Towns' Next Hit From Hurricane Is to Tax Revenue

New York City and county governments in New York are far less reliant on property taxes than localities, so they are expected to have an easier time weathering a drop in the value of the tax base caused by storm damage. The city, for example, has its own income and business taxes.

What's more, the city and county governments in both states have a much broader property tax base than small localities.

The $50.7 billion Hurricane Sandy relief bill approved this month by the House of Representatives provides up to $300 million in low-interest loans for localities facing shortfalls. The Senate has supported a similar provision in its own relief package.

But some local officials said such financing was not nearly enough. States themselves have not yet sent aid, and senior state officials said they were not inclined to do so until federal money was exhausted.

"It's a pretty inescapable conclusion that there will be an impact on the tax base," said Michael Drewniak, chief spokesman for Gov. Chris Christie of New Jersey.

"In many instances, we had homes completely wiped out or severely damaged to the point they were rendered uninhabitable," Mr. Drewniak said. "That left behind rebuildable land but, in the meantime, no 'improvements' to tax. In other cases, people may find it cost prohibitive to rebuild at all, depending on their individual circumstances."

It could be a year or two before the aftereffects are fully understood, given that localities will have to assess damaged properties before lowering property taxes on them.

That process, in fact, could be contentious. Some localities take as long as two years to incorporate revised assessments into taxpayers' bills. In the meantime, homeowners may balk at paying the higher tax when their properties are seriously damaged or destroyed.

But legally, they must pay every penny until the property has been reassessed.

Corinne DiSomma, the tax receiver for Babylon, N.Y., was duty-bound last month to send out thousands of property tax bills ? her annual "Christmas cards," as friends tease. They were based on July 1 values, no matter that scores of homes, in addition to her own, were heavily damaged in the storm.

Dan Tergesen's home burned down in Babylon when the storm kept firefighters from reaching it in time. Local officials, he said, have since advised him that any reduction of his tax bill could be slow in coming, and "of course, they want me to rebuild my house as quickly as possible, so I am back on the tax rolls."

Localities are also facing the prospect that homeowners will demand that property taxes be cut because of perceived decreases in the value of land beneath their homes.

Assessors rarely mark down land. But some homeowners may argue that their beachfront properties are worth less because buyers, newly sensitive to extreme weather, will avoid areas seen as vulnerable.

"We feel our market value will go down significantly, not just on the house but also the land," said Kathy Barisciano, the president of the Ortley Beach Voters and Taxpayers Association, in Toms River. Ms. Barisciano said she has been telling town officials that they must take into consideration the fact that buyers may avoid Ortley Beach because of uncertainty over whether its battered beaches will be replenished and fortified against future storms.

Still, some officials said they were trying to find a silver lining.

In the Village of Mastic Beach, a newly incorporated patch of Long Island with 7,500 pieces of property, damage was reported at 400 homes.

"Definitely, it's going to hurt the tax base of the village," Mayor Bill Biondi said. "We're a fairly new village, and in the two years, we've been hit with two hurricanes."

But Mr. Biondi said he was hopeful that property tax revenues would rise again once people rebuilt bigger, sturdier homes. He noted that 100 homes in the flood zone were going up on pilings.

"We may get hit the first year," he said, "and then I'm really hoping to bounce back bigger and better."

?Griff Palmer contributed reporting.

Source: http://www.cnbc.com/id/100407717

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