Huge Post-Sandy Tax Increases Fail to Materialize

With all the fears that Superstorm Sandy created, here’s one that never materialized: huge tax increases to make up for property destroyed along the coastlines of New Jersey, New York and Connecticut.

Waves of federal aid, some strategic borrowing, lowered property values and surplus accounts helped many shore communities avoid having to raise taxes drastically to compensate for the lost tax revenue.

But the sighs of relief are mixed with early jitters of what could happen next year, when the tide of emergency storm aid will have receded and full rebuilding will still elude some neighborhoods.

The thinking was that because shore towns had lost so much taxable property in the Oct. 29 storm, governments would have no choice but to raise taxes on surviving structures to make up the difference. But that was before Congress approved more than $60 billion in Sandy relief, most of it for New Jersey and New York.

“We were all concerned there would be a big tax increase,” said Ray Ryan, a resident of Mantoloking, a Jersey shore town where virtually every one of its 521 homes was destroyed or damaged. “But we are delighted it didn’t. It makes absolutely wonderful sense when you consider the storm aid that was available.”

The affluent borough adopted a 14.6 percent increase in the municipal tax rate. But because the storm lowered property values and because of an influx of storm recovery aid and borrowing, most municipal tax bills will actually be lower this year.

“That’s the good news: Taxes in 2013 will be lower,” said Councilman Steve Gillingham. “But because these are nonrecurring revenues, it may be hard in subsequent years to provide the same level of services.”

The budget calls for $5.6 million in spending, up from just over $4 million last year. But the average tax bill will actually be 23 percent less than last year because storm damage caused property values to plunge by about a third.

For example, the owner of a house previously assessed at $1 million and now worth $670,000 because of storm damage will pay $1,398 in municipal taxes, down from $1,817 a year ago. The owners of a $3 million home now worth about $2 million would pay $4,186 in municipal taxes, down from $5,450 last year.

Those figures do not include school or county taxes and are the only ones over which municipalities have direct control. Homeowners in many towns may still see an overall increase in taxes because of school spending or other causes, but the doomsday scenario many municipal officials – and homeowners – had feared is not happening.

Lance White, a Mantoloking resident who is raising his damaged waterfront house, was relieved to hear taxes would not skyrocket this year.

“It would have been a disaster,” he said. “We have a lot of people who still don’t know what their future is -whether they can rebuild, when, whether they might have to leave. There is still a lot of uncertainty. Everything worries you when you don’t know what’s going to happen. It’s been difficult here for several months now.”

In community after community, municipal taxes are either staying the same this year or going up only very slightly. Money towns had to front out-of-pocket in the fall and winter for emergency cleanup and reconstruction will eventually be paid back by the federal government by as much as 90 percent.

New York state passed legislation to aid badly affected homeowners, authorizing New York City to reimburse them by up to two-thirds of the total bill paid for the 2013 fiscal year. In May, the city announced a decrease in property taxes due next year through reassessments of damaged properties and across-the-board reductions in valuations for some of the hardest-hit neighborhoods.

On Long Island, Long Beach saw its 2-mile boardwalk destroyed and homes inundated with as much as 4 feet of water. The city cut its 2013-14 budget from $85.1 million to $83.3 million, spokesman Gordon Tepper said. Lost sales tax and other revenues from beach passes and access to other recreational events were lower because of the effects of Sandy, he said.

That will mean a moderate property tax increase of 1.49 percent, or an average of $43 per home. Long Beach has already received $24.3 million in reimbursement for debris removal.

In Connecticut, the $278 million Fairfield budget raised taxes 2.4 percent. Officials say they were able to offset storm costs with increases in revenue from other areas and are counting on federal reimbursement of 75 percent of the estimated $8 million in damage.

Belmar was the first Jersey shore town to rebuild its boardwalk, making an aggressive bid to be ready when summer tourism started. It is not raising its municipal tax rate for the third year in a row.

The town was able to do it, Mayor Matt Doherty said, with the help of a federal Community Disaster loan, a funding mechanism being used by many Sandy-hit towns this year that can be repaid over variable lengths of time and may even be forgiven by the feds.

Brick, N.J., where the storm and resulting fires wiped out 100 homes near the ocean and flooded 8,500 others, lost $420 million in taxable property. Yet it is keeping its municipal tax rate the same this year, largely by using nearly $8 million of its $13 million in surplus and counting on millions in storm aid.

Similar stories of averted fiscal crises include Seaside Park, Toms River, Bradley Beach and Middletown. Towns including Manasquan, Spring Lake and Sea Bright and Stafford Township raised taxes, but only slightly.