Yes, summer is over. As you look back on Summer 2007, I hope fond memories will be generated for further reframes. The relative coolness of June and July was halted by the Dog Days of August and, based on what I hear, many of you got “heated up” before August about your home assessment. This being an odd numbered year (’07), it was a property re-assessment year.
Before becoming involved in City government, my impression of big assessment increases meant a conspiracy by local and county governments to get more taxes without having to ask the people for an increase. First, let me assure you, that’s not the case. Perhaps, however, that impression may still exist with some citizens. Let me briefly review the assessment process and how it culminates into your tax bill.
Each county in Missouri has an Assessor. It’s the job of this office to carry out the functions of appraising parcels of property to fair market value in each respective county. This is done for all real property every other (odd) year. There are four types of property. Each type has a different tax rate percentage allocated to it: residential at 19% assessed rate; agricultural at 12%; utilities and commercial at 32%; personal property at 33.33%. I will limit my discussion to residential property.
Once an appraised market value is determined, the property
tax is calculated. The calculation
Appraised Market Value X Assessed Rate X Applicable Tax Rate = Tax on Property.
The following is an example:
Assessed Market Value of a Residence $400,000
Assessed Rate for Residential Property 19%
Assessed Value $ 76,000
Clarkson Valley’s Tax District Rate .076313*
7.6313% per $100 Assessed Value
Resulting Tax Liability $5,799.79
This is an illustration only. The City of Clarkson Valley’s portion of the 7.6313 is .129 or $98.04 of the $5,799.79.
*See Chart I of the sources making up this total on next page.
So, if the assessed value of your property goes up, using the same rate percentage, taxes go up accordingly, right? Of course, however, the Missouri Constitution was amended in 1980 (Hancock Amendment) to prohibit political subdivisions from increasing existing taxes, licenses or fees above levels authorized at the time of passage of the Hancock Amendment without voter approval. (However, the law does allow political subdivisions to adjust licenses and fees to maintain funding of the services provided, a subject for another time). Back to residential property, the State Auditor reviews the tax rate ceiling based on the assessed valuation for the entire political subdivision. What Hancock does is switch the method of determining what’s fair to taxpayers from tax percentage application to total revenues. For example, in a given city the voters had approved a real property tax date at .15 per $100 assessed value, resulting in the first year of $100,000 revenue. This is the maximum amount of revenue allowed for the next year. There may be upward adjustments for new construction and inflation. Depending on the effect of such adjustments, the tax rate for subsequent years may be adjusted downward. In the case of Clarkson Valley, the residential property tax in 1986 was .25, in 2006 it was .129 and, with the 2007 assessments, the new rate will be .103 per $100 assessed value. These computations are derived from the State Auditor’s formula on calculating political subdivisions tax rates.
Then how is it my real estate taxes go up? Some political subdivisions are not at their previous voter authorized rate ceiling. Therefore, they may choose to not roll back their rate. The taxing laws in our state are complex. Adding to these complexities are a voluminous number of taxing districts, each with their own set of political subdivisions. In addition, there are constant changes in tax law interpretation and local ordinances covering taxes. I have attempted to simplify only the assessment and calculation of residential property taxes.
The figures used in the illustration were based on the 2006 assessed tax rate. At this time we have not received the 2007 tax rates for the components in Chart I. Hopefully, you can read your 2007 tax assessment with a better understanding of how and who. I can’t guarantee you won’t still get “heart burn”.
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