Existing home values set to rise

Assessments of existing home values in Cape Girardeau County are likely to rise 6 to 7 percent this year as a result of reassessment, which will mean either higher tax payments this fall or a cut in tax rates, depending on how values of commercial and farm property fare.

The preliminary estimate of values, provided by County Assessor Jerry Reynolds last week, is purely speculative at this point. It is based on discussions with realtors and prices of recent home sales, he said, and must be evaluated through more in-depth reviews of sales and each property.

The increase, Reynolds said, is being fueled by low interest rates in recent years and loan terms that make buying easier. "Favorable loan factors have pushed prices up," he said.

All property in every Missouri county is reassessed in odd-numbered years. The Hancock Amendment to the Missouri Constitution, passed in 1980, prevents political subdivisions that levy property taxes from reaping a windfall of new revenue from higher assessments by requiring that rates be revised downward when the increase in values exceeds inflation.

But Reynolds questions whether that mechanism is working. The total assessed value of all property in Cape Girardeau County has almost doubled since 1999, from $474.8 million to $942.7 million in 2006. Yet, he notes, property tax rates have changed little in that period.

"It is just amazing to me that" the increase "has never gone past the rate of inflation," he said.

But under the Hancock Amendment and Missouri law, there's more to the calculation of tax rates than the raw assessment numbers and the increase. The first step to understanding whether values are going up faster than prices generally is to subtract the portion of the increase caused by new construction or property improvements, said Becky Webb, tax rate supervisor in the state auditor's office.

The auditor's office each year processes property value and tax rate calculations for every taxing district in the state. The rates, and the data used to find the rates, are published each year in a review of rates available on the Internet.

Another important part of the answer to whether a taxing district will get a windfall from increased values is whether the political subdivision charges the maximum rate allowed by law or is voluntarily setting its rate below that ceiling, Webb said. The ceiling is the maximum rate voters have approved for the taxing entity, she said, but no law requires that if rates are lower than the ceiling that the actual rate being charged must be adjusted.

More factors

Other factors can actually push rates up without voter approval. If property values fall from one year to the next, as has happened several times in recent years in area counties, the ceiling can go back up to recoup lost revenue as long as it doesn't exceed the maximum set by voters.

And school districts are allowed to charge $2.75 per $100 assessed value without any input from voters.

"It is basically designed to keep that existing property, in total, paying a revenue neutral rate," Webb said. "And the taxing entities are allowed growth for new construction."

In the past five years, existing property values in Cape Girardeau, Bollinger, Perry and Scott counties have fluctuated, with each county having at least one year where total property values fell.

And only two counties, Bollinger in 2003 and Perry in 2005, saw property value increases countywide that exceeded inflation. Both years were reassessment years.

In both of those counties, every taxing district either cut the tax ceiling rate or it remained unchanged. But in Bollinger County in 2004 and Perry County in 2006, rate ceilings rebounded when total value of existing property fell.

Each county has numerous taxing districts, including road districts, fire districts, school districts, cities and the county itself. Taxes are imposed for libraries, mental health and senior citizen programs. And for each district, a calculation must be made comparing the increase -- or decrease -- in property values from year to year.

Fluctuations

Scott County as a whole saw falling property values in 2002 and 2003. As a result, rates were adjusted upward in 29 and 27 different taxing districts, respectively.

In Cape Girardeau County, existing property values rose 0.66 percent in 2004 and 0.76 percent in 2006. In 2004, four taxing districts cut their ceiling rates while seven increased. And in 2006, five increased their ceiling while four rates fell. In both years, other rates remained unchanged.

The fluctuations, however, are small. The ceiling for the Cape Girardeau Public Schools fell by 72-hundredths of a cent. The district charged 12-hundredths of a cent less than the ceiling, a cut of 33-hundredth of a cent from the previous year. For the owner of a $120,000 home, that resulted in a savings of 75 cents.

Most people don't notice such minor fluctuations, said Rita Milam, county clerk in Scott County. County clerks compile the data on assessments and voter-approved maximum rates and send them to the state auditor's office, Milam said.

The auditor's office calculates the maximum legal rate and reports it back, she said. Then taxing entities hold public hearings and set the actual rate for the year.

"I would say people pay most attention to the dollar amount of the whole bill," Milam said. "Some people will say their rate went up, but unless an entity has had an election, the tax rate total has not varied but a penny or two in the last several years."

rkeller@semissourian.com

335-6611, extension 126