Tax Appeals Will Put Huge Strain On 2012 Budget

Montclair residents could win as much as $4 million in tax appeals this year, putting a strain on the 2012 municipal budget and most likely resulting in another tax increase, Township officials said Thursday.

Township Attorney Ira Karasick said that, as of today, he's tabulated approximately $2.2 million in "revenue losses" for the Township resulting from refunds or credits that will have to be given to residents who've appealed their property taxes in 2011.

"However that only covers about 50 percent of the property values that are on appeal at the county board ... the bottom line is that it doesn't include another 50 percent and that could be $1.5 million to $2 million more," he said.

In addition, Karasick said, appeals from previous years total about $2 million in refunds or credits.

Karasick said he prefers not to speculate about tax increases but admitted that the town will be in a tough situation.

Mayor Jerry Fried said that it's pretty safe to assume that—based on the $4 million figure—the municipal portion of a tax bill could go up during the next budget year by 5 percent to 6 percent.

"There is some money put aside for this sort of thing but there is not $4 million in there," he said.

In the 2011 municipal budget, the Township Council set aside $300,000 in a special reserve fund to help offset the tax refunds or credits it would have to face.

There were 1,130 tax appeals filed with the township for 2011, and Karasick estimated that about 50 percent or 51 percent of them have been resolved so far at the Essex County Board of Taxation.

Councilor Cary Africk said that it's not too early even now to start talking about the budgeting process, especially with the Township facing so many challenges.

"It is difficult, the numbers are challenging, but it is the responsible way to proceed," he said. "Instead of starting early, we've been getting last-minute scrambles."

Africk complained that the Council doesn't even "get planning for the year that starts in less than six months" let alone do any multi-year planning.

"And when it comes to the Capital Budget, well let's just say the capital budget for 2011 is still being 'studied'," he said. "Last year the 2010 capital budget wasn't completed until December 2010."

Councilor Nick Lewis said it's clear the municipal budget will be thrown out of whack by the tax appeals.

"It will certainly be a problem. The question is just how big the problem will be. At the same time, it seems clear to me that we have pretty much run out of programs and people to cut," Lewis said. "Therefore, unless we want to start slashing public safety, we are not going to have many weapons to attack a huge hole in our budget.

"It therefore seems likely that the tax appeal results will lead to a tax increase of some amount," he added. "Just how bad it will be is what is not clear at this point, so there is no point in speculating about a number."

In June, the Township Council approved a controversial $71 million municipal budget—following five months of sometimes heated debate—that resulted in an overall 1.6 percent property tax increase for residents.

That budget paid for a reassessment—currently being performed throughout the Township—that will impact all property owners.

The reassessment is designed to make adjustments to property values throughout the Township so that they more accurately reflect current market values. After Montclair's reevaluation was completed in 2006, real estate prices dropped dramatically, which led so many residents to file tax appeals.