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Thursday, March 12, 2009

More Reassessment

St. Louis County Executive Charlie A. Dooley and his staff have rethought, reconfigured and rejiggered their December estimate that property tax assessments would drop by only 2 to 3 percent. Under a barrage of criticism from the public, the county came up with a way to make the new assessments more closely reflect plunging real estate values.

On Tuesday, county officials announced that upon further review, the median residential property tax assessment would be down 9 percent. “Median” means half the county’s 365,000 residential properties will see assessments drop by more than 9 percent and half by less than that.

That’s still far below the estimated 19 percent drop in median home value in the county between November 2007 and November 2008. But 9 percent is a little closer to reality, even though it will cause huge budget problems in many taxing jurisdictions.

St. Louis County, for example, keeps only 6.7 per cent of the $1 billion in residential property taxes it collects, passing the rest to the state, some municipalities, schools, fire districts, library districts and other taxing jurisdictions. But that 6.7 percent accounts for about a quarter of the county’s $504 million budget.

Depending on where you live, you could still get a shock when you open your tax bill in May, even if your neighbors just took a beating on the house they sold. That’s particularly true if you live in a school district that decides it will “roll up” its tax rate to avoid having to cut its budget.

Tax jurisdictions are allowed by state law to keep their budgets stable year-to-year. So if assessments go down, rates can go up, thus keeping the total revenue about even.

The county has, in effect, passed the bucks — or non bucks — to the taxing districts. Now they get the job of deciding how much people will have to pay in property taxes. What could have been one giant countywide fight will now be multiple local fights. School boards, city councils, fire boards and other administrative bodies should gird for battle.

The impact will be greatest in the county’s 20 school districts, which receive about 55 percent of the property tax revenue. A few of those districts already are at their maximum allowable tax rate, but most can still “roll up” their tax rates to keep revenue stable. Generally school boards are teacher-friendly (teachers being more keenly interested in school board elections than most folks) and can be expected to resist cutting their budgets.

It can be argued that this is the wrong point in the nation’s history to cut educational budgets. The workforce for the future will have to be smarter, more literate and more computer savvy than at any time in history. Whacking school budgets is no way to do that, nor are economically-stressed schools particularly good for property values.

At the same time, the recession is causing real pain. The last thing anyone who has been laid off or has been hit with higher health care costs needs is a property-tax rate increase on a home he can’t sell. This is a time for shared sacrifice; before rolling up tax rates, local school boards and administrators must be sure that every dollar is being spent wisely.

County property owners who want to get ahead of the curve can see their homes’ new assessments online at www.stlouisco.com. You can also reserve a place in line for an assessment appeal by calling (314) 615-5000. School board meetings need no reservations.

But you’ll have to until May to see what your tax bill will be, because schools and other tax districts have until then to decide their tax rates for the coming year.

Once they inform the county, the revenue department will mail homeowners their new assessed value along with an estimate of what their tax bill will be. The actual bills are mailed in the fall and are payable by year’s end. Maybe the recession will be over by then. We wouldn’t count on it.

Real Estate Assessment

Think your real estate taxes are going down? Not necessarily

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By Eric Becker
Tuesday, February 17, 2009 9:12 AM CST


It's nearly tax time in St. Charles County. No, not for the IRS. Your property and real estate tax assessment notices will arrive soon, telling you what you'll have to pony up come November.

You might think you'll owe less this year, given how the housing market has trended during the last two years, with real estate property market values falling between 5 and 10 percent.

But you'd likely be wrong. Sure, your assessment may go down, but you're likely to find you'll pay the same amount as last year in taxes, as local taxing districts find it necessary to raise tax rates to maintain an existing level of services. Such districts, which include school and fire districts, point out it still costs them the same amount to provide services.

County Assessor Scott Shipman wants you to know he's not the one setting tax rates. He just calculates your home's value.

THE PROCESS

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In April 2008, the assessor's office began sending its group of 10 property field evaluators around the county, armed with laptops that know just about everything about your home - how many times it has sold, at what price, its floor plan (unless you've made a change), the square footage, you name it.

