Towns want assistance for revenue lost due to disabled veterans' tax exemption

By Rose Krebs - www.phillyburbs.com

Who should foot the financial burden so that qualified disabled veterans in New Jersey can continue to be exempt from paying property taxes?

That is the question officials in some municipalities are asking — municipalities such as Willingboro and Pemberton Township, which have the most 100 percent permanently disabled veterans of any towns in the state.

In 2006, state statute was amended to provide property tax exemptions for “permanently and totally disabled” veterans and their surviving spouses or surviving registered domestic partners.

But that exemption is now proving costly to communities, which in some cases are losing hundreds of thousands of dollars in revenue.

While local officials agree that those who honorably served their country and are now classified as 100 percent disabled should continue to be exempt from paying property taxes, they feel towns should be reimbursed for tax revenue losses by either the state or federal government.

And Assemblymen Troy Singleton and Herb Conaway, Democrats who represent the 7th Legislative District, agree that the state should offer financial assistance to some towns. Last week, they introduced a bill that would require the state to reimburse municipalities for 25 percent of tax revenue lost in towns with 100 or more permanently and totally disabled veterans, up to a maximum of $2.5 million annually.

According to the proposed bill, nine towns would be eligible for the reimbursement, with two in Burlington County: Pemberton and Willingboro. The others are Berkeley, Brick, Jackson, Manchester and Toms River in Ocean County; Gloucester Township in Camden County; and Hamilton in Mercer County.

In 2012, there were 8,517 permanently and totally disabled veterans statewide, which equated to a tax exemption of nearly $54 million, according to the bill.

According to the state Department of Treasury’s Division of Taxation, Willingboro had 273 totally disabled veterans and Pemberton Township had 195 in 2012. That equated to a tax revenue impact of about $1.45 million for Willingboro and $722,595 for Pemberton Township. The next highest was Toms River, with 176 permanently and totally disabled veterans.

At a recent work session to start preparing the 2013 municipal budget, officials in Willingboro indicated that the township has 302 totally disabled veterans and an expected tax revenue loss of about $1.56 million, or about 3 cents on the local tax rate.

“That is a big chunk of our assessed value,” Township Manager Joanne Diggs said. “It’s not fair that we take more of the burden than anyone else. We are in support of veterans getting the tax break. We love our veterans, and we’re glad they chose to live in Willingboro. We feel there should be a more equitable way to run the program.”

Diggs said the assessed value associated with properties where 100 percent disabled veterans or their surviving spouses live is about $47.9 million. Revenue lost is equal to about 3 cents on the township’s tax rate, she said.

“We support the position of giving veterans benefits, but we think it should be shared equally. These veterans didn’t just fight in Pemberton and Willingboro,” Pemberton Township Mayor David Patriarca said. “The state is mandating it so it should be spread across the board.”

Under the proposed bill, Willingboro would be reimbursed for about $360,000 in lost tax revenue, Pemberton Township for about $181,000.

“We value our veterans and the countless contributions they’ve made to this country,” Willingboro Deputy Mayor Ken Gordon said. “However, we need the state to back up their mandate with funding to make communities like ours financially whole, and I applaud any and all efforts to do so.”

Will bill get support?

Whether the bill will gain any support is another issue, as the state’s budgetary woes are significant. A bill proposed in May 2009 by Conaway and former 7th District Assemblyman Jack Conners to have the state reimburse municipalities for the full property tax exemption amount was never passed.

Mount Holly Mayor Richard Dow said he hopes the Legislature decides to tackle the issue this time.

“The folks at the capital need to be looking at issues like this,” Dow said. “It definitely has an effect.”

In Mount Holly, a town already financially impacted by a high number of properties, such as county facilities, that are nontax ratables, the loss of more tax revenue is critical, Dow said.

Patriarca pointed out that Pemberton Township’s proximity to Joint Base McGuire-Dix-Lakehurst attracts many military veterans to reside there. Township officials have contacted the New Jersey League of Municipalities to try to get that organization to lobby for an equitable distribution of the financial burden to provide the tax exemption.

“It’s an incredible loss of revenue, and we believe the state should be spreading it out equally,” Patriarca said.

Singleton believes the issue also needs to be addressed at the national level, but said the state should offer financial assistance to towns most affected until such action is taken.

