HoVal towns consider extending property tax payment deadline

On April 28, Governor Murphy signed Executive Order No. 130, which allows municipalities to extend the grace period for property tax payments due on May 1 to June 1. But, across the state, some town leaders say they are not sure whether it is a good idea.

“Allowing municipalities the option of extending the grace period for May property tax payments is the right thing to do as many New Jerseyans are impacted financially as a result of this crisis,” said Governor Murphy. “Leaders of towns and cities across the state have been trying to find ways to lessen the blow on local residents, and with this action, they are empowered to provide relief to homeowners as we continue to do everything possible to fight this pandemic.”

“We understand that many property owners are coping with financial challenges they’ve never had to face before as a result of this pandemic and we are considering every option available to answer their calls for help,” said Lt. Governor Sheila Oliver, who serves as Commissioner of the Department of Community Affairs. “Allowing municipalities to institute this grace period will afford New Jersey property owners who need it some extra time to get their finances in order so they can submit their quarterly property tax payments by June 1.”

The press release describing the order continues: “Under existing law, towns may only allow for a grace period of up to 10 days after the property tax deadline without interest or penalty.  In the aftermath of Superstorm Sandy, the law was amended to allow towns that have experienced a flood, hurricane, superstorm, tornado or other natural disaster to extend the grace period for up to a month in certain circumstances. There is currently no mechanism in the law to allow municipalities to extend the grace period as a result of a public health-related emergency. Executive Order No. 130 allows towns to extend the grace period for property tax payments due on May 1 to June 1, which will enable homeowners to pay their taxes a month after they are due without incurring any interest costs or penalties.”

However, the New Jersey State League of Municipalities points out that allowing a grace period can have serious repercussions for municipal operations. In New Jersey, each municipality has the responsibility of collecting all municipal, school, and county taxes. It then pays the school and county the amount due in regularly scheduled installments. Regardless of whether the tax deadline is May 1 or June 1, the municipality must make its regular payments to the county and the school district. The Governor’s executive order did not extend those deadlines.

On April 17, the leadership of the League of Municipalities issued a letter stating:

“While municipalities continue to deliver vital services to the people of New Jersey, it is only a matter of time before the virus has an impact on property tax collection rates. And, as municipal government collects property taxes on behalf of schools and counties, and must provide those entities with 100 percent of their levies, the lack of non-property tax resources and reduced collection rates will only serve to erode local services and could well necessitate staff reductions. Survey data released this week from NLC [National League of Cities] and USCOM [US Conference of Mayors] indicates local leaders in 1,000 municipalities said the reductions probably would affect their local police departments and other public safety agencies.’

Throughout New Jersey, municipalities are tightening their belts. Revenue is down due to closed municipal courts and people unable to pay property taxes. Meanwhile, costs are rising as towns pay for such things as setting up virtual workplaces for their employees in order to keep the government running, additional public health measures such as contact tracing, and making public service announcements to keep the public informed. According to the League of Municipalities, NJ Congressman Tom Malinowski and NJ Senator Cory Booker have each introduced bills to provide financial relief to towns in the next round of COVID-19 relief funding, but that won’t be decided for some time.

Hopewell Borough’s Administrator, Michel Hovan told MercerMe:

“The Borough of Hopewell will be extending the grace period for the 2nd quarter taxes due on May 1 to June 1, 2020.  Payments received after June 1 will accrue interest retroactive to May 1st. Governor Murphy issued Executive Order 130 on April 28th, permitting municipalities to extend the grace period to June 1 (or earlier but not later).  Until that action was taken, municipalities were statutorily prohibited from extending the grace period on their own. The Hopewell Borough Council will formalize this decision at its next meeting on May 7th.  The announcement is already posted on our website at www.hopewellboro-nj.us. The Borough Council is cognizant of the financial concerns that many are experiencing as a result of the pandemic and is hopeful that the additional time granted is helpful to those that may be struggling.  This one step does not create a long-term financial burden on the Borough and any inconvenience stemming from it will be ours to manage.”

Mayor Kristin McLaughlin of Hopewell Township told MercerMe that the Committee will be discussing the issue at its meeting at 4pm on Monday, May 4. (Information about how to attend by Zoom here).  She said the decision is particularly fraught for the Township because it pays about 80% of the Hopewell Valley School District budget and that if the Township can’t make its HVRSD payment due to delay of property tax collection, she worries about the District’s ability to maintain salaries and operations.

Pennington also will hold its next regular meeting on May 4 and the property tax extension will be discussed then. Zoom meeting link is here

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