Township of Jefferson v. Dir., Div. of Taxation, A-0613-11T3; Appellate Division; per curiam opinion; decided and approved for publication August 6, 2012. Before Judges Payne, Reisner and Hayden. On appeal from the Tax Court, 26 N.J. Tax 1 (Tax 2011) and 26 N.J. Tax 129 (Tax 2011). [Sat below: Judge Bianco.] DDS No. 35-2-7277 [10 pp.]

In these tax appeals, plaintiff, the township of Jefferson, challenges the table of equalized valuations promulgated by defendant, the director of the Division of Taxation, for the year 2010 (the director’s equalization table), to be used by the commissioner of the Department of Education for the apportionment of school aid. The township also challenges the Morris County Board of Taxation’s 2011 county equalization table (the county equalization table), which is used in apportioning county government costs. In promulgating its county equalization table, Morris County adopted the director’s equalization table. Thus, the township’s arguments apply equally to both documents.

The township’s challenges to the equalization tables were rejected by Tax Court Judge Bianco in two published opinions — Twp. of Jefferson v. Dir. Div. of Taxation (Jefferson I) (considering the director’s equalization table); and Twp. of Jefferson v. Morris Cnty. Bd. of Taxation (Jefferson II) (considering the county’s equalization table). Judge Bianco rejected the township’s arguments that the use for equalization purposes in that table of average true value in excess of equalized true value violated New Jersey statutes and the New Jersey Constitution’s Uniformity Clause. The township repeats these arguments on appeal.

Held: The township of Jefferson’s challenge to the table of equalized valuations promulgated by defendant, the director of the Division of Taxation, fails.

The township’s challenge focuses on the averaging step in the equalization process. It argues that, as the result of using such averaging in a declining real estate market, the township’s school aid is lessened and county taxes are unfairly increased. In circumstances in which, as the result of averaging, the average true value exceeds the equalized true value, the township contends that the director and the county are obligated to use the equalized true value in calculating applicable school aid and county taxes, respectively.

The trial court found that the director’s use of average true value in excess of equalized true value for the 2010 tax year did not violate either statutory law or the New Jersey Constitution’s Uniformity Clause.

Addressing the argument that use of the director’s equalization table in the circumstances presented violated the state constitution’s Uniformity Clause, the judge determined that he was “satisfied that the Municipalities’ argument was previously considered and rejected” in Bloomfield Township v. Essex County Tax Administrator. The judge observed that accepting the municipalities’ argument would mean that taxing districts with current year equalized true values lower than those of the previous year would be subject to averaging while taxing districts with increased equalized true values would not. This is specifically the outcome contemplated and disapproved by the court in Bloomfield. As a consequence, the parties’ challenge to use of the director’s equalization table in municipalities in which there was a declining real estate market was rejected.

Following the adoption of the director’s equalization table by the Morris County Board of Taxation, the township of Jefferson, alone, renewed the challenge to averaging in a declining market that it and other municipalities had previously asserted. Again, the township argued that use of the equalization table in such a market was unconstitutional and statutorily prohibited. The township’s arguments, which largely repeated those that Judge Bianco had previously addressed, were rejected by him in Jefferson II. The judge noted that, although the township offered evidence of the impact of the use of average true value on it, its expert did not know what impact there would be on the township’s county taxes if the board uniformly stopped averaging in all Morris County municipalities in which real estate markets were declining. Moreover, the expert acknowledged the adverse impact that a decision by the board to stop averaging only in Jefferson Township would have on other Morris County municipalities. As a result, the judge found that the township had failed to show that the average ratio promulgated in the county equalization table was arbitrary, capricious or unreasonable.

The judge adhered to his prior decision with respect to the constitutionality of the use of averaging in the equalization table. And he again rejected the argument that the cited statutes prohibited the board from apportioning the township’s share of Morris County taxes based on the average ratio of 94.34 percent, since the ratio was based on an average true value in excess of the township’s equalized true value. The judge clarified his prior opinion, in which he had held that the statutes did not apply to the director, but only to county boards of taxation. Further, the judge reinforced his view that equalized true value was not the equivalent of true market value. Accordingly, the judge found that the township had failed factually to overcome the presumption in favor of the county equalization table, and he rejected the township’s statutory and constitutional arguments.

Here, the appellate panel rejects the arguments that have been repeated on appeal and affirms, finding Judge Bianco’s detailed and careful analysis of the facts and the law was proper.

For appellant — Lawrence P. Cohen (Courter, Kobert & Cohen; Richard W. Wenner on the briefs). For respondents — Julian F. Gorelli, Senior Deputy Attorney General (Jeffrey S. Chiesa, Attorney General; Lewis A. Scheindlin, Assistant Attorney General, of counsel).