“The men and women who served our country didn’t just serve New Jersey. They served the entire nation,” Singleton said.

He said his office will be contacting U.S. Rep. Jon Runyan about the issue and sending a copy of the proposed bill to his office.

Runyan, a Republican who represents the 3rd District, chairs the House Veterans Affairs Subcommittee on Disability Assistance and Memorial Affairs. Earlier this month, he presided over hearings aimed at addressing possible overpayments by the Department of Veterans Affairs for veterans declared temporarily 100 percent disabled.

“The inspector general of the VA recently estimated that around 50 percent of all temporarily disabled veterans are misclassified,” Runyan said. “We need the VA to run efficiently so that we can maximize the services we provide to our veterans.”

However, Runyan said he is unaware of any “systematic” problems with the classification of permanently 100 percent disabled veterans, and said the process used to make such a classification is “thorough.”

“But I will continue to monitor the system to ensure it is being managed in a way that best serves our veterans,” he said.

Officials at the VA could not be reached for comment. And Runyan did not weigh in on the debate as to whether the federal government should offer financial assistance to states like New Jersey that do provide tax exemptions for permanently and totally diasbled veterans. An aide said the congressman had yet to hear from Conaway or Singleton about the issue.

To make a claim for property tax exemption, veterans must file a form with their municipality’s tax assessor. The form, known as a DVSSE, explains the eligibility requirements, including what period of service and types of disabilities.

The Department of Veterans Affairs must certify that the veteran is in fact 100 percent disabled due to certain service-related injuries or medical conditions. The local tax assessor is then given the certification, and the town’s governing body can decide whether to make the tax exemption retroactive until the date of the certification.

The veterans must meet other requirements, such as being honorably discharged and serving during a specified wartime period. Those with temporary declaration of 100 percent disability are not eligible for the property tax exemption. The veteran or surviving spouse or partner must be a full or partial owner of the property and a permanent and legal state resident, according to state documents.

‘A blessing’ for veteran

Westampton resident George T. Ridley, who served 26 years in the Army and was wounded in the Vietnam War, said he would not be able to make ends meet without the exemption.

“It’s very important because my house is paid for, but my taxes would be approximately $7,000 per year,” he said. “It’s a blessing.”

Ridley, 73, earned two Purple Hearts for his valor, was shot twice, and experiences migraines from an injury sustained during his military career. He hasn’t worked since 2005 and would have trouble paying property taxes, he said. Ridley also suffers from post-traumatic stress disorder and believes veterans who served their country and cannot work because of service-related conditions should get a tax break.

Ridley, who served from 1956 to 1984 and retired as a command sergeant major, said it took him about two years to get all the necessary documentation to be certified.

“There are a lot of veterans who deserve (the property tax exemption) but don’t get it because of bureaucracy,” he said. “There is a lot of paperwork involved.”

Ridley said he had to get medical records dating back to the 1960s. Also, he had to visit with civilian and VA doctors.

“It’s not automatic,” he said. “You must be able to show documentation.”

Ridley suspects many eligible veterans are not able to navigate through the bureaucracy necessary to get the certification.

Whether an exemption is available is up to a state’s discretion. Several states do offer an exemption, but regulations and how it is administered differs from state to state.

In New Jersey, the certification does not need to be renewed annually, but a tax assessor can request information in support of the claimant’s eligibility at any time, according to state documents.

In Pennsylvania, a property tax exemption is available for honorably discharged veterans who are 100 percent disabled and have a “financial need,” according to the state’s Department of Military and Veterans Affairs. To be eligible, veterans must have served during certain periods of conflict and have a service-connected disability certified by the VA. If the veteran has an income of more than $81,340, he must prove there is a financial need for the exemption. The exemption is to be reviewed every five years.

The VA website, www.va.gov, has information about available benefits. It also lists phone numbers for regional offices. To contact New Jersey’s regional benefits office in Newark, call 1-800-827-1000.

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TROY SINGLETON
ASSEMBLYMAN, 7TH DISTRICT
400 NORTH CHURCH STREET, SUITE 260
MOORESTOWN, NJ 08057
 
Tel: 856-234-2790
Fax: 856-234-2957
Email: AsmSingleton@njleg.org