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Murphy Gives Local Officials Option to Push Back Property-Tax Payments

Wednesday, April 29, 2020   (0 Comments)
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Governor gives cities, towns ability to lengthen grace period by a month to June 1, but concerns already being raised about next payment deadline on August 1

An executive order issued by Gov. Phil Murphy just days before May 1 property-tax payments are due is enabling local officials to effectively push back the payment deadline by a full month.

Murphy’s 11th-hour executive order doesn’t automatically extend the May 1 payment deadline, but instead gives New Jersey’s municipalities the option of lengthening a statutory grace period to help taxpayers struggling with the coronavirus pandemic.

The executive order was announced during a media briefing on the pandemic held in Trenton on Tuesday. It drew immediate praise, including from officials who represent the state’s many cities and towns, some of which are facing their own financial hardships amid the still-unfolding pandemic.

State of grace for taxpayers

In communities that choose to take advantage of the executive order, taxpayers will be able to wait until June 1 to submit their May 1 payments, without facing the penalties and interest that local officials can charge after the grace period, which typically lasts 10 days.

“I think it was wise to make this permissive,” said Michael Cerra, the assistant executive director of the New Jersey State League of Municipalities. “It’s in the hands of local officials.”

New Jersey has been among the hardest-hit states as the pandemic has spread across the country in recent weeks, trailing only New York in reported COVID-19 infections and fatalities. In addition, strict social-distancing measures ordered by Murphy to prevent further spread of the disease have shut down many businesses that have been deemed “nonessential,” and unemployment claims have reached record highs in recent weeks.

In response to the economic hardships, Murphy, a first-term Democrat, had already taken action to delay the state’s April 15 income-tax deadline. Other newly enacted measures have also assisted homeowners struggling to pay mortgages and tenants in danger of falling behind on their rent.

Murphy’s ‘additional measure of relief’

Murphy described his latest executive order as “an additional measure of relief” as he discussed it during Tuesday’s briefing.

Under a quarterly-payment schedule established in state law, property taxes are due on the first day of February, May, August and November. They can be paid directly to a municipality or through a mortgage company, which is something many homeowners do as they pay down home loans over the long term.

State law allows for the 10-day grace period for property owners to make their payments without facing penalties or being charged interest.

Lt. Gov. Sheila Oliver, who leads the state Department of Community Affairs, said the payment delay for taxpayers that will be allowed under Murphy’s executive order will help property owners who “need extra time to get their finances in order.”

“We understand that many property owners are coping with financial challenges they’ve never had to face before because of this pandemic,” she said during the briefing.

Stephanie Hunsinger, New Jersey state director for AARP, said she hopes “all New Jersey municipalities act immediately to provide relief to their residents.”

“On behalf of AARP New Jersey’s nearly 1.3 million members, we applaud Gov. Murphy and his administration for issuing today’s executive order,” Hunsinger said.

But many communities are also getting hammered themselves by the pandemic as social-distancing regulation have restricted many activities that generate significant revenue. And while New Jersey is notorious for having some of the nation’s highest property taxes, those bills fund much of the frontline services that are being leaned on heavily during the pandemic, including police and other first responders, as well as municipal health officials and sanitation workers.

In addition, while municipalities collect property taxes, they must turn over a large portion of the revenue to local schools and county governments in transfers that are due by the 15th of every month.

Can local officials afford the extension?

Making it an option for a town to extend the 10-day grace period allows local officials to work with their professionals to assess whether they can afford to offer the extension, especially since the deadline for turning over tax collections to school districts and counties still remains in effect, Cerra said.

With the intervention coming from Murphy so close to the May 1 deadline, many local officials had already begun to take action on their own to give their residents a break. In some cases, officials passed local resolutions that lowered the interest rates that can be charged for late payments to the lowest amount allowed under state law, which is less than 1%.

The executive order creates a uniform way for municipal officials to provide taxpayers with a break during the pandemic, just as Murphy has by doing things like delaying the April 15 income-tax deadline, said Cerra, whose organization will likely be drafting a model resolution to distribute to local officials.

“I think local officials were looking to do the same,” Cerra said.

Legislation had been proposed in recent weeks in the state Assembly to push back the May 1 deadline for many homeowners to July 15, which would have matched the state’s new deadline for filing income taxes. But that bill has stalled since its introduction.

Despite Tuesday’s action from the governor, Cerra said the next quarterly payments, which will be due on August 1, have already been flagged as a looming concern. Many homeowners may have had enough in escrow accounts to cover their May 1 property-tax payments, but they may still be facing economic hardships several months from now.

“We’re a little bit concerned about August 1,” he said.


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