Tag Archives: Ocean County

Bankruptcy in Birmingham

Jefferson County, AL has filed for bankruptcy protection, joining the ranks of Vallejo, CA; Central Falls, RI; Boise, ID; and Harrisburg, PA. In this case, the debt that the county used to finance a new sewer system is the main driver of insolvency. The county currently owes about $4.15 billion on the sewer system.

The Associated Press reports:

The problems were years in the making.

Its debt ballooned after a federally mandated sewer project was beset with corruption, court rulings that didn’t go its way and rising interest rates when global markets struggled.

Since 2008, Jefferson County tried to save itself the cost and embarrassment of filing for bankruptcy. But after three years, commissioners voted 4-1 to bring the issue to an end.

“Jefferson County has, in effect, been in bankruptcy for three years,” said Commissioner Jimmie Stephens, who made the motion to file for protection in federal bankruptcy court in northern Alabama.

While the last few years have seen a few cases of municipalities filing for Chapter 9, Jefferson County’s case represents by far the largest. Unlike other recent bankruptcies that were a result of both poor financial management and the economic downturn, Jefferson County’s problems were in part a result of corrupt public officials. Twenty-two people have been convicted for illegally refinancing the sewer bonds to benefit local and Wall Street financiers. Residents in Alabama’s largest county will likely face higher sewer rates as a result.

But the biggest problem for residents when municipalities file for bankruptcy protection is the resulting policy uncertainty. Businesses are typically reluctant, with good reason, to move to a bankrupt municipality. The shadow of Chapter 9 means that for years, residents and businesses will be paying higher taxes in exchange for fewer services because of the remaining debt burden. This will put the county and even the state in a poor competitive standing for new jobs.

In 1994, Orange County, CA, filed for Chapter 9 protection on $1.7 billion in debt, and residents there are still paying taxes toward that debt today. In the short term, Jefferson County will face painful and immediate cuts. The Birmingham Business Journal spoke with Commissioner Jimmie Stephens on what the future holds for the county:

“We’re looking at all of these services that are not mandated by the constitution and, from there, we will begin the reductions and take it as far as we need to, keeping in mind the services that the citizens need,” he said.

 

Record-breaking Property Tax Appeals in New Jersey

New Jersey residents are taking their property tax bills to City Hall. In Essex County, property tax appeals doubled to 6,487 and in Ocean County appeals have tripled to 14,129. “I’ve been in the industry 35 years, and it’s a record,” claims Ocean County’s tax administrator.

According to The Star Ledger, it’s so worrisome, the NJ League of Municipalities will be taking it up at their meeting in Atlantic City this month in a session entitled, “Strategies for Defending the Tax Base Without Wiping Our Your Budget.”

In appeals the town must defend its property assessments with the burden of proof placed on the homeowner. When residents win their case, it means less revenue for the town. One thousand successful appeals in Montclair mean a $1 million hole the budget.

While tax rates have increased in many communities, reassessments also drive swings in property tax burdens. Trenton requires a reassessment every five years – though this isn’t always enforced. After 42 years, Newark underwent a property tax reassessment in 2003. In the 1970s, members of Newark’s City Council including former Mayor Sharpe James were arrested for refusing to institute a reevaluation. While reassessments are never popular, the longer municipalities go without a reassessment the bigger the sticker shock.

What’s driving the record number of appeals across the state is a combination of factors. Increasing rates, reassessments, and bad economy cutting into people’s ability to pay. In some cases, a reassessment is good news for the taxpayer. At the high end of the housing market, values have come down, leaving some with a lower bill.  In Livingston, N.J.  the average homeowner has seen a property bill reduction. But this didn’t make one Florida-bound resident happy, “Overcharged for the first 8 years I lived here.

Point Pleasant Beach to Mayor: “No New Taxes, or Police Furloughs.”

Residents in Point Pleasant Beach, New Jersey have resorted to a seldom-used method to protest their mayor’s proposal to raise taxes: they want him recalled from office. The recall petition containing 1,250 signatures was approved this week, giving Mayor Vincent Barella until July 22 to mount a challenge to the motion being placed on the ballot in November.

point-pleasant-beachThe movement to recall Mayor Barella began in the fall, after he asked the state government permission to levy local special options taxes on beach badges, paid parking lots, and alcohol — and more controversially, proposed parking fees on all neighborhood streets — to meet the $11.5 $1.5 million gap in the borough’s budget.

Republican state representatives don’t  like the idea. “We don’t support raising taxes, and [Barrella] doesn’t accept that response,” said state Sen. Andrew R. Ciesla (R-Ocean), referring to the all-Republican northern Ocean County delegation to the legislature. “He believes that it is appropriate to raise taxes in order to cure the financial ills of the borough on the backs of nonresidents and residents alike.”

And the Mayor’s Democratic rivals who initiated the petition also disapprove, claiming he has other options. Said one petitioner, “We have eight too many cops…. Manasquan has 6,500 people with 18 cops. We have 26 cops for 5,300 people.”

Residents’ motives seem clear — “No New Taxes!” — but the solutions aren’t as easy. Continue reading