Property reassessment reflective
of current property values
There is much talk about property taxes going up based on a persons property value reassessment. But, I don’t ever hear anything said about the required tax rate rollback to ensure local governments don’t receive a windfall. To make a long story short, property reassessment should reflect current property values, the price you can expect to sell your property. The Hancock Amendment protects property owners from having their taxes also go up, by requiring local governments to roll their tax rates back, it is not optional. Below, are excerpts from Missouri’s Property Reassessment and Taxation Handbook.
The Missouri State Tax Commission is given the responsibility of ensuring the uniform and equitable assessment of all taxable tangible property in the state. The Commission works with assessors to promote an accurate and fair assessment program.
Property is assessed as of January 1. By July 1, all assessors must have completed their real and personal assessment rolls and turned them over to the county clerk. Local BOE meet to hear valuation appeals by taxpayers in July. Appeals from the BOE may be made to the State Tax Commission by September 30 with conditions. Tax rates must be set and certified to the county clerk in September and October for all local governments. Tax bills are prepared and sent to taxpayers as soon thereafter as possible. Taxes are due on or before December 31 and become delinquent after that date.
How does reassessment affect my taxes?
It depends. An increase in assessed value does not necessarily mean your property taxes will increase. When you receive a notice that your assessment has been increased, it is too early to be able to calculate how the change in assessed value will affect your taxes. You will not know until the rates have been set by all of the local governments that tax your property.
Setting Tax Rates
Local governments set tax rates each year within the limits set by the constitution and statutes. They are based on the revenues received from the prior year, with an allowance for growth based on the rate of inflation. Revenues are divided by the assessed valuation for the current year. Values from new construction and improvements, and any increment in personal property valuations are held aside.
Will cities, schools, and districts lower their tax rates?
When the total assessed valuation in a political subdivision increases substantially, as often happens with a reassessment, it is allowed an increase in revenues to account for inflation, plus the revenues from taxing new construction and improvements. The governing body, after that, is required by the constitution to adjust tax rates downward. This is called a tax rate rollback. The allowed increase in revenues over the previous year for cost of living of 5% maximum is allowed.
A simplified version of the tax setting process is:
Revenues authorized previous year $500,000 + Cost of Living Allowance 2% = Current year revenues authorized $510,000.
Total Current Valuation $25 Million less New Construction $800,000 = Valuation used for Tax Rate Calculation $24.2 Million.
Current Revenues Authorized $510,000 divided by Adjusted Valuation $24.2 million = tax rate allowed (per $100 valuation) = $2.11
Tax Rate allowed $2.11 x full Valuation $25 million = total revenues current year $527,500.
This year, the assessed valuation for real property in the City of Excelsior Springs increased by 9.73% or $9.4 million and the City’s tax rates were rolled back by 1.45% to $1.1655 for General, Parks, Recreation and Hospital. Tax revenues are estimated to increase by 3% or $48,697.