Property-tax task force delivers report to House speaker

By MATTHEW J. CHELLIS

It was an honor to serve on a property-tax task force appointed by Missouri House Speaker Rod Jetton last fall.

The problem is well known to St. Louis County homeowners. Real-estate assessments have gone up 30 percent to 40 percent in St. Louis County in the latest two-year cycle alone. The assessors say that they are just trying to get closer to “true value.”

While the St. Louis County assessor may be a professional and overwhelmed with the number of properties that need to be assessed, the fact remains that assessments are not handled uniformly across the state. We have an assessor appointed by the county executive while throughout the majority of the state the assessor is politically accountable to the people who live in the area and own the property that is being assessed.

The problem, of course, is not just that assessments are unequal, and therefore unfair, but that so are the resulting taxes. When assessments increase at such drastic rates, so do taxes. The Hancock Amendment was designed to limit the increase, but it does not apply to the county’s rate or that of many school districts because they are exempt or already at the “minimum rate.”

The resulting taxes, some would say, stay here in St. Louis County and go largely to our local school districts and are therefore the most democratic of taxes because they are locally controlled. The truth is that St. Louis Countians are paying a disproportionately large percentage of both the property tax and the state income tax.

The Missouri Department of Elementary and Secondary Education reports that 55.8 percent of school districts’ revenues in 2006 come from local sources statewide. If local districts such as Mehlville are getting somewhere in the neighborhood of 90 percent of their revenues from local sources, that means some of these out-state districts have to be getting far less than 55.8 percent of their revenue from local sources for 55.8 percent to be the state average.

Out-state districts are getting the majority of their funding from the state through the “foundation formula,” and the state gets the majority of its funding from state income taxes paid disproportionately by suburban taxpayers who generally have higher reported income. In short, we are picking up the tab for both our own local public schools and those throughout the state.

Something has to give. Furthermore, the problem is exacerbated by exempting certain commercial properties from the property tax roles through “economic-development-incentive” devices such as tax-increment financing , or TIF. When a TIF is granted to a business to relocate or redevelop a property in your area, you provide an incentive but you also put existing businesses at a relative economic disadvantage.

Why should government favor big business over small business or any business over another? Each and every TIF reduces the percentage of property tax collected from business and therefore shifts the overall tax burden further toward residential property taxpayers. They have yet to give a TIF to a homeowner who wants to improve his property by putting on a new roof or replacing the furnace.

The recommendations agreed to by a majority of the task force include setting a tax-rate ceiling at the preceding year’s tax revenue with an allowance for new construction. This would require a taxing district to roll back rates to remain revenue neutral when the district has increasing assessment values. This likely would require a constitutional amendment. Another recommendation is to review such economic incentives as TIF, Enhanced Enterprise Zones, Chapter 99 (Municipal Housing), Chapter 100 (Industrial Development), and Chapter 353 (Urban Redevelopment) to determine how they impact property taxes and particularly residential property taxpayers. A third recommendation would require clear, concise ballot language for all school bond and tax-increase is-sues to explain impact and costs to taxpayers.

Since the problem is so complex, task-force members did not agree on everything. Many were of the opinion that the task-force recommendations did not go far enough. Many thought that all businesses should be required to pay their fair share of property taxes to aid in alleviating the tax burden that has shifted to residential homeowners as a result of the declining tax obligations of businesses.

Many thought that each county ought to be required to adopt a uniform Certificate-of-Value approach to more evenly and accurately assess the value of real property.

A growing number, including Rep. Walt Bivins, seem to think that the current system has become so unfair that property taxes ought to be eliminated altogether in favor of a statewide sales tax. Current estimates for the sales-tax increase are 3.5 percent, which would eliminate the current unfair and unbelievably expensive system of assessment and taxation in Missouri.

“The root of the problem,” according to Rep. Jim Lembke, “is the never-ending desire for more expanding government. A government big enough to give you all that you want is big enough to take all that you have. Many taxpayers in the district are needing to move because of the high cost of their property tax. School funding needs to be separated from the assessment process.”

The report has been made to the speaker. It’s now up to the Legislature to act. Let them know what you think.

Editor’s note: Besides being a member of the property-tax task force, Mr. Chellis served six years on the Mehlville Board of Education.