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Time to reassess how N.J. apportions taxes

how to reassess property taxes

Taxpayers throughout New Jersey are unhappy about property taxes, and one of the causes of that discontent is the inefficient and unfair way property is assessed. This is not a problem unique to Gloucester County. The property tax assessment system fails in every part of New Jersey.

Many owners of new homes know that they can be assessed at a higher value than the owners of a similar home purchased three years earlier. Town-wide property revaluations are not conducted when they should be, because already strained municipal budgets cannot afford the cost, which, in a township the size of Deptford, is estimated at $1.2 million. The cost of a countywide revaluation is estimated to be $7.5 million.

The current property tax assessment system is clearly broken, failing to fairly and uniformly apportion property taxes as required by the New Jersey Constitution. The proof: Twenty of Gloucester County's 24 municipalities have equalization ratios in the 40 and 50 percent range, meaning their property assessments average only a fraction of market value. When market and assessed values are this far out of balance, fair tax assessment is a virtual impossibility.

This problem has existed for decades and needs reform now. Municipal leaders in Gloucester County now have the opportunity to help reform tax assessment by supporting Senate Bill 2356, the County Property Tax Assessment Reform Act, sponsored by state Sen. Stephen Sweeney, D-3. The legislation is endorsed by the Gloucester County freeholder board, of which Sweeney is also director.

Sweeney's reform proposal would fundamentally change New Jersey's assessment system, starting in Gloucester County, by transferring this local responsibility to county government. This is not a radical proposal.

Blue-ribbon commissions established by two governors have acknowledged problems in the existing system and recommended that property assessments be conducted on a regional or county basis.

Real estate is supposed to be assessed at market value in order to apportion the tax levy fairly. When assessed value deviates significantly from market value, taxes are not apportioned fairly and uniformly. The closer the equalization ratio is to 100 percent, the closer assessed values are to market values. This is the key to keeping tax assessments fair.

The linchpin of the reform proposal is to reassess all property every three years using county personnel instead of expensive consultants. Technological advances,

combined with common-sense changes in assessment practices, now enable reassessments to be conducted much more efficiently.

Under the plan, Gloucester County would be divided into three regions, each with an approximately equal number of taxable parcels. Towns would be grouped together in regions with others of similar property and market characteristics. At any given time, one region would be preparing to undergo a reassessment, one region would be implementing a reassessment, and one region would have just completed a reassessment.

This cycle would repeat continuously, keeping assessed values in line with market values without the need for expensive mass reappraisals. The constitutional mandate that property taxes be fairly and uniformly apportioned would finally be met.

The annual cost of a county assessment office is estimated at $2.4 million. Compared against the 2007 budgets of municipal assessors, plus the estimated cost to conduct revaluations in each town (with an assumed lifespan of five (years), supporters of the reform proposal project savings countywide of $1.5 million a year. A county assessors' office budget would also include the salary of a tax attorney to handle tax appeals.

Municipalities' legal expenses to defend tax appeals are not included in the comparison above. As a result, the countywide savings could actually exceed $1.5 million, since municipalities will no longer need to fund these legal costs.

Some of my fellow mayors have expressed "customer service" concerns regarding this countywide proposal. Twenty municipalities currently have assessors who serve in a part-time capacity. A county assessor's office would keep normal business hours and, in partnership with the municipalities, could schedule times for county staff to meet with taxpayers in each town hall -- as local assessors currently do.

In these difficult economic times, all municipalities are looking for ways to cut the cost of government. Sen. Sweeney's countywide assessor proposal offers $1.5 million in savings and reforms the broken tax assessment system.

I have been lobbying my fellow mayors on behalf of S-2356. As of this writing, officials in all but two county municipalities have indicated they support the proposal. Local leaders need to put aside their fear of losing local control and support S-2356.

The critical need to save tax dollars is now, and fair tax assessment is long overdue.

Paul Medany is the mayor of Deptford Township.

Category: Taxes

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