Amid a public outcry about increased property taxes caused by growth in assessed property values, the General Assembly on May 16 approved a bill that seeks to strengthen existing requirements that are supposed to force local taxing jurisdictions to roll back their tax rates so that they don’t profit from tax reassessments.
Property values in Missouri are reassessed every two years. Because overall values typically increase during reassessment cycles, the Missouri Constitution requires taxing entities, such as school districts and fire districts, to roll back their tax rates so that they bring in roughly the same amount of revenue, plus the value of new construction and an inflationary adjustment. Because of past rollbacks, however, actual tax rates are often lower than a jurisdiction’s maximum authorized rate. As a result, many taxing entities in that situation refuse to enact further rollbacks following reassessment, resulting in higher taxes for property owners.
SB 711 would require taxing jurisdictions to roll back from their actual rate following reassessments, thus reducing reassessment-driven tax hikes. Efforts by House Democrats to provide additional property tax exemptions for elderly Missourians were rejected. The final bill passed 33-0 in the Senate and 142-5 in the House.
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If I understand this bill correctly, it should make for a fascinating situation in view of the current real estate devaluations playing our in the market. If cities were required to scale back their ACTUAL tax rates following prior year valuation increases, they're likely to need substantial tax rate increases once the current real estate price reductions work their way through the markets. Can they do so without a referendum? I can hear the screaming already . . .
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