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South Orange News

Created: July 27, 2012

Understanding Your 2012 Tax Bill

Budget and Reassessment Impacts

 

 

Important Points (more details below):

 

2012 Tax Bills and Due Date

 

  • 3rd Quarter Taxes are due August 20, 2012 with no grace period.
  • 4th Quarter Taxes are due November 1, 2012 with a 10 day grace period
  • Recently mailed bills are actual bills, not estimated as historically sent, and no further bills will be sent

 

Tax Levy Increase

 

  • South Orange’s total municipal tax levy increased 1.46% and is 27.7% of total taxes, with school being 56.6% and County being 15.7%
  • The municipal tax increase on the average home was $83
  • South Orange’s budgeted spending was reduced by over $1,000,000
  • The total tax levy (Village + School + County) increased 1.83%

 

Reassessment and Tax Impact

 

  • Reassement was done to equalize Village-wide property values due to extremely large volume of tax appeals (over 12% of all households)
  • Reassessment was performed by independent licensed real estate appraisers
  • Overall property value decline in the Village was 19.2%
  • If your value went down more than 19.2% your taxes would decrease
  • If your value went down less than 19.2% your taxes would increase
  • Reassessment impact is in addition to 1.83% Tax Levy increase.
  • To see the impact of the Tax Levy Increase and of the Reassessment of your Property on your tax bill, simply input your 2011 and 2012 assessed values in the calculator on the link at the end of the article.

 

 

2012 Tax Bills and Due Date

          The 2012 Tax Bills were recently mailed to all taxpayers.  Typically, 3rd Quarter Tax payments are due on August 1st, with a 10 day grace period.  HOWEVER, PLEASE NOTE THAT, AS A RESULT OF THE MAILING DATE AND STATE LAW, THE DUE DATE FOR THE THIRD QUARTER 2012 TAX PAYMENTS HAS BEEN EXTENDED TO AUGUST 20, 2012.  THERE IS NO GRACE PERIOD AND ANY PAYMENT RECEIVED AFTER AUGUST 2OTH WILL BE SUBJECT TO INTEREST.  The 4th Quarter due date is not extended and remains November 1, 2012 with a 10 day grace period.

          For the first time in more than 15 years, the Village adopted its budget in sufficient time for the mailing of actual tax bills, as opposed to the “estimated” tax bills you have typically received and may have become accustomed to.  Unlike in prior years, you will not receive another bill later in the year containing adjustments to this bill.  The recent bill should be used for all payments set forth thereon.  The payment coupons #3 and # 4 on your recent bill represent the third and fourth quarter payments for 2012.  Those two payments, together with the first and second quarter payments you made in February and May, (based on the preliminary bill), add up to your total 2012 taxes.  Because the 1st and 2nd Quarter payments are based on the preliminary bill, any 2012 tax increase is billed only on the 3rd and 4th quarter payments.  To calculate your total 2012 taxes, DO NOT MULTIPLY THE 3RD OR 4TH QUARTER PAYMENT BY FOUR. Instead, add the 3rd and 4th quarter payment amounts to the 1st and 2nd quarter payment amounts you already made.  As discussed below, any increase in your tax bill can be caused or impacted by the Village, School and County budgets and tax levies, as well as the recent reassessment.

The Reassessment

          In 2011, the Village underwent a Village wide reassessment of all property values, which values are reflected for the first time in the 2012 tax bills.  The reassessment was conducted by an independent firm of licensed real estate appraisers.  The reassessment was necessary due to the overall decline in the real estate market in the past few years, which resulted in a large number of tax appeals. The effect of those tax appeals was to grant relief to those property owners who appealed.  However, the results of those appeals also unfairly increased the burden on those property owners who did not appeal, since their higher, above market values charged them with a higher share of the tax burden. The goal and purpose of the reassessment was to readjust and fairly apportion the tax burden among all residents by assessing all properties at their fair market value as of October 1, 2011.

          In addition, prior to the reassessment, South Orange’s higher than market value total assessment resulting in South Orange bearing a larger share of the school budget than we should have.  This was particularly true since Maplewood had just completed its own revaluation.  By adjusting our total value to market value, the reassessment also corrected the imbalance in the school tax apportionment.

