Harrison will be repaying more than $600,000 in tax refunds with borrowed money, after the town board decided earlier this month to bond tax certioraris that could not be funded by the now-depleted Judgments and Claims budget.
The town had already settled two claims for about $247,000 in tax certioraris this year, using funds from the $280,000 certiorari budget.
The town was then faced with four certiorari claims this month, totaling $617,306. Town Comptroller Maureen McKenzie said Harrison expects to settle one more claim by the end of the year, which she said will cost the town about $275,000.
That would bring the town’s total tax reimbursements to more than $1.1 million for the year.
Town officials say they can’t predict how much the town will have to pay in tax certioraris in any given year when drafting their budget. Sometimes, the tax refunds stay within the budgeted amount; this year, the tax certioraris amount to four times the budgeted amount.
Tax certiorari amounts are unpredictable year to year, as property owners sometimes compile multiple years of tax certioraris before making a claim. A certiorari is a legal process by which property owners can grieve their assessment and have their property value reassessed. If the property had previously been overvalued, a judge can determine that the property owner must be reimbursed by the municipality to which they paid their property taxes.
“These things take many years to come to fruition,” McKenzie said. “The monies that we’re paying out to these properties stem back to the year 2010.”
The Golf Club of Purchase, for example, made claims for six years of tax refunds, totaling $227,000.
Because these tax repayments can be compiled over years before a claim is made, municipalities can borrow money for up to a 10-year period, according to Councilman Steve Malfitano, a Republican. “This isn’t a one-year event,” he said. “The law recognizes that there are multiple years of refunding being addressed.”
The $635,000 bond for this tax settlement will be repaid over a five-year period.
During a town board meeting, McKenzie said Harrison has previously—but not always—bonded to cover tax certioraris beyond the budgeted amount.
Harrison is required to pay a total of $4.5 million in bond repayments this year, a portion of the total $46.6 million the town has in outstanding debt. Of that debt, $2.9 million is related to tax certioraris which were bonded in 2011, 2012 and 2014. The largest of those bonds was in March 2011, for $1.5 million, and is expected to be paid-in-full by 2025.
Malfitano said bonding large settlements is a matter of fiscal responsibility, and gains the trust of credit rating agencies.
“What they want to see is that you’re managing your budget process responsibly; and if you’re having an issue with funding you’re expenses, they’d much prefer to see a tax rate increase,” he told the Review, adding that an unexpected $600,000 expense would be perceived as a poor budgeting practice by credit agencies.
“Since this is an unbudgeted liability, it would not make sense to me that we take money out of fund balance to fund it,” the councilman said during the town board meeting.
McKenzie could not be reached for additional comment as of press time.
