Already reeling from a quarter-billion dollar cut in state aid, New Jersey’s towns and cities face another daunting challenge: Dealing with a spike in property tax appeals that will leave them with less money than expected. This year, there have been 19,788 appeals to county tax boards in 150 towns surveyed by the state League of Municipalities — a 44 percent uptick from last year, when there were 13,760 appeals in those same towns.

Enough of those appeals were successful to bring property values down by $88 million in those municipalities, according to the League.

“It hurts the municipalities a lot,” said League Associate Counsel Bill Martin. “Now they’re in a situation at the end of the year where they have to cope with something they were not able to budget for.”

The survey attributed the rise in appeals to the drop in property values, which allowed financially hard-pressed homeowners to successfully appeal assessments done when the real estate market was hot and their homes were more valuable.

Most towns give refunds as credits on fourth-quarter property tax bills. This forces many towns to either dip into surplus or ask the state Local Finance Board for permission to borrow money to pay for the refunds. League President Bill Dressel said some towns could reopen their budgets to further cut services.

And successful tax appeals lead to more tax appeals, Dressel added, meaning next year could be worse.

“When neighbors learn of their neighbor’s tax reduction, it increases the likelihood of more numerous appeals,” he said.

Although many towns keep reserve funds to pay for tax appeals, in many cases they did not anticipate how much they would have to pay back. Read more in Star Ledger.