Property tax reform raises cry from rural officials

JEFFERSON CITY, Mo. -- When Missourians get their property tax bills in reassessment years, sticker shock often results.

Although the Missouri Constitution requires taxing entities to lower their property levies to prevent them from profiting from the higher land values reassessments typically produce, that doesn't mean taxes stay flat for individual property owners. If the value of a certain parcel rises at a rate exceeding the average growth in a particular taxing jurisdiction, the owner still pays more taxes.

And the way tax rollbacks are applied has helped shift the overall tax burden from commercial property owners to homeowners.

Seeking to address that disparity, a law was enacted in 2002 to require that tax rollbacks be applied based on the type of property rather than in the across-the-board fashion that has been the practice.

As a result of a last-minute political deal struck in the Missouri Legislature, however, the new law took effect only in St. Louis County for the 2003 reassessment cycle, with the rest of the state slated to follow in 2005.

But rural county officials, fearing drastic increases in their operational expenses, are urging lawmakers to repeal the scheduled statewide implementation.

State Rep. Shannon Cooper, the sponsor of a bill that would maintain the status quo, said lawmakers two years ago adopted a statewide solution for a St. Louis County issue.

"It is something we do all the time around here," said Cooper, R-Clinton. "We fix one guy's problem at the expense of somebody else."

But state Sen. Michael Gibbons, R-Kirkwoood, who handled the 2002 measure, said the law would provide an important protection to homeowners throughout the state.

"In a county where you've got any sort of volatility in assessments of different classes of property, not implementing changes to the rollback is hurting their taxpayers," Gibbons said.

There are three different methods for assessing real property.

Residential property is assessed based on fair market value. Commercial property is valued on its ability to generate income. Agricultural property is assessed as determined by a schedule set in law that takes into account soil quality and production potential.

What skews the application of the rollback is that residential property as a group increases in value while the other classes, particularly commercial, stay relatively flat.

With the rollback applied uniformly, owners of nonresidential land can end up with lower taxes, while homeowners pick up an increased share of the burden.

The new law, as already implemented in St. Louis County, would match the rollback-to-growth rate of each property class.

But doing so means that instead of having one property tax rate, taxing jurisdictions, including school districts, municipalities and fire districts, would each have to establish four different rates -- one for each type of real estate plus another for personal property, such as vehicles.

With dozens of taxing entities per county, many of which overlap, county clerks say that will lead to hundreds of tax rates, requiring an expensive overhaul of computer systems to calculate.

"We would have to completely change our software to do it," said Mississippi County Clerk Hubert DeLay Jr. "Who knows what the cost would be, but it would be a tremendous increase in our workload."

Cape Girardeau County Clerk Rodney Miller said he hadn't yet started preparing for the change, but that an increase in expenses to his office is a given.

'No taxpayer gain'

Cooper said the disruption to county operations isn't worth it since no overall savings to taxpayers would result.

"All this law does is create a huge burden on the counties," Cooper said. "There is no gain for taxpayers whatsoever."

From an overall standpoint that is true, as the rollback is intended to make sure taxing jurisdictions receive the same amount of revenue, adjusted for inflation, after reassessment as they did before. But how the tax burden is distributed, if the law takes effect statewide, would have an impact on individual taxpayers.

Judging by the sharp drop in complaints he fielded in 2003 as compared to 2001, Gibbons said the split rollback system has worked in St. Louis County. While he thinks it would also yield a positive result in the rest of Missouri, Gibbons said he is sympathetic to the concerns of county officials.

"I've been open to trying to soothe the absolute high state of terror being exhibited by county clerks," Gibbons said.

An acceptable compromise, he said, would be to allow individual county commissions to opt out of the split system.

If there is no big disparity in growth rates between property classes, maintaining a single tax rate might make sense, Gibbons said. If unfairness results, county commissions would have to deal with irate property owners.

"That way they have to answer to their voters," Gibbons said.

The bill is HB 823.

mpowers@semissourian.com

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