Localities across the New York region, already reeling from the cost of cleaning up from Hurricane Sandy, are confronting the prospect of an even bigger blow to their finances: a precipitous decline in property tax revenues.
The storm damaged tens of billions of dollars’ worth of real estate, especially in coastal areas of Long Island and New Jersey. As a result, localities can no longer expect to reap the same taxes from properties that have lost much of their value — in some cases, permanently.
Without new revenues, state and local officials and Wall Street analysts said, these areas may have to make deep cuts in spending on schools, police and fire departments and other services. They also may be hard-pressed to finance rebuilding.
“Absolutely, this is going to be devastating for several years,” said Ester Bivona, former president of the New York State Receivers and Collectors Association, which represents local tax officials.
The Division of Local Government Services in New Jersey estimated this month that more than a dozen municipalities in the state could lose at least 10 percent of their tax bases. About another 10 face a drop between 5 percent and 10 percent, state and local officials said.
Among the worst hit is Toms River, one of New Jersey’s largest municipalities, with 90,000 people. It recently warned Wall Street that property tax receipts could drop 10 percent to 15 percent, according to its financial disclosure documents.
Down the coast, the tiny borough of Tuckerton lost close to 20 percent of its property tax base. In Sea Bright, nearly half the homes are uninhabitable.
The situation is similar on Long Island, according to interviews with officials there.
The village of Freeport in Nassau County expects that many of its 15,000 homeowners will qualify for reductions in property tax bills, erasing at least 5 percent of property tax revenues and probably far more.
Experts said the looming revenue crisis for localities in the region underscores how natural disasters can have a profound effect long after the debris is gone.
If localities try to raise overall tax rates to make up for looming deficits, they may touch off a backlash from homeowners with undamaged properties.
“My thing is to encourage property owners to not seek reassessments because you’re going to pay on one end or the other,” said Andrew Hardwick, Freeport’s mayor. “If too many people seek reassessment and are successful with it, that means, how do you pay the bills on the other end? You raise the taxes again? It doesn’t make sense.”
Some localities, like Long Beach, on Long Island, had shaky finances before the storm and are now in deeper trouble, according to local budget records. But many others had been on solid financial ground.
Two major bond-rating agencies, Moody’s Investors Service and Standard & Poor’s, have expressed concerns in recent weeks about the fiscal stability of numerous municipalities in the region.
New York City and county governments in New York are far less reliant on property taxes than localities, so they are expected to have an easier time weathering a drop in the value of the tax base caused by storm damage. The city, for example, has its own income and business taxes.
What’s more, the city and county governments in both states have a much broader property tax base than small localities.
The $50.7 billion Hurricane Sandy relief bill approved this month by the House of Representatives provides up to $300 million in low-interest loans for localities facing shortfalls. The Senate has supported a similar provision in its own relief package.
But some local officials said such financing was not nearly enough. States themselves have not yet sent aid, and senior state officials said they were not inclined to do so until federal money was exhausted.
“It’s a pretty inescapable conclusion that there will be an impact on the tax base,” said Michael Drewniak, chief spokesman for Gov. Chris Christie of New Jersey.
“In many instances, we had homes completely wiped out or severely damaged to the point they were rendered uninhabitable,” Mr. Drewniak said. “That left behind rebuildable land but, in the meantime, no ‘improvements’ to tax. In other cases, people may find it cost prohibitive to rebuild at all, depending on their individual circumstances.”
It could be a year or two before the aftereffects are fully understood, given that localities will have to assess damaged properties before lowering property taxes on them.
Storm-Damaged Homes Mean Lower Property Tax Revenues in New York Region
This article
Storm-Damaged Homes Mean Lower Property Tax Revenues in New York Region
can be opened in url
http://inflatablenews.blogspot.com/2013/01/storm-damaged-homes-mean-lower-property.html
Storm-Damaged Homes Mean Lower Property Tax Revenues in New York Region
