Tax Hike Questioned in Face of Home Value Drop

The sharp year-to-year drop in the total assessed value of the property in the borough led to questions Wednesday as to what the 2013 municipal budget actually means.

. An owner of a home assessed at the borough average can expect to pay $1,901 in municipal taxes in 2013.

It was the assessment drop, coupled with a tax hike that confused resident Jeffrey Carey.

He said he received notice from the company performing the borough’s reassessment that his house was worth 50-percent less than it was last year, and his taxes were rising.

Borough administrator Robert Elia said that probably was not true. The property tax on a home is determined by the assessed value of the home multiplied by the tax rate, Elia said. If the home value dropped by half, there was a good chance that the taxes will be less than last year, Elia told Carey.

The confusion comes because Hopatcong is completing a reassessment, which dropped the total value of the borough’s property by about 30 percent, or $581 million. All the property in Hopatcong was valued at $1.451 billion by Appraisal Systems Inc., the company that performed the reassessment.

In 2012, the average home in the borough was $308,590. Appraisal Systems said in its February preliminary report on the reassessment that the owner of a home assessed at the borough average could expect to see a decrease in their 2013 property tax bill. The new assessments will be felt fully in the 2014 municipal budget, since they take effect in August.

Under the new assessment, the average borough home is valued at $214,600.

The $16.556 million spending plan calls for $12.4 million in property taxes, a 3-percent increase from 2012. Overall the 2013 budget is $376,767 larger than the 2012 budget.

Borough auditor Paul Lerch said the Borough Council and administration brought the budget in below the state mandated tax levy cap. Under that law, which called for a 2-percent cap on the amount of new taxes from year to year, the council could have raised $12.9 million in taxes, instead the levy is $530,689 below the cap.

State aid for the budget is flat, at $953,270, and the council used an additional $250,000 from surplus to balance the budget. For 2013 the council plans to use $1.3 million from surplus.

But, Lerch said, the borough restated the 2012 tax rate by 26 cents to incorporate the lower assessments, which impacted the 2013 tax rate.

The restatement raised the 2012 tax rate from 60.3 cents to 86 cents.

The tax rate hike for 2013 is 2.3 cents of $100 of assessed value.

Resident Bob Durham said he was also one of those concerned by the drop in value of his home at the same time his tax bill will rise.

“The taxes are hurting a lot of people, and now with the foreclosures,” he said.

Durham said his tight-knit neighborhood has been hit by foreclosures, with four homes on his street now vacant.

Mayor Sylvia Petillo said the officials are aware of the impact of a bad economy on borough residents, but said that the council has done its best to lower the cost of government.

The number of borough employees has been reduced and the council uses many shared services and grants, when they are available, to reduce costs.

Councilman Richard Bunce said many items in the budget are set by other entities, such as the state government, which determines the borough’s pension costs, for example.

“When this council started out, we set a goal to work hard to make things better a little at a time,” Bunce said. “This is a smaller increase than last year. Every year we make a little more progress.”