RARITAN TWP, NJ - Raritan Township cannot afford to give an additional grace period for tax payments regularly due by May 1, according to Mayor Jeff Kuhl.
Gov. Phil Murphy announced an executive order Tuesday allowing municipalities to extend the grace period for payment of municipal property taxes to June 1. There is currently already a grace period of 10 days from May 1, so this proposed extension would add 20 days to that.
“And if the taxpayer were to pay after June 1, the interest would still go back to May 1,” Kuhl said. “This was not well thought out or explained to the taxpaying citizens of New Jersey. Our tax collector received about 100 phone calls on Wednesday asking about this because the governor did not spell it out or explain it properly.”
Kuhl said that the extension does not allow for an extension on the payment by the borough to the county and schools for quarterly taxes.
“There are state mandates that obligate the township distribute that money on time to the schools and county, whether we have collected it or not,” he said. “We cannot only give them part because we only received part, so the township would need to borrow money to pay them.”
In a call with the governor’s office, Kuhl said, he and other mayors expressed their displeasure with the order.
“If we give a grace period on tax collection, the schools and county also should give a grace period to the township,” he said. “Guess what, that can’t happen unless the laws are changed. Wouldn’t you think you would have done that first?”
Kuhl said the municipality collects tax money for the schools, county, open space and library. In Raritan Township, he said, the Flemington-Raritan Regional School District and Hunterdon County School District receive approximately 72.3 percent of the property tax money collected, and Hunterdon County receives approximately 12.9 percent of property tax money collected.
From there, Kuhl said, open space and library taxes account for 2.9 percent of the money collected.
Raritan Township uses about 11.9 percent of the money collected to provide all services residents expect, including police, roads, parks, snow plowing, recycling and more.
Kuhl said that the total amount of taxes expected to be collected by Raritan Township in 2020 is $106 million. It will then disperse $93 million of that, and use only $13 million for its own budget.
By May 15, Kuhl said, Raritan has to pay Flemington-Raritan Regional about $8.2 million, $4.2 million to Hunterdon Central and $3.5 million to Hunterdon County.
“We, like most municipalities, do not have money like that in any type of reserve,” he said. “If we did, we are charging you too much for taxes.”
So if the township did not collect taxes on time, Kuhl said, the township would have to borrow money to cover those bills through Tax Anticipation Notes, which he said usually have very high interest rates and can affect rates for future borrowing for capital projects.
“Again, we must pay those bills by law,” he said. “The interest on millions of dollars would have to be passed onto all the township taxpayers, and adding that cost to the township itself.”
In addition, Kuhl said, in looking at the interest cost for the average home in Raritan Township that is delinquent from May 1 to June 1, the cost of penalties and interest would be about $25.
“If you pay your taxes before May 11, you pay no penalty or interest,” he said.
Kuhl also pointed out that because of low population, Hunterdon County and Raritan Township did not receive any funds from the federal stimulus packages recently approved. Funds only went to municipalities of 500,000 or more people.
Kuhl said they would like to give the grace period to taxpayers to help the citizens, but they cannot afford to do so.
“You can ask the majority of municipalities and they will probably give you the same answer,” he said. “This may not be the easy, popular answer, but it is the responsible answer in looking out for all the township residents now and in the future.”