Bayonne runs low on cash to pay successful tax appeals

By Charles Hack/The Jersey Journal
October 16, 2009, 12:06AMJournal

Bayonne municipal government needs cash to pay successful tax appeals

Facing a 70-percent leap in tax appeals this year, the City of Bayonne may have to borrow money to pay off the claims that have merit, since the $2.25 million set aside for that purpose has been all but drained, city officials said.
The number of tax appeals jumped from 388 last year to 662 this year. So far this year, the city has refunded $1.5 million to some 500 property owners, officials said.
There are still more than 100 appeals to be dealt with, mostly from large commercial and industrial properties. These cases are now in state tax court, Bayonne's CFO and Business Administrator Terrence Malloy said.
With roughly $750,000 left in city coffers for future settlements, Malloy said the city might have to borrow money to pay tax refunds, or find funds elsewhere in the budget.
"As we continue to tighten numbers, I will sit down with the council and mayor to determine the correct course of action to finance this," Malloy said. "This may mean issuing short-term notes or running it through city budget, or both."
City officials attributed the skyrocketing number of tax appeals to the recession, which has driven property values down. But property owners haven't seen their taxes diminish.
This year's reserve for tax appeals was funded by diverting money from pension funds, after the state allowed municipalities to pay into pension funds at a reduced rate, officials said.
William S. Winters, an East Brunswick tax attorney who has filed 1,300 appeals across the state including some in Bayonne, said New Jersey tax courts are becoming backlogged with the number of appeals.
"In prior years it was much easier to settle tax appeals based on value on property," Winters said. "Now we have the additional concern that municipalities say they simply can't afford it."
Malloy called the problem "a statewide issue."
"This highlights the fact that in New Jersey we have been overly reliant on property taxes to provide municipal, school and county services," he said.

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