FLEMINGTON, NJ - Flemington Mayor Betsy Driver is recommending that the borough not allow a grace period for the payment of property taxes because of the borough’s continued responsibility to provide tax payments to the county and the school districts.
But she emphasized that the decision will be made by the council itself, she can only make a recommendation.
Gov. Phil Murphy signed an executive order Tuesday that would allow municipalities to extend the grace period for tax payments one month from May 1 to June 1. The order does not extend a grace period for the municipality to pay their obligations of tax payments to the counties and schools.
For that reason, Driver said, she would not recommend moving forward with the grace period for residents.
“The borough is just the bill collector for nearly 70 percent of the tax bill that is due on May 1, and our obligations to pay the county and schools has not changed,” she said. “The amount they are due on May 15 is nearly $2 million.”
Driver said the municipality will owe $354,823.85 to the county, and $35,284.86 in county open space tax money.
On the school side for taxes, which is due every other month, the municipality owes, by May 15, $393,019.68 to the Hunterdon Central Regional School District, and $966,675 to the Flemington-Raritan Regional School District.
Whether or not the municipality provides the grace period, those tax costs are due on May 15.
“The borough does not have sufficient resources in escrow to cover this amount,” she said. “In order to pay these obligations while opting in via a resolution to extending the grace period means having to float a tax anticipation note.”
Driver said this is a great example of why the county and schools should be doing direct billing, and the municipalities should not be serving as bill collector.
“I feel very strongly about this,” she said. “I think the governor put a lot of smaller municipalities in a very bad spot.”
Driver said the borough was already getting calls from residents after the governor made his announcement, and she understands it would be a feel-good decision for the borough to do, but she also believes Flemington cannot afford it.
Driver said the decision ultimately rests with the council, but unless they approve a resolution, taxes will be due May 1.
Driver said she is dumbfounded that the governor has offered this grace period without extending it to municipal obligations as well. A grace period on those obligations, Driver said, must be addressed by the state legislature and cannot be changed by executive order, but the legislature is on recess until the middle of May.
“I had asked if anything was going to be done about the tax bills in the past, and they were adamant that changes could only be addressed statutorily,” she said. “And then on the 28th of April, they dumped this on municipalities.”
Driver said that when they prepare the budget each year, they have to anticipate how much of the money they will receive in taxes. Usually, she said, they receive about 98.25 percent of tax payments, but anticipated a lower payment this year because of the pandemic.
In the budget this year, which was introduced Monday, Driver said they prepared for an about 97.08 percent collection of taxes.
“People will eventually pay, and the process for tax liens is still in place, that’s not going to change,” she said. “Residents who cannot pay their tax bills, they need to reach out to us and we will do whatever we can to make sure everything works out ok.”
Driver said she is concerned that if the tax payments are not made, and she has to find the money to pay the county and schools, it will have to come from other areas of the budget, including salaries.
“I want to do all I can to help the residents and business owners, but I also need to keep the government running,” she said.
Instead of pushing forward with the grace period in such a short amount of time, Driver said, it would have been nice to wait until the August payments are due. She said the state could have seen how things go with May payments and then provide the possibility for action with more than three days notice before the due date.
“It makes municipalities who can’t afford to participate in this look like the bad guy,” she said.
Council president Caitlin Giles-McCormick did not respond immediately to a request for comment about the council's plans.
Driver said she is not sure what the council plans to do, but she has provided as much information as possible to help them make a decision.
“It was short-sighted and threatens the long-term financial health of smaller municipalities like Flemington Borough,” she said. “In order for this scheme to work for everyone, and be fair to both taxpayers and municipalities, the due dates of county and school taxes must also be changed.”
“The financial harm (of moving forward) is significant and scary,” she added. “I hope the council makes the right decision based on the data they have been provided regarding borough financials and the financial implication of that decision.”