VOTERS DECIDE WHETHER TO LIMIT BUSINESS SURCHARGE

A commercial property tax surcharge would be subject to the same rollback provisions as other tax rates if voters in Missouri approve Amendment 9 in the Aug. 4 primary election.

"It will benefit some businesses who are having a hard time keeping up with the surcharge," said Rep. Joe Driskill, D-Poplar Bluff, who handled the legislation that sent the constitutional change to voters.

"I think it is a pretty legitimate, straight forward effort to curb taxes," added Bob Hendrix, president of the Cape Girardeau Chamber of Commerce.

The commercial property surcharge was placed on the books in 1985 as part of the statewide reassessment effort in Missouri. At that time, the state had a merchants and manufacturers tax that was essentially a tax on inventory.

Statewide reassessment divided property into three classifications: residential, agricultural and commercial. When the M&M tax was abolished, however, all property classified as commercial was subject to the surcharge to make up for the loss of the M&M tax.

Cape County Assessor Jerry Reynolds explained that the surcharge rate was determined in 1985 by taking the amount of money lost due to the end of the inventory tax and dividing it by the assessed commercial valuation, to come up with a figure on what it would take to raise the same amount of money the following year.

But the rate, which in Cape Girardeau County is 37 cents per $100 assessed valuation, has never been adjusted even though the assessed value of commercial property has increased.

"The problem is that the rate raises more money than it did in 1985 because the overall assessed commercial valuation has gone up," said Reynolds. "Anything commercial built since then pays that 37 cents."

Other tax rates are rolled back, with an allowance for inflation, to prevent a large windfall from increases in assessed valuation.

In the city of Cape Girardeau, Reynolds explained that the property tax rate is $4.02 per $100 assessed valuation for all tax levies combined. But for property classified as commercial, there is the surcharge of 37 cents added to that rate.

Driskill said when the merchants and manufacturers tax was removed in 1985, he had expected there to be a rollback provision. "But that apparently was never the case," said Driskill. "I think there have been a number of businesses in the state who have suffered because of that.

"This way, when the value of property grows there will not necessarily be a windfall to political subdivisions."

The proposed amendment limits the total surcharge to 1992 receipts, plus an allowance for inflation and new construction, figured the same way as for other tax levies.

Hendrix agrees with Driskill that the amendment will provide some relief to businesses that are facing increased costs.

Reynolds said he is unsure what the total impact of the constitutional amendment will be, but noted in some counties it could amount to a significant savings for some businesses.

Surcharges vary between counties, ranging from 15 cents to over $2, Reynolds pointed out.

"I really don't know what the impact will be, but it will cost some taxing entities some money over the long haul," he said.

"If I was on the paying end, it would be good. If I was on the receiving end, it might be bad."

But Driskill said he does not believe the amendment will reduce revenues to political subdivisions dramatically. School districts could be the most affected because the property tax is their major source of tax revenue.

"I just don't think it will be a big-money loss, even to schools," said Driskill. "The amount of money taken in by the surcharge is only a small portion of the total tax monies taken in."

The official ballot description for Amendment 9 is: "Would limit commercial property tax surcharge levies to 1992 receipts, plus adjustments for inflation and construction. Currently, surcharge rates are not adjusted as are other rates. There would be no revenue reduction to political subdivisions. The commercial property surtax would be subject to the same rate revision rules, including rollbacks, as other property taxes."