of this significant. We lost over $100 million in ratables, so the amount of taxes we receive, which should go into revenue, has dropped significantly.

"This affects not only us, but also the schools and the county."

The township ratable base dropped 4.3 percent to approximately $3.6 billion last year. Over the last seven years, the township's ratable base has decreased by $180 million. For the first time in 20 years, South Brunswick's total assessed value dropped for two consecutive years. 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.

"During the last three years alone, 8 percent of our ratable base has been diminished from the net affect of tax appeals," said Chief Financial Officer Joseph Monzo, at a Township Council meeting earlier this month.

The corporate tax appeals are a near slam-dunk in court due to the impact of declining residential values, according to Gambatese.

"You can't win those cases, because when you go into court they say residential values are down to 46 percent of their true value, while corporations are at 100 percent," he said. "But corporations don't sell their houses like residents do. You can't sell those warehouses very easily, so that's the problem. There are more and more lawsuits in every town, and more and more lawsuits put in by companies in every town, and they have every right to do that."

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

The overall impact from the appeals for lower property taxes have driven increases in South Brunswick's municipal and school budget for the past few years, according to township officials.

"The decrease in total assessed value alone accounts for a 2-cent tax increase," Monzo said of this year's municipal budget. 

Gambatese said the township has attempted to lessen the financial impact of the corporate tax appeals by working on settlements with the individual companies.

"We try to meet with them and come up with a reasonable reduction that they will settle for," he said. "Once we settle they can't sue us for a reevaluation for two years, so our tax assessor tries to make a settlement with them. Especially if he feels going to court would lose more money than the settlement that we're able to come up with." 

With more successful appeals to point to, an increased number of law firms are encouraging residents to join together in mass tax appeals, Gambatese added.

"I just got a letter in my development from a law firm saying your house is assessed at such and such and we feel it should be reduced in value, so we'd like to handle a class action lawsuit for the entire development," he said. "So if they got everybody in the development to sign up, with 300 houses, let's say it's reduced by $20,000, then that's a significant loss in the tax revenue we receive. So this is what's happening everywhere in the state and there will be no end to it until the economy starts to pick up."

Winston February 28, 2012 at 11:08 AM
Frank, Bernie, Joe and the boys pove their incompetence with their management strategy, words and actions. So....for the past several years the front pages have been screaming the obvious....depressed business climate and decreasing property values. So rather than reduce expenses, share services with other towns and right size the workforce they all sat there, did nothing and blamed Bush, Christie, etc. Isn't it time to hire a full time professional finance director and qualified town manager?
Just me February 28, 2012 at 01:10 PM
I couldn't agree more. What amazes me is how we keep electing the same people over and over. Perhaps the latest increase in our property taxes will be the turning point where the residents actually take notice. Just bought our property out of state and can't wait to start keeping a little more money in my pocket rather than putting it in the incompetent hands of our elected officials.
raymond Weis February 28, 2012 at 05:11 PM
i love South Brunswick and have lived and volunteered here for 35 years. I have to wonder at what point people seeking property tax reductions is going to cost the other people in town extra taxes. I have resisted looking to have my property assessment lowered but I can't help but think at some point I'll have to do something. Unfortunately nobody wants to pay more or earn less so I don't see where the answer to this dilema comes from. The only possibilty I can see is moving someplace less expensive and learning to love it there.
Winston February 28, 2012 at 06:15 PM
Ray ...how about fiscally and ethically responsible elected officials? Something South Brunswick hasn't had for years.
Judy Walters February 28, 2012 at 09:02 PM
I keep waiting for Winston to run for our local government so we can finally have fiscally and ethically responsible elected officials. Alas, he does not.
raymond Weis February 28, 2012 at 09:13 PM
Winston Couldn't hurt
Winston February 28, 2012 at 09:55 PM
Thanks Judy...since I am NOT a Democrat my chances of getting the MORON vote are slim to none plus as an Independent I couldn't even get the tired old and out of touch republican party support me!
mt.wj.fg February 29, 2012 at 01:01 AM
Winston- did you ever think that MORON'S attract the Moron vote.
Joe R February 29, 2012 at 01:04 AM
If you are retired and feel that the tax burden is too much, then downsize and find cheaper accommodations. It's a lot less traumatic than moving out of SB or NJ, especially if you like the SB area.
Joe R February 29, 2012 at 01:07 AM
I am sick and tired of Winston's constant whining, carping, crying, kvetching and complaining about SB. He does this almost every day, all day on the Patch. SB is the worst place in the universe, SB schools are the worst, SB public school teachers are union thugs, the mayor is horrible, the council is horrible, the zoning board is controlled by the NJEA, blah, blah, blah, blah all day, every day. Geez, move for God's sake and torment some other municipality with your blather. Move, move, move, go away to some right wing Nirvana where the taxes are low and the services are crap. Move already. Move, since you hate it so much in SB; run for council or mayor or the school board or run for governor of NJ ( now there's a nightmare scenario if there ever was one). Second thought, just MOVE! Already, yesterday.
Winston February 29, 2012 at 01:15 AM
Think...no there's undeniable proof! Just look at the SB Town Council....who else could have voted them in...well....um...er....MORONS!
Winston February 29, 2012 at 01:22 AM
Comrade Joe...rather than post a response I would rather have the famous Joe Dolce sing my response to your inane ramblings..... http://www.youtube.com/watch?v=sFacWGBJ_cs&feature=youtube_gdata_player
Patrick February 29, 2012 at 04:17 AM
and Winston here is your song.... http://www.youtube.com/watch?v=Wyb_7bWr2X0
Winston February 29, 2012 at 11:10 AM
Two Issues Patty... Why are you even posting here? This has nothing to do with your only two concerns gay marriage and protecting unqualified teachers...
mt.wj.fg February 29, 2012 at 03:35 PM
Winston...come out of the closet already...show us who you really are...or are you afraid
Patrick February 29, 2012 at 04:23 PM
you seem oddly obsessed with homosexuality and teachers... I don't wanna draw any rash conclussions, but you should probably look into that.
Winston February 29, 2012 at 04:45 PM
Hey Frank, Bernie, Ron and/or Joe, Please stop blogging on the taxpayer dime and get to work on the towns finances.
Patrick February 29, 2012 at 05:33 PM
I assume you work... whose dime are you stealing.
Winston March 01, 2012 at 02:38 AM
Patty..don't tell anyone I work in the SB health department...
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Truthteller March 09, 2012 at 02:33 PM
You could lobby congress to pass the fair tax act which would eliminate all write offs except charitable contributions and mortgage interest. The tax rate would be flat and the calculation straight forward..
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