LIVINGSTON, NJ – Recently, the city of East Orange and the township of Livingston reached a settlement agreement to resolve the East Orange Water Commission’s (EOWC) outstanding tax delinquency, resulting in East Orange paying Livingston $2.014 million.
According to Livingston Township, “Livingston Town Council members have successfully ended several years of litigation against the EOWC for delinquent taxes – one of the main factors in this year’s tax increase.”
Since the 2013 budget cannot be retroactively changed, payment received from East Orange will be combined with all other delinquent taxes collected throughout the year and will be added to the year-end fund balance or surplus. According to the township, this fund “has been substantially depleted in recent years due to tax revenue shortfalls and payment of tax appeal refunds.”
When the annual budget is prepared for 2014, the township will decide possible uses for the surplus. The township’s proposed plan for 2014 will include an option to use the money to pay tax appeal refunds, which are estimated to total $3.1 million for 2013 and to exceed that in 2014 and 2015.
“Unfortunately, Livingston tax payers got hit with a significant increase in property taxes – in large part due to the unresolved issue with East Orange,” said Councilwoman Deborah Shapiro. “Using this ‘windfall’ to pay down interest bearing tax appeal refunds – most notably with the Livingston Mall – is certainly among the priorities for which this payment must be used."
Currently the township is responsible for paying 100 percent of a tax appeal even when it only keeps a fraction of the collected tax money. According to the township, for every dollar in tax money collected, the township keeps 18.5 cents. The rest goes to the Board of Education and to Essex County, neither of which is responsible for refunding tax appeals. This forces the township to pay the 18.5 cents portion it received plus the balance allocated out to the Board of Education and county.
Tax appeals from as far back as 2009 are still being processed through the state tax court system. If any of the appeals from 2009 to 2013 are successful, the township will have to refund the determined amounts.
According to the township, money collected from East Orange will significantly increase Livingston’s surplus and using the surplus to fund tax appeals will help to reduce increases in property taxes.
The township’s press release also stated that, “This is also the most appropriate use of non-recurring surplus in the 2014 budget, since this one-time increase in surplus reserves should only be used for one-time expenditures, and not to finance ongoing operations.”