Once evaluators revisited your property to monitor any change in appearance, they looked at your neighbor's lot, too.

According to a University of Missouri-St. Louis report, the county has historically assessed values at about 96 percent of their actual value, an accuracy that exceeds most other metro area counties in Missouri and Illinois. Many, whether for political expedience or otherwise, assess real estate at an artificially low level.

Part of that accuracy is likely due to the county assessor's calibration method. Once the assessor's office has set a value on your home, it checks its list twice. In order to adhere closer to fluctuations in the market value, the assessor's office runs its value assessment against property sales in the last year, and identifies any trend that can help it better assess your property. The office also looks at current offerings on homes for sale.

"The goal is 100 percent accuracy," Shipman said.

Shipman said that because inspectors don't enter residents' homes, it's possible they miss a refinished basement or pool added to a property that weren't in the county's plot maps. But he said all properties are assessed on a level playing field based on the information the county has.

This year, the assessor's office found its assessed values were running, on average, 10 percent higher than actual value, and revised downward.

Because of Senate Bill 711, passed last year, the county can only reassess real estate every two years. This year's assessment value will hold steady for 2010.

Residents can appeal the assessment to the county. Three to 3.5 percent of county residents do so every reassessment year, Shipman said.

SOME ASSESSMENTS MAY NOT DECREASE

Shipman said a common misconception is that his office assesses taxes, as well. In fact, the assessor's office only sets your property value, and the bill you get is from the county collector.

This year, as a result of Senate Bill 711, along with your assessment notice you receive in April, you'll get an explanation of how your tax bill was calculated, showing every political subdivision that taxes you.

Shipman is trying to get the word out early that your assessment value may not go down this year. Some values in the county have decreased, Shipman said, but some subdivisions may even see their assessed property value rise slightly or stay the same. It all depends on which one of the county's 300 neighborhoods you reside in.

"There are pockets that tend to be more desirable," Shipman said, thus maintaining higher values.

Because of the scarcity of some lower-priced homes, those assessed values tend to adhere even closer to actual market value.

Commercial properties, Shipman said, have generally taken a larger hit in value than residential properties, as a sour economy has raised vacancy rates at some industrial and office buildings.

SCHOOL DISTRICTS ADJUST

Some school districts have announced they'll have to raise tax rates to maintain their levels of service, and Francis Howell School District announced last week it will trim its staff by 62 positions, part of a $5.3 million cut in the 2009-10 budget. The district hopes those positions can be cut simply by not filling vacancies created by workers retiring or employees who quit. Francis Howell Superintendent Renee Schuster said last week she hoped few, if any, employees would lose their jobs.

The St. Charles School District, too, is facing a $1 million deficit, and Rick Radford, the district's assistant superintendent of business services, has said tax rates at school districts across the county will have to adjust to reduced property values.

All county taxing districts must receive assessments for their districts from the county assessor by March 1.

The Hancock Amendment, Radford said, requires school districts to adjust their tax rates so they meet the same level of tax revenue for fiscal year 2009-10 as they did for this school year. Likewise, when assessed values increase, the school district will be required to lower the tax rate so as not to collect more tax revenue than it currently does.

"The Hancock Amendment is going to dictate what our school boards can do," Radford said. "Our boards can adjust just a little bit, but they have to be pulling in the same revenue (at the current tax rate as before an assessed value decrease)."

As part of a charter county, political subdivisions in St. Charles County have until Oct. 1 to finalize tax rates. Those that are not charter counties have until Sept. 1.

Radford said residents' tax amount may not be higher, but the tax rate they pay may be higher.

"If I paid $1,000 last year, I may pay $1,000 this year, but the tax levy may be higher," he said.

Over the past several reassessments, Radford said, school tax levies have decreased as assessed values have ballooned. As a result, this reassessment creates a peculiar circumstance, and schools, fire and other districts that assess taxes are scrambling to meet their budgets with a downward trend in property assessments.