Property tax reform bills advance

JEFFERSON CITY, Mo. -- A pair of property tax reform bills cleared the Senate Ways and Means Committee on Tuesday.

One measure attempts to fix rollback procedures that are intended to protect property owners from higher taxes following the state's biennial property reassessment cycles. It would also cap assessment increases for all homeowners at 5 percent.

The second bill would allow many people age 62 or older to defer paying property taxes on their homes until the home is sold.

Both measures are expected to undergo significant revisions before reaching the Senate floor for debate.

State Sen. Michael Gibbons, R-Kirkwood and committee chairman, said fixing the rollback protection is the key to ensuring property taxes are fair. His proposal would roll back tax rates differently for different subclasses of property.

Following reassessment cycles, taxing jurisdictions such as school districts are required to roll back tax rates to prevent them from profiting through increases in assessed values.

Residential property is assessed at market rates, which has steadily increased in most areas. Commercial property is assessed on its earning potential, which tends to change little.

However, the rollback currently applies equally to both classes of property. Therefore, when residential values go up and commercial values stay flat, commercial owners often disproportionately benefit from the rollback.

Shifting tax burden

"The rollback provision is designed to protect taxpayers, but what it is doing is shifting the tax burden from commercial to residential," Gibbons said. "If we separate by subclass, we let the rollback do its job."

While most committee members supported changes to the rollback, some were concerned about the 5 percent cap on assessments. The bill would require the state to reimburse local taxing entities for money they would lose because of the cap.

State Sen. John Schneider, D-Florissant, said that creates a constitutional problem by giving some, but not all, homeowners a tax break.

"You propose that some homeowners not pay taxes in accordance to the value of their property but others would," Schneider said. "The state would have to reimburse counties for losses incurred because some folks are not paying their taxes."

The measure also would ban so-called "drive-by" inspections by county assessors and put the burden on assessors to prove that values they assign to properties are correct.

Deferred taxing

The second bill, sponsored by state Sen. Wayne Goode, D-Normandy, is modeled on a longtime Oregon law.

A homeowner who chose to defer property taxes would have a lien placed against his property. At the time ownership changed hands, the lien plus 6 percent annual interest would be paid off from the sale proceeds or, in the case of the death, from the owner's estate.

Senior citizens with annual incomes of $32,000 or less could defer up to 100 percent of their property taxes. Those with household incomes between $32,000 and $64,000 could defer only taxes above what they paid when they turned age 62. For those already older than 62, their 2001 property tax bills would serve as the base year.

The bills are SB 688 (Gibbons) and SB 902 (Goode).

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