Bill Would Codify Order Allowing Longer Grace Period for Property-Tax Payments

Assembly advances legislation; sponsor says, ‘Not only will this help us through the COVID-19 pandemic, but it will also prepare us for future crises’
Credit: Ali Eminov from Flickr (CC BY-NC 2.0)
Local officials could soon have the option of providing their residents with a property-tax payment extension but would not be forced to do so.

Gov. Phil Murphy’s executive order giving municipalities a new way to provide residents with tax relief amid the ongoing coronavirus pandemic could soon to be cemented in state law.

The Assembly Appropriations Committee unanimously approved legislation Monday that would effectively codify Murphy’s order made last week, allowing for an extension of the typical 10-day grace period for paying quarterly property taxes during the public-health emergency.

The governor’s executive order gave local officials the option to extend the grace period for submitting May 1 quarterly property-tax bills to June 1, to help ease any hardships that residents are facing as COVID-19 infections have spread across the state.

The bill that advanced in committee seeks to establish as a matter of law that local leaders would not have to wait for another executive order to extend the grace period for up to 30 days in their communities during a public emergency. Residents who make payments during the grace period are not charged any penalties or interest, which can effectively delay the payment deadline by a full month.

“For some New Jerseyans who are struggling financially, an extra 30 days could make all the difference,” said Assemblyman Joe Danielson (D-Somerset), the bill’s primary sponsor.

State hit hard by pandemic

New Jersey has been hit hard by the pandemic, with nearly 130,000 residents reported as positive COVID-19 infections as of the latest update from Murphy and other state officials. There have also been 7,871 deaths attributed to COVID-19 in New Jersey, officials said.

In addition, nearly 1 million New Jersey residents have filed for unemployment benefits in recent weeks as the governor has closed many businesses deemed “nonessential” to prevent further spread of the disease.

New Jersey property-tax bills are generally due on the first day of February, May, August and November under a quarterly schedule established in state law. Bills 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. But state law also allows for a 10-day grace period for property owners to make their payments without facing penalties or being charged interest.

Extending May 1 deadline

Concerns that many residents would have trouble making the May 1 deadline led to Murphy’s 11th hour issuance of the executive order earlier last week that let local officials extend the grace period to June 1.

The governor had previously taken action to ease deadlines for mortgage payments and to help tenants in danger of falling behind on their rent. The April 15 deadline for paying state income taxes was also pushed back to July 15 under legislation Murphy enacted last month.

Under Danielson’s bill, local officials could choose to lengthen the grace period for property-tax payments once again in the future if the deadline for payments occurs during an ongoing public-health emergency that’s been declared by the governor. The bill allows for the same, up-to-30-day extension that Murphy incorporated into last week’s executive order.

“This bill would allow municipalities to give residents in their communities more time to make payments when we are experiencing a public health emergency,” Danielson said. “Not only will this help us through the COVID-19 pandemic, but it will also prepare us for future crises.”

Under the bill, offering the longer grace period would remain permissive for local officials, meaning they would have the option of providing their residents with an extension but would not be forced to do so as part of a statewide remedy.

Not every town can afford to extend grace period

That was a key issue the New Jersey State League of Municipalities raised in recent weeks, since not every community can afford to provide its residents with an extension of the grace period. In fact, many communities are getting hammered themselves by the pandemic, as social-distancing regulations have restricted many activities that generate significant revenue.

In addition, while New Jersey is notorious for having some of the nation’s highest property taxes, those bills fund much of the frontline services being leaned on heavily during the pandemic, including police and other first responders, as well as municipal health officials and sanitation workers.

Municipalities are also in charge of collecting all property-tax revenues for New Jersey’s local schools and county governments, and transfers are due in full by the 15th of every month. That deadline was not waived in Murphy’s executive order, and the League of Municipalities has been urging local officials to first consult with their professional staff to determine whether they can afford to offer the extension allowed under the governor’s executive order.

Meanwhile, some lawmakers have already indicated they are drafting legislation to prevent municipalities from being charged interest by any counties or school boards for payments that come in after the 15th in the wake of the executive order.

“We need to encourage school boards and counties to work together to pitch in and make this tax relief work,” said Sen. Declan O’Scanlon and Assemblywoman Serena DiMaso, both (R-Monmouth), in a joint statement.

“And to be clear, it very likely may not work in some areas if this proactive cooperation — that we will make mandatory with our legislation — doesn’t happen,” the two lawmakers said.