          In 2011, each property owner was mailed a notice of their proposed new assessed value and provided with an opportunity to meet with the appraisers to discuss or seek adjustment of their new value.  The appraisers were in Village Hall for a total of nine days and met with hundreds of taxpayers to discuss their new values and made adjustments where warranted.  Following those informal meetings, the values were finalized and certified to the County and State and have been used for the 2012 tax bills.

          Under the reassessment, the total value of all properties in the Village decreased by approximately 19.2%.  However, each property was individually evaluated by the appraisal firm and not every property decreased by 19.2%, some decreased more and some decreased less.  The amount of any particular decrease in value may have been a result of certain neighborhoods retaining greater or losing more value.  A lower decrease in value can also be the result of a property owner having previously brought a successful tax appeal in the last few years.  In those cases, the value had already been adjusted downward to market value in the appeal, and the reassessment would have a much lesser impact and a lower decrease in value. The results of the reassessment of each individual property will directly affect the taxes on that property. In simple terms, if your property declined in value by more than the average 19.2% decrease, then your value is a smaller piece of the overall total Village property value and your taxes would decrease as a result of the reassessment, although the tax levy increase may offset any reassessment decrease.  If your assessed value decrease was less than the average of 19.2%, whether because you were fortunate and your property lost less value than others or because you had already had a successful tax appeal, then your value is a slightly larger share of the total value and your taxes would increase solely as a result of the reassessment, over and above the tax levy increase.

Tax Bill Calculator

          As noted, a portion of any increase in your tax bill is the result of the tax levy increases from the Village, the Board of Education and Essex County.  In addition, a portion of any increase in your tax bill may be the result of the reassessment of your property.  In order to allow taxpayers to see and understand the impact of those two factors, we have prepared a calculator which calculates your total 2012 tax increase over 2011, for your municipal taxes alone, and for your total tax bill.  The calculator then provides a breakdown, again for municipal taxes alone and then for your total tax bill, of the increase caused by the budget tax levy increase, and the impact of the reassessment of your property value.  In order to use the calculator, you need to have your 2011 and 2012 assessed values and Microsoft Excel or a compatible spreadsheet software program.  To access the calculator, simply click on the link at the bottom of this article.

Budgetary Tax Levy Increases in Tax Bill

          A portion of the increase in each tax bill is due to the increases in the municipal, school and county tax levies.  These tax levy increases are the result of increased expenses, decreased revenues, or both.  In the case of the Village, the 2012 Budget actually reduces authorized spending by over One Million Dollars ($1,000,000).  Unfortunately, an unavoidable decrease in other available revenues still resulted in a modest tax levy increase.  These increases in the tax levy would have occurred whether South Orange had a reassessment or not.

          The table below reflects the percentage increases of the Village, the Board of Education and Essex County tax levies, as well as each entity’s percentage of your total tax bill.

Taxing Entity

2012 Tax levy Increase %

% of Total Tax Bill

South Orange Village

1.46%

27.7%

SO/Maplewood Bd. of Ed.

1.90%

56.6%

Essex County

2.22%

15.7%

          The dollar amount of your property tax increase resulting from these budgetary tax levy increases is shown in the second to last row in the calculator as “Tax Increase Due to Tax Levy Increases”, with the first column isolating only the Village’s budgetary tax levy increase and the second column showing the total budgetary tax levy increase (Village, Bd. of Ed, and County) in your 2012 tax bill.   As discussed below, any remaining tax increase on your bill would be as a result of the reassessment.  That amount is reflected in the final row in the calculator.

Reassessment Impact on Your Tax Bill

          As previously explained, in addition to the budgetary increases discussed above, your tax bill was impacted by the Village wide reassessment undertaken last year and first applied to the 2012 tax year.  The reassessment had varying impacts on every property in the Village.  Each property was reassessed and set at its market value as of October 1, 2011.  The calculator compares your 2011 assessed value and resulting taxes with your reassessed 2012 value and resulting taxes.  After quantifying the tax levy increase in your bill, the calculator identifies and isolates the impact, in dollars, of the reassessment of your property on your tax bill.  If the calculator shows that your taxes did not increase as a result of the reassessment, it is because, unfortunately, your property value declined by more than the Village average decline.  If your taxes increased as a result of the reassessment, it is either because your property retained more of its value than the Village average, or because you previously had a successful tax appeal which already adjusted your property to fair market value before the reassessment.

          To access the calculator click here: CALCULATOR