On Property Tax Appeals

Here is a story concerning the growing trend, in many jurisdictions, of property tax appeals among homeowners. In my own state of New Jersey, property taxes are big potatoes. Here, as elsewhere, property taxes are a significant part of how localities within the state finance their governments. And New Jersey has the highest property taxes in the nation. In many property tax-setting jurisdictions across the state, property tax assessments are yet pegged to home values that were assessed at or near the high-point of the real estate boom. Because many jurisdictions have not conducted new assessments since that time, many homeowners may be paying significantly more in property taxes than they should be paying. Of course, one governmental incentive is to delay any reassessment for as long as legally possible, the better to keep the money coming in to finance local governments; this is especially true at a time when Trenton, under a new governor, is poised to reduce state aid to localities. Nevertheless, more home owners and some businesses in the state are pressing forward with appeals to have their property taxes lowered. As an attorney in the state, I've had occasion to become familiar with the appeal process in the County of Mercer.

Homeowners may bring appeals on their own before the county assessment board, and, generally speaking, they will be opposed at the hearing by the relevant township assessor's office. Chances for homeowners of prevailing are not great. For one thing, state law allows a 15% margin of error to the township assessor, which diminishes not just the number of appeals, but can also affect any write-down. Moreover, townships are likely to aggressively contend any appeal, because revenue is scarce. And if you are a corporation and want to appeal your property tax assessment, you are required to have a lawyer licensed in the state prosecute your appeal. For small corporations without a counsel's office, that means the cost of representation must be considered alongside the uncertainty of prevailing, and the magnitude of any savings coming from prevailing, in arriving at a decision whether to appeal your current property tax assessment.

New Jersey is in bad fiscal shape. And local governments in the state, long on current and legacy promises to highly compensated public employees, now find themselves between the rock of a new governor intent on lowering their state aid and the hard place of corporate and private citizens looking to reduce their property tax bills, many of which are based on inflated property values.

Comes the bill due.