New law could push tax rates higher

A new state law intended to control property taxes could push some local jurisdictions to increase their tax rates to avoid revenue losses.

Gov. Matt Blunt visited Cape Girardeau on Wednesday to tout the new law, stopping at a home built by Habitat for Humanity. The measure, Blunt said, will provide protection against tax bills that rise following reassessment.

Under Missouri law, in odd-numbered years all property statewide is assigned new values based on the sales price of similar property. When those assessments rise faster than inflation, provisions of the Missouri Constitution kick in that require tax rates to be reduced to avoid windfalls of new revenue.

But the constitutional provision applies to the maximum tax rate approved by voters. In many jurisdictions, the actual tax rate being charged is lower than the voter-approved limit and so no adjustment is required following reassessment. In some instances, tax rates have been increased following reassessment if a gap remains between the rate allowed by law and the rate actually being charged.

"In some instances, reassessment has become a shadowy path to higher taxes," Blunt said.

There are numerous taxing jurisdictions in every Missouri county. In many instances, a single jurisdiction has several tax rates. For example, Jackson collects property taxes to support general operations as well as a tax for the library, municipal band, cemetery and parks. In each instance, Jackson's actual tax rates equal the legal maximum, or tax rate ceiling, approved by voters.

But in Sikeston, Mo., the rate being charged for general operations is 36.93 cents per $100 assessed valuation, while the tax rate ceiling is 50.51 cents per $100. The levied rate is lower, city manager Doug Friend said, because the city council reduced it several years ago as an inducement to voters to approve a new sales tax.

The law allowing the sales tax did not require the property tax reduction, so Sikeston is free to raise the rate to the tax rate ceiling at any time. The new law will force a decision this year on whether Sikeston can live with a possible tax rate cut in 2009.

Under the bill, local governments can raise taxes to the rate ceiling only in nonreassessment years and only after public hearings.

"Over the next few weeks, we will be trying to judge what the long-term impact will be," Friend said.

In all, two jurisdictions in Cape Girardeau County, six in Scott County and three in Perry County have levied rates below the tax rate ceiling.

Senate President Pro Tem Mike Gibbons, R-Kirkwood, said local officials would be making a mistake to take the new law as a signal to raise taxes before it takes effect Aug. 28.

"If someone wants to gouge taxpayers, I guess they could do that," he said.

Other provisions of the bill would help taxpayers understand the reassessment process and provide tax breaks to lower income elderly and disabled.

Among the changes:

• Assessors must notify property owners by June 15 each year of changes in their assessments and provide an estimate of the tax that will be owed when actual tax bills are issued in November.
• An increase in the income ceiling and tax credit amount for senior citizens and the disabled who live in their homes. For homeowners, the maximum income for the credit is increased to $30,000 and the maximum credit for property taxes paid is increased to $1,100. For renters using the credit, the old limits of $27,500 maximum income and $750 in rent payments to cover property taxes remains in effect.

Blunt and Gibbons visited the home of Steve Barry and Christy Young at 524 S. Pacific St., where the couple live with their four children. Young said she was asked by local Habitat for Humanity vice president Robin Cole to open their home to the governor but was unsure exactly what was to be discussed. That mattered little.

The bill will help every taxpayer by creating permanent protection against hidden tax increases, Blunt said when asked whether Barry and Young would see any benefit.

"Going forward, this is good for every property owner," he said.

rkeller@semissourian.com

335-6611, extension 126

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