Tax Bill Appeals Take Rising Toll on Governments (NY Times)

By Jack Healy
Published: July 4, 2009

Homeowners across the country are challenging their property tax bills in droves as the value of their homes drop, threatening local governments with another big drain on their budgets.

The requests are coming in record numbers, from owners of $10 million estates and one-bedroom bungalows, from residents of the high-tax enclaves surrounding New York City, and from taxpayers in the Rust Belt and states like Arizona, Florida and California, where whole towns have been devastated by the housing bust.

“It’s worthy of a Dickens story,” said Gus Kramer, the assessor in Contra Costa County, Calif., outside San Francisco. “These people are desperate. They know their home’s gone down in value. They’ve watched their neighborhoods being boarded up. They literally stand in there and say: ‘When can I have my refund check? I need to feed my family. I need to pay my electric bill.’ ”

The tax appeals and reassessments present a new budget nightmare for governments. In a survey conducted by the National Association of Counties, 76 percent of large counties said that falling property tax revenue was significantly affecting their budgets, said Jacqueline Byers, the association’s research director.

Officials in some states say their property tax revenue is falling for the first time since World War II.

The recession has already taken a significant toll on states’ budgets, as rising joblessness, a weak business climate and a drop in consumer demand have cut sharply into receipts from taxes on sales, personal income and business earnings.

The pain at the state level is trickling down to county and local governments. To compensate, about 10 percent of large counties are raising the tax rates associated with home values to minimize the revenue loss, the county association said.

Even so, most counties simply have to absorb the lost revenue. Municipalities are laying off workers, renegotiating labor contracts, freezing salaries and cutting services.

The revenue losses are coming as homeowners prod towns for new assessments, and as municipalities conduct regular revaluations of their real estate. While declining residential values weigh heaviest on many governments, the value of commercial real estate is also sliding as businesses shut down and move out of storefronts or shopping malls.

Property taxes are meted out by a disparate patchwork of cities, towns, counties, and school and fire districts, all with their own rules. Because tax formulas vary widely county to county, not every decrease in assessed values automatically lowers a household’s property taxes.

But officials across the country say there is no question that the number of appeals has risen from the usual trickle to a flood.

In suburban Atlanta, thousands of people lined up at government offices to file their requests for reassessments before a March 31 deadline. In parts of Ohio, appeals have multiplied fivefold. Tax lawyers in the northern suburbs of New York say they have never been so busy, and some towns have hired extra employees to sift through the paperwork and are spending hundreds of thousands of dollars on legal fees to deal with the cases in tax courts.

The call for counties to acknowledge the falling price of homes is loudest in states where taxes are highest, or the housing crisis has hit the hardest.

“We’ve been absolutely getting killed,” said Robert W. Singer, the mayor of Lakewood Township, N.J., and a state senator, whose town is setting aside $2 million to pay tax refunds to homeowners. “We’ve never had this before. Usually they’re undervalued. Now, everyone’s overvalued.”

The appeals are not just coming from individual homeowners. Condominium associations and entire subdivisions are pushing for new tax assessments, as are companies that own office towers, industrial parks and shopping malls.

New Jersey, which has the nation’s highest property taxes, has been besieged by tax appeals from homeowners like Peggy Tombro, whose rambling home in Bound Brook is assessed at a value of $1.8 million but is languishing on the market with an asking price of $1.3 million. Her taxes are increasing to $53,000 a year.

“I don’t know what else to do,” said Ms. Tombro, 63, who has gone back to work selling antiques to pay her tax bill.

In the Inland Empire of California, near Los Angeles, Joylette Lynch, 70, is challenging the assessed value of her home as she tries to scrape together $1,158 a month to pay her mortgage, taxes and other bills. Her two-bedroom house in a community for older residents was worth as much as $280,000 three years ago, but houses on her block are now selling for less than $100,000.

“If the house is not worth what I bought it for, why am I paying the same amount in taxes?” she asked.

