Thousands of Monmouth County homeowners hit with sky-high assessments this year may see an end to property value roller coaster under a series of modifications rolled out by the county Tax Board and Assemblyman Declan O’Scanlon.
Two of the reforms are aimed at protecting taxpayers from the huge spikes in property values that many saw after they successfully appealed their assessments, and reducing a wild swing of home values from one year to the next. The reforms, however, won’t help for this tax year. Homeowners will have to file an appeal if they think their values are out of line with the sales market.
The proposed changes come following a series of Asbury Park Press articles that outlined problems with the Assessment Demonstration Program, a pilot program implemented in 2013 as a way to make the tax assessment system fair to all. The Press investigation, which looked at relationships between some assessors and some private reassessment firms, has sparked a grand jury probe.
O’Scanlon said taxpayers and town officials have to separate the questions surrounding those relationships and the goals of the program itself.
O’Scanlon said other suggested changes are intended to address fears by some Monmouth County towns that their residents will pay more in property taxes if they stay within the new program. Three towns have opted out and are staying with the old assessment system, where homes are reassessed about once every 10 years.
“We heard folks and we are being responsive, we think,” O’Scanlon said in an interview with the Press. “If (towns) still don’t like it, they can opt out.”
Towns have until April to decide if they want to drop out of the pilot program for 2017. So far, Eatontown, Manasquan and Avon officials approved resolutions to opt out, while Millstone Township Committee was considering a resolution on its Wednesday night agenda.
The pilot program resets assessments each year so owners are paying taxes on their properties’ market values, what they would get if they sold their property on Oct. 1. The purpose, O’Scanlon said, is to guarantee no one is over or underpaying for the cost of running towns, the county and schools.
“This is simply a new way of ensuring fairness in our property tax system,” he said. “We know that, done right, this system of allocating the tax burden is a more fair, less expensive and more efficient way to do it.”
O’Scanlon said he began working with the tax board to develop the pilot program fixes after hearing from taxpayers and town officials in the wake of the Press investigation. Most of the changes proposed can be done administratively by the tax board, he said.
Tax board members, in a joint statement, promised to make other changes to improve the pilot program.
“We won’t be stopping here,” Tax Board president James Stuart said. “Board members will be meeting with local officials on an ongoing basis to answer questions and get input.”
Tax Commissioner Cliff Moore said, “It is my hope that local residents and officials will take a legitimate look at these modifications — and take advantage of the Tax Board’s ongoing outreach efforts — over the next several months prior to making any decision about the program.”
Avon Administrator Tim Gallagher said the changes proposed don’t address his town’s primary concern that the pilot program requires all property values to change every year. The program, he said, was an unnecessary cost for Avon when its assessments were already hovering right around market value.
The pilot program reforms will:
Cap how much property values can increase after an appeal. Under the old system, property owners had protections of the Freeze Act, which meant their assessments could not increase for three years after they won an appeal. That protection is gone under the pilot program, and some homeowners say they felt assessors targeted them for increases — the same action the Freeze Act meant to prevent.
O’Scanlon and the tax board want to give back some of those protections. Their change would mean values for properties with successful appeals could only increase by the same rate seen in the real estate market. So, if the real estate market increased by 2 percent, assessments on properties with recent appeals couldn’t increase by 10 percent.
Try to prevent big swings in property values. Some homeowners complained they saw big spikes in their property values that they say assessors attributed to as few as one property sale in the past year.
The fix offered by O’Scanlon and the tax board would require assessors to review all sales within a town in the past 36 months, which would give assessors more data to consider when setting market values, especially in small towns where there may not have been many sales.
“You will mathematically see a smoothing in value,” O’Scanlon said.
Ensure towns are paying their fair share of county government and schools. In the past in Monmouth County, the cost of county government and regional schools was divided among towns based on their “equalized” value — a number that calculated the town’s overall market value based on recent property sales in any given town. But some property sales, such as property transfers from one family member to another, aren’t included in those calculations
O’Scanlon say municipal leaders are worried taxpayers their towns will be left paying a bigger chunk of shared budgets like those for schools and the county if they stay in the pilot program and others opt out. The new change would require the tax board to come up with a way to more closely watch towns to make sure they are accurately setting their overall market value regardless if they calculate it or if they reset all property values each year.
“We want to eliminate any perception that there might be a disadvantage to staying in the program or that perhaps there might be a monetary advantage to opting out,” he said.
O’Scanlon said he would also introduce legislation that would require towns to make up the difference if they underpaid for their share of a county or school budget and give other towns credits if they overpaid.
O’Scanlon also vowed to push for statewide reforms to cut property taxes.
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