House passes amendment limiting property tax increases

JEFFERSON CITY, Mo. -- A proposed constitutional amendment intended to limit local property tax increases passed the House on Tuesday, an important step toward appearing on Missouri's ballot this year.

Supporters say the measure would close a loophole that allows some public schools, cities, counties and other governmental entities to reap a financial windfall when reassessments result in sharply higher home values.

Local property taxes are calculated by applying a voter-approved tax rate to the assessed value of the property. So tax bills can rise either because property values rise or because the local governments increase their tax rates.

According to the Missouri Constitution, if assessed property values rise by more than inflation -- excluding new construction and improvements -- then local governments are supposed to reduce their maximum allowed tax rate so that the total amount of taxes they collect remains the about same.

Maximum amounts

But some governments have avoided a mandatory roll back of their tax rates, because they voluntarily set their tax levy below the maximum amount they are allowed by local voters to charge. That has allowed them to keep more money when tax revenue soars as a result of reassessments.

Rep. Chuck Portwood's proposal would change just two words in the constitution. By deleting the words "maximum authorized" in front of the words "current levy," it would require tax rate reductions in more circumstances. Portwood said his amendment would enforce what already is the general intent of the law.

Representatives passed the measure 133-19. If the Senate also approves it, the proposal would appear either on the November ballot or at an earlier special election if called by the governor.

Portwood, R-Ballwin, estimated that the various taxing jurisdictions in St. Louis County received a windfall of about $106 million last year because they either did not roll back their tax rates or did not do so enough. Those governments essentially "curled their noses to the taxpayers," he said.

Lobbyists for school administrators and cities opposed the constitutional amendment when it received a House committee hearing earlier this year.

Rep. Joe Aull, a former school principal and superintendent, said Tuesday that some Missourians might actually end up paying higher taxes as a result of the amendment. A school district that might otherwise voluntarily reduce its tax levy, might as a result of the constitutional amendment instead set the tax rate at its ceiling, he said. Doing so would give the school more budgetary wiggle room if forced the following year to roll back its tax rate to offset rising revenue from property reassessments, he said.

By passing this amendment, "everybody's going to believe we're giving the taxpayer a break," said Aull, D-Marshall. But "this won't necessarily be a tax break, this could be a tax increase."

The Senate in February passed a similar measure that would change state law to require tax rate reductions, even if local governments have set their tax rates below the voter-approved ceiling.

But Portwood contends that changing state law would be meaningless unless the constitution also is changed.

The separate measure by Senate President Pro Tem Michael Gibbons, R-Kirkwood, also would require counties to mail notices in the spring to property owners detailing their projected tax bills that will arrive later in the year. The intent is to provide greater warning to taxpayers so they can appeal or save money to pay the bill.

Portwood described much of the Senate bill as "fluff."

"I don't think that bill does enough to protect the taxpayer," Portwood said. "This is a constitutional amendment. If you pass this, something will change about the way our system works right now."

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Property tax measures are HJR43 and SB711.

On the Net:

Legislature: http://www.moga.mo.gov