Ms. Lynch, meanwhile, lost her job at a Bed, Bath & Beyond this year, and is behind on her mortgage payments. Shaving a few hundred dollars off her annual tax bill of $4,300 might not keep her out of foreclosure, but it would help, she said.

“Everything’s in God’s hands now,” she said.

Officials say stories like these are common as unemployment hits 9.5 percent and people seek to trim their budgets. Appraisers and assessors, normally concerned with land values and comparable sales, are becoming ersatz crisis counselors.

Jeff Furst, the appraiser in St. Lucie County, Fla., said a 62-year-old man recently walked into his office and described how his wife had been laid off and his salary had been cut in half. He was struggling to pay his taxes and looking for relief, Mr. Furst said.

“We’re hearing from people like this every day,” Mr. Furst said. In St. Lucie, which sits along the Atlantic, property tax revenue is expected to fall 20 percent, and tax appeals are 10 times as high as they are normally. “Most people are going to see a significant decline in their tax bill.”

Mr. Kramer, the assessor in Contra Costa County, said homeowners started swamping his office with requests for new assessments in December. As many as 500 people would call in one day. His voice mail message now begins: “If you’re calling to request an informal review of your property value due to the declining real estate market.”

Contra Costa has now reduced the recorded value of more than a third of the 350,000 privately owned properties in the county.

Lisa Driscoll, the county’s budget director, said property tax revenue had been growing about 8 to 9 percent a year but was now projected to decline 5 percent next year. The county has cut $50 million from its budget to offset the decline in real estate and other taxes.

Bonnie Grassley’s house in Fort Pierce, Fla., reflects the rise and fall of the broader economy. Its assessed value topped $153,000 in 2006, as Florida’s housing market caught fire. Now, it is worth $77,500.

Though her tax bill is only $150 a month, Ms. Grassley is out of work, spending her savings, and says she hopes a reassessment will save a couple hundred dollars a year.

“My home means everything to me, and it’s all I really have,” Ms. Grassley said. “I’m determined to keep it, come hell or high water. It’s a terrible way to lose your home, just over taxes.”

Similar Articles

Assessing Your Assessemen... Fair to say,  if you are living in New Jersey, you are probably paying more property taxes than you should. The National Taxpayers Union, in fact, estimates
Westfield And Other NJ To... Fоr thе fіrѕt time іn 40 years, thе N.J. Division оf Taxation ѕауѕ it’s forcing towns tо bеgіn property tax revaluations bесаuѕе thеу hаvе bееn delinquent іn
Opt-Out For Towns Using P...   Asbury Park Press Monmouth Tax Board: Towns can opt out of pilot program Asbury Park Press For towns that stay in the pilot program, the Tax
Risk In Being Underassess... In the minutes of a recent council meeting in Westfield I saw something that caught my eye: a suggestion by the Finance Policy committee that the tax
Greenwald’s Tax Rel... New Jersey property taxes cost the average homeowner around $7519.00 a year.  That’s nearly 12 percent of the average household’s annual income. In 2009, the bite was
NJ Tax Appeals: Do It On ... From Bankrate.com Home prices are falling everywhere, but homeowners hoping for lower property taxes may find themselves disappointed when the bill arrives. If you think your home’s
Filing Delay Costs Bergen... A property owner attempted to file a tax appeal for the 2010 tax year with the Bergen County Board of Taxation on the April 1st filing deadline.
Fairlawn Tax Appeals Trig... From The Fair Lawn Patch: To combat the dramatic increase in the number of tax appeals being lost by the borough in recent years, a reassessment, which
Englewood Considers Bond ... From NorthJersey.com: The city council is considering bonding $3.5 million to pay for approximately 100 tax appeals that are close to receiving judgment ….More at Englewood council considers
Tax-Exempted Properties M...   NorthJersey.com North Jersey towns reassess tax-exempt status for hospitals after key ruling NorthJersey.com The case “is a huge potential game-changer when it comes to property tax
Reassessments Hurt Homeow... Due to a high number of tax appeals after a 2008 assessment, Lincoln Park recently completed its reassessment and noted a $149 million drop in value.  In

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.