Burdesome tax plan

State rejiggering of property-tax rates to offset the impact of mandatory every-other-year reassessment sounds like a fair way to equalize the tax burden, but the cost to counties of implementing the plan outweighs the benefit to taxing entities and taxpayers.

A bill to undo the 2002 law that set in motion new rollback rates for each kind of property tax makes sense -- at least until the logistics are sorted out or funding is earmarked to offset the cost to counties and other subdivisions for switching to the new tax-rate plan.

Most Missouri counties have seen the impact of statewide reassessment and mandatory rollbacks. Under the system currently used, county assessors are required every odd year to determine the fair market value of residential property, the income-producing value of commercial property and the production value of agricultural property. The value of a fourth category, personal property (cars, boats, motor homes and the like), is assessed each year.

By law, when assessed values increase, tax rates must be lowered so that the tax revenue stays the same. That would be equitable if the assessed valuation of all the taxing categories changed at the same rate. But they don't.

Generally, the value of residential property increases at a much higher rate than commercial or agricultural property. This means when tax rates are lowered to offset increases in assessed valuation due to reassessment, commercial and agricultural property owners see their tax bills go down while residential property owners see their bills stay the same or go up.

In highly volatile residential markets, the impact of reassessment is huge. That was the case in St. Louis County when the bill in question was passed. The bill provided that rates for each taxing category -- commercial, agricultural, residential and personal property -- should be different and should be adjusted to reflect reassessed values. Under the bills provisions, the burden of offsetting reassessment is to be shared by each category rather than keeping residential tax bills artificially high.

The aims of the bill appear to be good, but the nightmare and cost of implementing the tax rates are daunting -- especially when the bottom line is no increase in tax revenue to the various taxing entities.

Under the provisions of the bill, each county could wind up with hundreds of tax rates, many of them overlapping. Keeping track of these rates and adjusting them in reassessment years is beyond the capabilities of most county computer systems. The cost of upgrades would be considerable when multiplied by the needs of the other 113 counties.

One compromise idea is to keep the bill's provisions but permit counties to opt out of the split tax rates. This might work. But unless some provision is made to allow counties to keep some of the revenue generated by increased valuations or state funds are provided to offset collection costs, not many counties are going to support the current bill.