Opinion ID: 1469609
Heading Depth: 1
Heading Rank: 11

Heading: the pending case

Text: Now for the first time we are confronted with a simple suit by a taxpayer of a municipality directly attacking the assessments in the municipality as being at less than true value and seeking to remedy discriminatory and unfair taxation resulting therefrom by forcing general compliance with the command of the statute to assess at true value. The case has gone through the Law Division of the Superior Court and the Appellate Division of that court. Meantime the defendant municipality has undertaken a reappraisal according to true value of all of the property within the municipality, and we have been advised that that reappraisal has now been completed. Thus, the case as between the plaintiff-taxpayer and the defendant-municipality and its tax collector is now ripe for decision. To delay decision in the instant case and to permit the inequities of taxation that have existed in the Township of Middletown to continue because some other municipalities have refused to see the handwriting on the wall, as the majority and concurring opinions do, cannot be justified. Incidentally, we are told in the majority opinion that 99 municipalities have undertaken professional revaluation programs in anticipation of enforcement of assessments at true value and 15 more are contemplating such action, but such proceedings, either undertaken or contemplated, constitute no reason for withholding action in favor of the aggrieved taxpayers of the Township of Middletown while we are awaiting either revaluation programs in the remaining municipalities of this State, or a new taxation program from the Legislature. The decision of this case in favor of the plaintiff does not bind any other municipality in the State, though it would, of course, serve notice as to the necessity of their complying with this statute directing assessment of property at true value. The majority of the court fear that a decision in favor of the plaintiff, effective now, would upset the economy of the State. To my mind this is attributing to a judgment in favor of the plaintiff, effective now, after a revaluation has been completed in the township, a fanciful result, which in the meantime deprives the plaintiff and other similarly situated taxpayers of their undeniable right to immediate fair treatment. The situation in every other municipality would still require decision on the basis of the facts of its particular case, if it comes before the courts. The majority and concurring opinions concede that in principle the plaintiff is entitled to relief and they acknowledge that conformity with the statutory plan is much to be preferred over the present state of affairs. Yet, because none of our 567 municipalities (except Princeton Township alone) assess at true value at the present time and because of their fears, they have elected to excuse non-compliance with the law by the defendants and thus compound the pernicious effects of disregard of the statute. They are afraid that any sudden and drastic change in the established practice could work detriment to the economic and community fiscal aspects of life in this State; that in the areas where it is said industries were lured by gentlemanly understandings of tax preference, forced equality of treatment may result in the chasing away of the industry and the imposition of the burden borne by it upon the residential property, principally the small home owner; that there will be the temptation, in anticipation of increased revenues, to yield to the desire to obtain those things which have been thought necessary but heretofore unobtainable because of the lack of the wherewithal to purchase them; that a rapid unconsidered transition from failure to comply with the law to compliance with the law will create new conditions not conducive to common and individual right; that to order fulfillment of the statutory mandate in but one municipality is to increase the inequities that already exist; that the resulting increase in the debt limitations caused by sudden increases in the aggregate valuations will lead to pressures to borrow more and that the measures adopted to alleviate these conditions may result in even greater problems. There is nothing in the record or in the facts before us to justify these fears of the majority, once the court realizes (1) that the decision of this case concerns only Middletown Township and its inhabitants, and (2) that if any other municipality has some special equity that Middletown Township does not have as to the time when its assessments shall be made at true value, it may assert its peculiar equity when its case comes on for hearing. Any peculiar situations in other municipalities are not at all related to the problems of Middletown Township and cannot be permitted to interfere with the decision in its case. The Township of Middletown has undertaken the reappraisal of all of the property within its borders at true value pursuant to the governing statutes. Without any outside help it has completed all but 25% of the reappraisals and under legal advice is prepared to apply a formula to the balance of the properties to bring those appraisals to an estimated level of true value and thus be in a position to comply forthwith with any judgment of this court requiring immediate assessment at true value. It is, however, now awaiting the judgment of this court before actually assessing all of the property in the township. Meantime, the township has not filed its assessments with the Monmouth County Board of Taxation, although we have been assured that they are in a position to do so forthwith, with the result that the County Board of Taxation has been unable to strike a county tax rate or to readjust the aggregate ratables among the municipalities in the county based on the actual assessments for the Township of Middletown. The failure of this court to decide in the pending case to order immediate compliance with the statutory standard is thus not only interfering with the orderly course of taxation in the Township of Middletown but throughout the county as well. The instant case is obviously ripe for decision. The majority are concerned with an imaginary possibility that in the year of transition from the old order to the new system of assessments at true value more taxes may be raised than were provided for in the budget of the municipality. But there can be no windfall to the governing body of the municipality at the expense of its taxpayers. The present statutes safeguard the citizens against such a contingency. The Local Budget Law, R.S. 40:2-1 et seq. requires that every municipality adopt a budget for each fiscal year, R.S. 40:2-5, and to state in it the amount to be raised by taxes, R.S. 40:2-13 and 15. This budget upon adoption constitutes an authorization of the amount to be raised by taxation for the purposes of    the municipality, R.S. 40:2-11. The grant of power by the Legislature to assess, levy and collect taxes is granted solely for the purpose of supporting any budget adopted pursuant to statute and for all other lawful purposes, R.S. 40:2-19; see also 40:48-7. Once the budget is adopted, R.S. 40:2-8, the amount required for public purposes in a particular year has been determined, and except in extraordinary cases it cannot be altered, R.S. 40:2-8, supra, R.S. 40:2-9, 40:2-20. The intent of the law is that the receipts, including taxes, in that year should equal the authorized appropriations of the budget. The scheme provided for by statute is that the amount of money required for the public purposes of the municipality be first proposed and fixed and determined after a public hearing, at which the people affected have an opportunity to voice their opinions, R.S. 40:2-6; that the tax rate then be computed by dividing the amount called for by the budget by the gross or aggregate value of the assessments. Thus, the total amount of ratables of a municipality for the particular year in question, multiplied by the tax rate, should equal the amount authorized for public purposes by the budget, R.S. 54:4-48. If the assessment of properties in a municipality at true value is completed and approved prior to the adoption of the budget, as in the usual course it would be, R.S. 54:4-42, R.S. 40:2-10, the new tax rate will reflect the change caused by assessment at true value, R.S. 54:4-48, supra. If, however, an increase in the gross value of the ratables in a municipality is caused by assessments at true value after the tax rate is fixed and determined for a particular year based on less than true value assessments, the amount of taxes that would actually be raised would be grossly disproportionate to the amount required by the adopted budget to be raised by taxation and therefore unauthorized. Protection against any undue inflation of the borrowing power of a municipality is already given by the provisions of the Local Bond Law, L. 1935, c. 77, where the debt limit provided for is based upon the average of the three next preceding assessed valuations of taxable real property of a municipality, R.S. 40:1-15 and 16, R.S. 40:1-80 and 82. This would give the Legislature until the session of 1958 to adjust the statutory debt limits, if any adjustment is necessary. As to the years following the year of transition, the taxpayers have it within their power to voice their opinions to their elected representatives as to how much municipalities should spend. The real interest of the taxpayers is in the number of dollars they will be called upon to pay in taxes rather than in the rate at which they are to be taxed and as to the future, as it does today, public opinion and law will protect the people from unconscionable burdens.